Smith, Newman & Co. v. Isaacs

Wyly, J. Isaacs, the maker, and A. A. Nevins and Forstall & De Lassus, the indorsers, have appealed from a judgment against them on the promissory note sued on by the plaintiffs- The plaintiffs received the note before maturity from the payee, A. A. Nevins, as collateral security for a pre-existing debt due them by him, and it is shown that Nevins is still indebted to them iu a sum ■exceeding the amount of the note. They have the right to sue for and recover the whole amount of the note, and are not hound by tho equities existing between Isaacs, the maker, and Nevins, the payee. See the Succession of Dolhonde, 21 An. 3, and the authorities there cited. Tho plaintiffs are not conditional holders as contended for by the ■defendant, Isaacs, nor were they hound to credit the debt due them, by Nevins with the amount of the note in order to he considered holders before maturity for value and to avoid the equities existing [455] between the original parties. A pawnee before maturity for a preexisting debt is a holder for a valuable consideration in the sense of •the rule applicable to negotiable instruments, and in a suit to collect •tlie note pledged, he is not bound by the equities existing between tlie maker and payee. Had the plaintiffs credited Nevins with the amount of the note, they would have become the absolute owners of the instrument. But not doing so and holding it as collateral security, they are the pawnees. In either case the holders for a valuable consideration before maturity are not bound by the equities existing between the original parties. As to the indorsers, we think, from the evidence, that they were •duly notified of the dishonor of the note, and their liability is fixed. It is therefore ordered that the judgment appealed from be affirmed, with costs.