Bowman v. Van Kuren

Dixon, O. J. There was no error in receiving the deposition of the witness H. L. Ooffeen, taken on commission in the State of Minnesota. Counsel for the plaintiff frankly concedes in his brief that the first objection, that the certificate of the com-, missioner did not give the title of the cause or the court in — 214 — ■which, the deposition was taken to be used, “ may not prevail, and probably will not, if the court shall consider the commission under which it was taken, a part of the deposition, as that states the court in which the cause was pending and the names of the parties to the action.” Such is the consideration of the court; and .so this objection fails. The other objection was, that the commissioner did not certify in the words of Rule 61, Circuit Court Rules, 1849, that the witness “was duly sworn before giving his evidence.” Instead of this the commissioner certified “ that such deponent, before examination, was by me sworn to testify the whole truth and nothing but the truth relating to said cause.” Such certificate was fully equivalent to, and expressed at length and more explicitly the idea intended to be conveyed by the words of the rule. The meaning of the words “ were duly sworn,” found in the rule, and when used in a certificate, no doubt is, that just such an oath was administered before giving evidence, as the commissioner here certified he did administer. See Sydnor v. Palmer, a decision of even date herewith. The objection to any evidence being received under the answer setting up new matter, because the facts therein stated did not constitute a defense, was unfounded. The answer did state a defense, by alleging that the note was never indorsed and delivered to the plaintiff or to any one for her, that she was not the owner and holder of it and had no property in it, and that the possession of it was obtained by her husband as her agent, by fraud and without the knowledge or consent of the maker, or the defendant, or either of them. This was not, however, the defense upon which the defendant prevailed; and for the purposes of that defense it must be admitted the answer was radically defective. But the objection was not so made as to suggest or meet that point. The case turned upon the primary and most important fact, well established in evidence, that the' defendant was an accommodation indorser of the note, of which fact the answer contained no statement nor even an — 215 — intimation of any kind. It needed bnt the statement of this fact, and that the plaintiff was not a bona fide holder for value of the note, to let in the evidence upon which the jury found, under the instructions of the court, that the defendant was not liable to the plaintiff as upon the contract of indorsement. As the objection was not such as to indicate or point out the real defects in the answer, and since, if they had been pointed out, they might, and it is altogether likely, would have been 'obviated by an amendment, we think the plaintiff can have no benefit of his exception on this appeal. And the objections to evidence were of much the same character. They were general, and did not indicate the ground of inadmissibility, which, if they had, would have been obviated by the same amendment. Where evidence has thus been admitted, being only generally objected to, and the same was in strictness inadmissible on technical grounds, as that the complaint-, answer or other pleading did not properly or sufficiently state the facts, or contained no statement, yet the testimony being admitted, established a good cause of action or defense on the merits, and it appearing that justice has been done, and that there was no .surprise or improper advantage taken, in such case the verdict and judgment will not be disturbed or reversed on appeal, but an amendment will be directed, or it will be considered as if the pleading had been amended in the court below. This point is settled by Smith v. Whitney, 22 Wis., 438, where the majority of the court agree that the objection was waived where the party appeared and failed to take the proper exception in the court below. The exception here was not the proper one. The objection was not such as to direct the attention of the court to the precise ground of inadmissibility, while, if the objection had been so made, the defect might have’been remedied in the manner above suggested. And upon the same question, see Neis v. Franzen, 18 Wis., 537; Tomlinson v. Wallace, 16 id., 224; Mead v. Bagnall, 15 id., 162; and Bogert v. Phelps, 14 id., 88. See also 20 Wis., 149 and 246, and cases there — 216 — cited. The .omission or defect of pleading in such case, it appearing that the party has had a full and fair trial and opportunity to prosecute or defend on the merits, becomes a mere formal •one, which affects no substantial right, and for which the statute declares no judgment shall be reversed or affected. R. S., ch. 125, sec. 40; Decker v. Trilling, 24 Wis., 615; Morrison v. Austin, 14 id., 603; McIndoe v. Hazelton, 19 id., 572, 573; Warren v. Gordon, 10 id., 500; Warren v. Foreman, 19 id., 38. And there was no error in the charge of the court to the jury, nor in the refusal to give the special instruction asked by the plaintiff. There was evidence tending to show that the accommodation indorsement was made by the defendant for a special purpose, and that the paper had been diverted by delivery to the plaintiff. Where such is the nature of the indorsement, and the note has been negotiated by the maker in violation of the agreement between him and the indorser, the settled rule of law seems to be, that the holder cannot.recover against such in-dorser, unless he received the note in good faith and for a valuable consideration, and without notice of the agreement. Small v. Smith, 1 Denio, 583; Palmer v. Richards, 1 Eng. Law and Eq. R, 529 ; Edwards on Bills and Promissory Notes, 316, 317. There was also evidence tending to show that the plaintiff received the note without knowledge of the particular purpose for which it was indorsed. But'the court below withheld the consideration of both these questions from the jury, by treating the case and charging the jury as if it were an unrestricted accommodation indorsement, which was more favorable to the plaintiff than a strict application of the law to the facts proved, or which the evidence tended to prove, would have justified, in case the jury had found a verdict in favor of the plaintiff. It removed all obstacles in the way of a recovery growing out of the restricted character or particular purpose of the in-dorsement, and out of the manner in which it was claimed the plaintiff obtained possession of the note. Relieved of these objections, the cause was submitted as if it was an indorsement — 217 — without limitation, or one which the maker of the note was at liberty to make use of or negotiate for his own benefit or advantage in any manner he saw fit. The court charged the jury: “ If the jury find the note was taken by the plaintiff to secure a precedent debt, and nothing was paid at the time, nor the original debt in any way discharged, and that the defendant is an accommodation indorser, then the plaintiff cannot recover.” An examination of the testimony on the part of the plaintiff, which was that of her husband, who acted as her agent in the transaction, and which would seem to be fully reported, fails to disclose any evidence on her part, proving or tending to prove that the precedent debt or any part of it was discharged, or that there was any stipulation, express or implied, of further time to pay it, or any change of securities, or any new liabilities assumed or present rights relinquished, or, in short, that there was any consideration whatever, given or received, for the transfer of the note, except the pre-existing debt, with respect to which the parties remained in the same situation as before, save only such additional rights or security as the plaintiff may have acquired by the transfer. It is true, the witness spoke of some money loaned to Coffeen, the maker, at the time, and for the security of which the note in suit was delivered; but the jury, under the instruction, must have found the contrary. The receipt given for the note in suit at the time it was transferred, together with the promissory notes for the security of which the transfer was made as claimed by the plaintiff, all of which were given in evidence by her, tended very strongly to show that there was no new loan or advance of money at the time. The two notes bore date prior to the date of the receipt, and the receipt stated the note in suit, “received” from the maker, was “taken as security on what he had previously borrowed of me.” Now, in view of the evidence or the facts which it tended to prove, it seems very clear to us the law of the. case, except in the particulars where the plaintiff was too greatly favored, was correctly stated and given to the jury in the foregoing instruc218 lion. It is true, there are occasional dicta to be found in the books, and perhaps one or two exceptional decisions, to the effect that the mere deposit or pledge of accommodation paper as collateral security for a pre-existing debt, constitutes the pledgee or creditor a bona fide holder for value of the paper, within the meaning and policy of the commercial law. Such are the dicta in Robbins v. Richardson, 2 Bosw., 253; Cole v. Saulhough, 48 Barb., 105; and in Lathrop v. Morris, 5 Sandf., 9. And such seems to have been the point decided in De Zang v. Fyfe, 1 Bosw., 385. The case of Grandin v. Le Roy, 2 Paige, 509, is so imperfectly reported that we are not informed what the particular facts in relation to the transfer were, or whether there was any new consideration moving between the parties at the time,’but from our knowledge of the views of Chancellor Walworth as to the question, expressed by him in Stalker v. McDonald, 6 Hill, 93, and other cases, we must presume that there was some statement in the answer or other evidence of such consideration. Aside from the -support supposed to be given to the proposition by these cases, we know of no adjudications or authority, sustaining it. On the contrary, the strong and almost unbroken current of authority, in New York as well as elsewhere, seems to be directly against it. And we think the decided weight of reason favors the same conclusion. Roxborough v. Messick, 6 Ohio St., 448; Bramhall v. Beckett, 31 Maine, 205; Jenness v. Bean, 10 N. H., 266; Williams v. Little, 11 id., 66; Prentice v. Zane, 2 Gratt., 262 ; Petrie v. Clark, 11 S. & R., 377; Kirkpatrick v. Muirhead, 16 Pa. St., 117; Kimbro v. Lytle, 10 Yerg., 417, 428; Brooks v. Whitson, 7 Smedes & Marsh., 513; Chicopee Bankv. Chapin, 8 Met., 40; Thompson v. Shepard, 12 id., 311; Washington Bank v. Lewis, 22 Pick., 32; Brush v. Scribner, 11 Cohn., 388; Smith v. Babcock, 2 Wood & Minot, 288; Bay v. Coddingion, 5 Johns. Ch., 54; Coddingion v. Bay, 20 Johns, 637; 9 Wend., 170; 10 id., 85; 12 id., 593 ; 13 id., 65; 21 id., 499 ; 24 id., 115; 1 Hill, 513; 2 id., 301; 39 Barb., 577; 49 id., 542. — 219 — Of tie cases thus referred to, the two first will he found particularly .valuable and interesting discussions of the ques-tions, and in which the authorities are numerously ‘collected .and examined. They resulted in laying down what we regard as two clearly correct propositions of law. which, as stated in the first, are as follows: 1. When the note of :a third .person is transferred, Iona fide, before due, as collateral security, and for value, -such as in consideration of a loan, or advancement, or a stipulation, express or implied, of further time to pay a pre-existing debt, or in consideration of a change of securities of a pre-existing debt, or the like, the holder of such collateral will be protected from infirmities affecting the instrument before it was thus transferred. 2. But when a debt is created, without any stipulation for further security, and the -debtor afterward, without any obligation to do so, voluntarily - transfers a negotiable instrument, to secure the pre-existing debt, and both parties are left, in respect to the pre-existing debt, in statu quo, no new consideration, stipulation for delay, or credit being given, or right parted with by the creditor, he is not the holder of the collateral for value, in the usual course of trade, and - receives it subject to all the equities existing against it, at the time of the transfer. The present case, -according to the facts proved, or so far as there was any evidence tending to prove them, fell clearly within the principle of the second proposition. The- jury having found there was no money borrowed by the debtor at the time of the transfer, there was then no new consideration of any kind, unless it might be said the consideration of forbearance on the part of the plaintiff, for which there was not the slightest evidence of any express agreement or stipulation. An implied agreement to that effect might possibly be shown by circumstances, as when the creditor is pressing his -debtor for payment or security, and upon the transfer being made, grants him indulgence or forbears to urge his demand on account of it; but no such facts were shown in this case. De Zang v. Fyfe, — 220 — supra, was such a case. In Atkinson v. Brooks, 26 Vt., 569, tRe court seem to Rave Reid tRat forbearance, or an agreement for extension or delay of time of payment of a debt past' due, is to be implied from tRe mere fact of tRe transfer of tRe collateral. This seems to ns to be going very far; and if anything short of an express stipulation, valid in law, extending the time, is to be Reid sufficient to constitute the creditor a Iona fide holder for value, it would seem that it should only be where the proof of other facts and circumstances is so clear as to leave no doubt as to the understanding and intention of the parties. But upon these points we forbear to express any opinion further than that the mere transfer of the collateral raises no presumption of a stipulation for further time to pay a pre-existing debt, which will operate to defeat the equities of the maker or indorser, as the same existed before the transfer was made; which is all it is necessary to decide in this case. The decisions of this court, so far as any have been made bearing; upon the question under consideration, are quite in harmony with the views thus expressed. Cook v. Helms, 5 Wis., 107; Jenkins v. Schaub, 14 Wis., 1; Stevens v. Campbell, 13 Wis., 375; Shufeldt v. Pease, 16 Wis., 660. Of these cases, Jenkins v. Schavh, maybe said to be fully in point, and directly to sanction the instruction of the court below, which we have been considering. The other instructions require a passing notice. In view of the facts in evidence before the court and jury, we understand the first instruction to signify the same as if the court had said that the taldng and holding of the note merely as collateral security for a precedent debt would not make the plaintiff a bona fide holder for value. And the last instruction or point charged, we understand also to have been given and received subject to the qualification, or fact to be found by the jury according to the previous instructions, that the defendant was an accommodation indorser of the note. That was a fact about which there was in reality no dis — 221 — pute and no conflict of evidence ; and it is very obvious the jury must have understood that it was upon that hypothesis only, or in case they so found, that their verdict should be for the defendant upon their also finding the other facts submitted in that instruction. By the Court. — Judgment affirmed.