Jenkins v. Schaub

By the Court, Oole, J. It appears that on the trial of this cause the counsel for the appellants offered a witness for the purpose of proving that the note sued on was given without consideration, and also to .establish the several allegations in the answer, except those relating to the ownership of the note and the transfer of the same to the respondent — stating that he should ask leave of the court, under instructions, to submit the question to the jury, whether or not the note was taken by the respondent virtually as collateral security for a pre-existing debt due from the payee to the respondent at the time of the transfer; but the court held that there was no evidence in the case from which the jury would be authorized to find that the note was taken as collateral security for a pre-existing debt due the respondent from the payee, and excluded the testimony offered. The proposition of law, that if the respondent held the note merely as collateral security for an antecedent debt which is, not discharged but still remains unsatisfied, and no new consideration intervened at the time of the transfer, then he is not entitled to protection, but the defense set up in the answer is available, is not made a question, or controverted. The question discussed, however, is: Was there any evidence in the case to which such a principle of law was applicable, and which would authorize a jury in finding that the respondent was not a bona fide holder of the note, but held the same merely as collateral security for a pre-existing debt ? If so, the decision of the circuit court was erroneous, and there must be a new trial. In view of the offer of testimony made, and of the ruling of the court upon this offer, it is obvious that the ease does not present for solution a question of law, but rather a consideration of what facts the evidence given tended to establish. And upon this point we have no hesitation in saying that to our minds the evidence tends very strongly to show that the respondent was not a bona fide holder of the note. Even his own testimony, we think, [4] > would authorize a jury in finding that be received the note . merely as collateral security for the payment of the money be bad loaned bis father in the years 1855, 1856 and 1857. He says, in effect, that the consideration of the assignment of the note was this money previously loaned; that be bad the note to get bis pay out of it, and that be was the legal owner of the note and bad been since it was transferred to him on or about the 14th day of September, 1859. But be does not say, what it would be very material that be should, if it were so, that be took the note in payment of a portion of the existing indebtedness of bis father, and that such indebtedness bad been to that extent discharged and cancelled. For if be has parted with nothing of value for the note, if the original indebtedness still remains undischarged, and be has lost no rights, then a failure of consideration is a good defense to the instrument in bis hands. Besides there are other circumstances in respect to the time and manner of the transfer of the note, which tend to show that the respondent is not a bona fich holder for value. The note was given October 1, 1855, and made payable, four years from date, to the father of the respondent, or bearer. About twenty days before it became due the note was indorsed by the payee to the respondent. At the same time a written assignment of the note was made, assigning and transferring it to the respondent, stating that the note was assigned for a valuable consideration. These unusual efforts to transfer the note, payable to bearer, first by indorsement and then by assignment stating that it is for a valuable consideration, tend rather to awaken than to allay suspicion in regard to the bona fides of the transaction. A question is raised as to the sufficiency of this defense, because the appellants by their answer raised no issue as to whether the respondent took the note as collateral security for a pre-existing debt. But the testimony on this point was admitted without objection. For the reasons above given, we think there should be a new trial. The judgment of the circuit court is reversed, and a new trial ordered.