Maitland v. Citizens' National Bank

Alvmt, J., delivered the opinion of the Court. This appeal is taken from a judgment of the Superior Court of Baltimore City, rendered in an action on a promissory note, of which the defendant was maker, for — 556 — $10,000, dated January 11th, 1872, payable four months after date, to the order of Phillips & Maitland, and hy them endorsed to the plaintiff. The note was protested for non-payment at maturity. The declaration was in the usual form, and the pleas were, that the defendant never was indebted as alleged, and that he did not promise as alleged. At the trial, two bills of exceptions were taken by the defendant; the first to the ruling of the Court in admitting certain evidence offered by the plaintiff; the second to the rulings of the Court in granting the three prayers .offered by the plaintiff as instructions to the jury, and the refusal to grant the first, second, third and fourth prayers .offered by the defendant. Before proceeding to consider the specific questions presented by the bills of exception, in order the better to iunderstand the nature of the transaction out of which the controversy arose, we shall state briefly the leading facts of the case as disclosed by the record. The son of the defendant and a party by the name of Phillips, composed the firm of Phillips & Maitland, a house doing business in the City of Baltimore at the time of the making the note sued on. This firm, for some .time prior to the date of the note, had kept an account with the plaintiff, and had received from the latter discounts of drafts or bills drawn upon certain houses in New York to a considerable amount. While the account was still running, in consequence of some distrust as to the .solvency of the house of Phillips .& Maitland, the bank, hy its directors, after examining into the state of the account, instructed its cashier,. Mr. Gruest, to call upon Mr. Maitland, of the firm of Phillips & Maitland, for collateral security. This instruction was given the cashier some time between the 5th and 10th of January, 1872 ; and on ■the last mentioned date, Mr. Maitland presenting himself .at the .bank, had his attention called to the instruction of — 557 — the board of directors by the cashier, with a request that the security should be furnished; but whether the security required by tbe board of directors and demanded by the cashier was for all existing indebtedness of the firm to tbe bank as w'ell as for all indebtedness that might thereafter he contracted with it, is the controverted question in the ease. According to the testimony of the cashier, Guest, the demand was for collateral security for all drafts then held, as well as for all that might thereafter be discounted for the firm; and the giving of the defendant’s note as collateral security was suggested to Mr. Maitland, Jr., hy the cashier himself. On the other hand, it was proved on the part of the defendant, that security was only required, and therefore only given, lor drafts thereafter to he discounted, including two drafts discounted on the 10th of January, 1872. Phillips & Maitland failed on the 15th of January, 1872, and, according to the testimony of the plaintiff’s cashier, of the drafts discounted for the firm from the 10th of January to the day of their failure inclusive, the sum of $5,681 remains unpaid, and of drafts discounted for them previous to the 10th of January, 1872, there remain unpaid over $15,000. The defendant himself testified that he had no interest in the business of Phillips & Maitland, and no connection whatever with that house, but on the 11th' of January, 1872, he signed the note in suit, and gave it to his son, Burgwyn Maitland, for the purpose of being left with the plaintiff as collateral security for the payment of the two drafts which had been discounted by the plaintiff for Phillips & Maitland, on the 10th of January, 1872, and of any drafts which that house might thereafter get discounted by the plaintiff; that he did not take the note to the bank himself, nor accompany his son to the bank, nor had he any interview on the subject with any officer of the bank; that the note when signed by him was in blank, as to the amount and time of payment, his- son having — 558 — authority to fill both blanks when he took it to the bank, provided the amount did not exceed $10,000. The defendant further testified that the note was given to Phillips & Maitland for the purpose stated, in response to a request made of him on the evening of the 10th of January, 1812, by his son, Burgwyn Maitland, who stated to him, that the plaintiff’s cashier had, on that day, declined to discount two drafts drawn by Phillips & Maitland, unless he, the son, would bring defendant’s note, or some other security, as collateral, for their payment in case they were not paid by the persons on whom they were drawn. The note was, therefore, made for accommodation of the house of Phillips & Maitland, and, according to the testimony of the defendant, was only to be used as collateral security for the two drafts discounted on the 10th of January, and such other drafts as should thereafter be discounted for that house. The defendant, therefore, contends that he is only liable on the note for any balance that may remain due on the two drafts discounted on the 10th of January, 1812, and on any subsequent drafts that may have been discounted by the plaintiff for Phillips & Maitland; while, on the contrary, the plaintiff contends that the note was given as collateral security for all drafts discounted for Phillips & Maitland, which remained unpaid at the time of their failure, as. well those discounted before as after the 10th of January, 1812, and consequently it is entitled to recover to the extent of the face of the note, if the indebtedness of Phillips & Maitland is as much as or more than that sum. Such being the nature of the controversy between the parties, as disclosed by the evidence, the plaintiff, on the trial, for the purpose of corroborating the testimony of its witness, Guest, in some particulars in regard to which the latter was in conflict with the testimony of Burgwyn Maitland, a witness for the defendant, as to the debts for which the collateral security was required to be furnished, — 559 — offered to prove by its president and two of its directors, the statements made by Guest to them soon after the transaction ; and, under the ruling of the Court, was allowed to prove that Guest, a few days after the 11th of January, 1812, and before the failure of Phillips & Maitland, stated to the board of directors that he had obtained from Phillips & Maitland the defendant’s note for $10,000, which was to be held by the bank as collateral security for all drafts which it was carrying'—that is, which it had discounted at the date of the note, as well as for all drafts which it might discount subsequent to that date, for that house. To the allowance of the question to be propounded to the witnesses, as also to the admissibility of the evidence elicited • thereby, the defendant objected, and the objection being overruled, such ruling forms the subject of the first exception. ■■ ; This exception presents a question that has been upon several occasions before this Court, as in the cases of Cook vs. Curtis, 6 H. & J., 93; Washington Fire Ins. Co. vs. Davison, 30 Md., 104, and McAleer vs. Horsey, 35 Md., 441. The rule recognized and applied in those cases would seem to be an exception to the general principle which excludes all mere hearsay evidence, because ex parte and without the sanction of an oath. But the evidence admitted under it is not admitted to prove or disprove any fact involved in the issue on trial, but simply to corroborate or support the credibility of the witness who may be in some manner impeached. It is a rule, however, not very generally recognized in'the Courts of England, or of other States of this country, and it should not be extended, but applied strictly. The Legislature, at its last session, abrogated the rule entirely as applied to the case of a party to the cause who may be examined as a witness, (Act 1814, ch. 386,) but left it in force as applicable to other witnesses. The object of the rule is to allow a party, whose witness is impeached, to show that the witness has been consistent — 560 — in giving tlie same narrative of fact; that his former statements, when without interest or motive to falsify the truth, consist with his sworn testimony as given on the trial; and thus, to some extent, remove suspicion that his testimony has been fabricated to meet the emergencies of the case, or that his recollection has varied, and is therefore not to he relied on. But, in order that the rule may be properly applied, and the evidence admitted under it furnish the foundation for some rational presumption in corroboration of the witness’s credibility, it should appear that there is real or substantial similarity, in facts and circumstances, between the unsworn and the sworn statements. Evidence of mere conclusions or deductions from certain transactions, formerly declared by the witness, do not corroborate or support the credibility of his evidence, consisting of what professes, to he the particular facts occurring in the transaction. His opinions or conclusions may have been erroneously founded, or drawn from very different facts from those testified to by him. The former unsworn statements, as compared with his testimony on the trial, should furnish some test of the witness’s recollection, as well as of his integrity. In this case, the witness G-uest had testified to the particulars of a conversation and as to an understanding with Maitland, Jr., in regard to the collateral security required by the bank, and as for what that security was really given ; and in the evidence offered in corroboration, instead of consisting of a similar narrative of the facts to that testified to, the mere general statements or conclusions of the witness are given, that the note of the defendant was to be held as collateral security for all drafts discounted by the hank and remaining unpaid, whether prior or subsequent to the date of the note, This may have been the witness’s conclusion at the time, founded upon a state of facts quite dissimilar to those proved by him, and which, if those facts had been stated, might have rather tended to impeach than corroborate his — 561 — evidence. Wo think, therefore, that there was error in the ruling on the exception to the admissibility of this evidence. We come now to the main questions involved in the case, and they arise upon the prayers offered by the parties, plaintiff and defendant. And in considering the questions thus presented, it must be borne in mind throughout, that the note sued on was made purely as an accommodation note,—was indorsed to the plaintiff simply as collateral security, and that the right of recovery thereon is maintained by the plaintiff only in respect to the amounts due from the indorsers on the debts for which the note was intended as security. With respect to these propositions there is no controversy. The controverted questions raised by the prayers, particularly those of the defendant, which were rejected, are: 1st. Whether an indorsee of a negotiable promissory note, made for the accommodation of the indorser, taking the note in good faith, as collateral security for an antecedent debt, and without other consideration, is entitled to the position of holder of such paper for value, and therefore not affected by the defence of the want of consideration to the maker. 2ndly. To what extent, if at all, is the indorsee and holder of the note affected by the fact that the note was made and delivered to the payees, to be used as collateral security only for certain debts, and the payees, disregarding the purpose for which the note was made and delivered to them, pledged it as security for other debts, in addition to those contemplated by the maker; and 3rdly, Upon whom is the onus of proof, as to the debts protected by the security, and the amount for which the plaintiff is entitled to recover, under the circumstances of the case. 1. Asa general proposition, we think it may be affirmed, as the result of all the well considered cases upon the subject, that it is no defence that the note sued on was known to the plaintiff to be an accommodation note between the — 562 — maker and the payees, provided the plaintiff took the note for value, bona fide, before it was due. The reason is, as stated by Mr. Justice Story, in his work on Promissory Notes, sec. 194, that the very object of every accommodation note is, to enable the payee, or other party accommodated, by sale or negotiation, to obtain a free credit and circulation of the note; and this object would be wholly frustrated, unless the purchaser, or other holder for value, could hold such a note by as firm and valid a title as if it were founded in a real business transaction. Indeed, the parties to every accommodation note hold themselves out to the public, by their signatures, to be absolutely bound to every person who may take the same for value, to the same extent as if that value were personally advanced to them, or on their own account, and at their request. And according to the doctrine laid down by Judge Story, every person is within the rule, and entitled to the protection of a bona fide holder for value, who has received the note in payment of a precedent debt, or has taken it as collateral security for a precedent debt, or for future as well as past advances. This latter proposition, to the full extent here stated, is maintained by Judge Story in his work on Bills, sec. 192, and in his work on Promissory Notes, see. 195, and is supported by the citation of many authorities, both English and American. The principle thus stated by Judge Story, so far as it asserts that a party who receives a negotiable note simply as collateral security for a precedent debt is entitled to protection as holder for value, has, it is true,-been controverted in some quarters; and the cases in which the principle has been repudiated, or its correctness denied, have been pressed upon the Court in the argument of the present case. But the reasoning of those cases does not convince us of the correctness of the conclusions maintained by them. The leading American case upon this subject is that of Swift vs. Tyson, 16 Pet., 1. In that case the Supreme — 563 — Court of the United States, by Mr. Justice Story, stated fully the grounds upon which the principle rests, that he who receives a negotiable instrument, as a promissory note, in payment of, or as collateral security for, a precedent debt, without other consideration, is a holder for value, within the rule of protection against antecedent equities. In the course of the opinion, the Court said: i(It becomes necessary for us, therefore, upon the present occasion, to express our own opinion of the true result of the commercial law upon the question now before us. And we have no hesitation in saying, that a pre-existing debt does constitute a valuable consideration in the sense of the general rule already stated, as applicable to negotiable instruments. Assuming it to he true (which, however, may well admit of some doubt from the generality of the language,) that the holder of a negotiable instrument is unaffected with the equities between the antecedent parties, of which he has no notice, only where he receives it in the usual course of trade and business for a valuable consideration, before it becomes due; we are prepared to say, that receiving it in payment of, or as security for, a pre-existing debt, is according to the known usual course of trade and business. And why, upon principle, should not a pre-existing debt he deemed such a valuable consideration? It is for the benefit and convenience of the commercial world to give as wide an extent as practicable to the credit and circulation of negotiable paper, that it may pass not only as security for new purchases and advances, made upon the transfer thereof, but also in payment of and as security for pre-existing debts. The creditor is thereby enabled to realize or to secure his debt, and thus may safely give a prolonged credit, or forbear from taking any legal steps to enforce his rights. The debtor also has the advantage of making his negotiable securities of equivalent value to cash. But establish the opposite conclusion, that negotiable paper cannot he applied in payment of or as security for pre-ox — 564 — isting debts, without lettiug in all the equities between the original and antecedent parties, and the value and circulation of such securities must be essentially diminished, and the debtor driven to the embarrassment of making a sale thereof, often at a ruinous discount, to some third person, and then by circuity to apply the proceeds to the payment of his debts.” The principle thus asserted in Swift vs. Tyson, appears to have been sanctioned and followed by the Courts in many of the leading commercial States of the Union, as in Massachusetts, Connecticut, New Jersey, California, Illinois, Indiana, Missouri, Louisiana, South Carolina, Rhode Island and Vermont, as will be seen by reference to the judicial reports of those States. 6 Cush., 469; 1 Allen, 502; 98 Mass., 303; 29 Conn., 475; 37 Id., 205; 1 Zabr., 665 ; 14 Cal., 94; 36 Ill., 490; 1 Carter, 288; 38 Mo., 49; 18 Louisiana Ann., 222; 11 Rich., 657 ; 5 R. I., 515; 7 Id., 550; 26 Vt., 574. While, on the other hand, the Courts of New York, and those of some of the other States, following the case of Bay vs. Coddington, 5 John. Ch. B., 56, 8. C., 20 John., 637, have held that it is not sufficient to protect the note in the hands of the holder, that he received it merely as collateral security for a pre-existing debt, or even as nominal or conditional payment of such debt, unless he had given some new consideration for it; that a note so taken is not received or negotiated in the usual course of trade. But Chancellor Kent, who gave the opinion in Bay vs. Coddington, and which, upon the same reasons assigned by the Chancellor, was affirmed in the Court of Errors, while stating the law in the text of his Commentaries, vol. 3, p. 81, in accordance with that opinion, has appended a note, in which he said he was inclined to concur in the decision of Swift vs. Tyson, as the plainer and better doctrine. Subsequently, the doctrine has been mooted in the Supreme Court of the United States, upon the theory that the — 565 — case of Swift and Tyson did not call for the decision of the broad and comprehensive question, whether the holder of a negotiable note, received simply as collateral security for a pre-existing debt, should be regarded as a holder for value, and, if received bona fide, protected against antecedent equities. In the case of Goodman vs. Simonds, 20 How., 343, the question was much discussed, and though the facts of that case did not require the expression of a direct opinion upon the subject, yet it is not difficult to perceive the inclination of the Court in favor of the principle of their former decision ; as they take care to fortify it by showing that it is in accordance with the decisions in England, and in many of the States of this country. In the later case of McCarty vs. Roots, 21 How., 432, 439, which arose on the indorsement of an accommodation bill, and where the defendant pleaded that the bill had been delivered to the plaintiff by the indorser as collateral security for a pre-existing liability of the indorser, and for no other consideration, upon demurrer to the plea, and the demurrer being sustained by the Court below, the Supreme Court held the demurrer properly sustained, and expressly declare that the delivery of the bill to the plaintiff as collateral security for a pre-existing debt, under the decision of Swift vs. Tyson was legal, and consequently the plaintiff was entitled to recover. The principle, therefore, may be taken to be established in the Supreme Court, and, indeed, in the entire Federal jurisdiction of the country ; as upon commercial questions the State adjudications are not accepted by the Federal Courts as binding rules of decision. In this State, there has been no decision of the Appellate Court, going to the extent of maintaining fully the doctrine of the cases in the Supreme Court, to which we have referred. In the case of the Cecil Bank vs. Heald, et al., 25 Md., 563, this Court held that a bona fide holder of negotiable paper, for value, without notice, will be protected against the antecedent equities existing between the origi — 566 — nal parties, and that such holder is entitled to- protection where he has received the paper in payment of an antecedent debt, regarding such debt as a valuable consideration ; and the case of Swift vs. Tyson was so far approved, as it declared that the receiving of negotiable paper in payment of a pre-existing debt is according to the known usual course of trade and business. The Court, however, declined expressing any opinion upon the rights of a holder of a negotiable instrument received by him as security for a pre-existing debt. The case of Miller vs. The Farmers and Mechanics' Bank of Carroll Co., 30 Md., 392, has been relied on by the counsel of defendant, as maintaining a- doctrine somewhat at variance with that maintained in Swift and Tyson. But we are not of that opinion. The case of Miller vs. The Bank, was the ordinary case of a- bank asserting its lien upon securities in' its hands for the payment of balances due from- its customers. According to the law of the land,, the bank, a kind of factor in pecuniary transactions, was entitled to a lien upon all the securities for money of its- customers in its hands for its» advances to such customers,, in the ordinary course of business, without reference to the true ownership of such securities, if the bank was without knowledge upon the subject; (Davis vs. Bowsher, 5 T. R., 488; Collins vs. Martin, 1 B. & P., 648; Barnett vs. Brandao, 6 M. & Gr., 630;) and the question: was, whether the bank had’ received the note from its- customer, in it's usual course of dealing, without notice of the true ownership, and whether any credit had been given on the faith of it. There being then no adjudication in the State to restrict the- application of the principle as. maintained in the decisions of the Supreme Court to which we have referred, we have .no hesitation- in giving to it our full approval; believing it to be supported by reason,, and the usual and ordinary course of dealing in the commercial community, — 567 — as well as by a decided preponderance of judicial authority. Indeed, so well established is the principle, as applicable to accommodation paper, that we find Mr. Parsons, in his work on Notes and Bills, 1 vol., p. 226, stating that it is universally conceded that the holder of an accommodation note, without restriction as to the mode of using it, may transfer it, either in payment, or as collateral security for an antecedent debt, and the maker will have no defence. See also Lord vs. Ocean Bank, 20 Penn. St. Rep., 384. Applying the principle just stated to the case before us, and there can be no doubt of the sufficiency of the consideration for the transfer of the note to the plaintiff, whether it was as collateral security for a pre-existing or a contemporaneous debt, or to secure future discounts or advances, or all combined. In either case, the consideration would be valuable in the sense of the rule which protects the holder of negotiable paper, and the plaintiff be entitled to the full benefit of the security, unless mala fides, or notice of such facts as will impeach its title to the note be shown. And this brings us to the consideration of the second question, raised by the prayers of the defendant. 2. The defendant himself proved that the note was furnished the payees to be used as security for the two drafts of the 10th of January, 1872, and any subsequent drafts that might be discounted by the plaintiff for the payees in the note, and for that purpose only; and consequently the payees exceeded their authority in the use of the note, if they did in fact pass it to the plaintiff as collateral security for prior discounts as well as those on the 10th of January, and any that might subsequently he made. But the question is, who is to bear the consequence of this excess of authority ? Plainly, we think, not the plaintiff, unless it be shewn that the note was taken by it with knowledge of the fact that the payees had exceeded their — 568 — authority in the use of the note. If the fact of such knowledge he established, then, clearly, the plaintiff would he affected by it, and could have no right to recover except for amounts due on the discounts for which the note was authorized to he pledged. With such knowledge of the excess of authority, or misappropriation by the payees the plaintiff in taking the note would have acted in had faith, and having so acted would he liable to have its title to the note effectually impeached. It is a general proposition, laid down in all the authorities upon the subject, that, while it is no defence to an action by an indorsee for value against the maker of an accommodation note, who has received no consideration, that at the time the plaintiff took the note he knew it was such accommodation paper, yet, if he received it of a person who held it for a particular purpose, and was therefore guilty of a breach of duty in appropriating it to a different purpose from that intended, and the plaintiff at the time was aware of the fact, he cannot recover as against such maker of the note. Byles on Bills, 128; Stoddart vs. Kimball, 6 Cush., 469; Small vs. Smith, 1 Denio, 583. But if the defendant seek to impeach the plaintiff’s title by alleging notice of the fraud or breach of duty by the payees, it is for him to prove it; as the transfer of a negotiable instrument before its maturity raises the presumption of the want of notice of any defence to it; and this presumption prevails until overcome by proof. Carpenter vs. Longan, 16 Wall., 271. In this case, in order to make the defence effectual, on the ground of the want of authority in the payees to pledge the note for past discounts, there should have been such proof as would have justified the conclusion that the plaintiff, through its agents or officers, had actual knowledge of the limited purpose for which the note was made, and, consequently, of the excess of authority by the payees in applying it to a different purpose! Nothing less than proof of knowledge of such facts would meet the require — 569 — ment of the defence. The plaintiff was not hound to make inquiry, and mere negligence, however gross, not amounting to wilful and fraudulent blindness, while it may be evidence of mala fides, is not the same thing. Goodman vs. Harvey, 4 Ad. & Ell., 810; Ulher vs. Rich, 10 Ad. & Ell., 184; Com. & Farmers’ National Bank vs. First National Bank, 30 Md., 11, 26. The question whether the plaintiff had such knowledge or not, was one of fact for the jury. Goodman vs. Simonds, 20 How., 366. But, upon a careful examination of the record, we think the Court below entirely correct in instructing the jury, as was done by granting the plaintiff’s second prayer, that there was no evidence before them, legally sufficient, from which they could find that the plaintiff had such knowledge or notice of the excess of authority by the payees of the note. And although the question was, by the plaintiff’s third prayer, submitted to the finding of the jury, yet that is an error of which the defendant cannot complain. With the views entertained and which we have expressed in regard to the two main questions involved, -we are of opinion that there was no error committed by the Court below in granting the three prayers offered by the plaintiff. Those prayers were founded upon the theory that the plaintiff was holder of the note for sufficient consideration, and as such entitled to protection against the defence of the want of authority in the payees to pledge the note as collateral security for a pre-existing indebtedness as well as for debts contracted on the faith of it; and that, in order to affect the plaintiff’s title to the note, it, was necessary to bring home to it, at the time the note was taken, knowledge that the note was being used by the payees for a purpose' different from that for which it was obtained from the defendant. This, we think, upon the facts enumerated in the prayers, was a fair and proper presentation of the case to the jury. It has been objected to those prayers that they should not have been granted, because some of the propositions of — 570 — fact contained in them were not supported by the evidence. But we think the objection should not prevail. The defects pointed at by the objection amount to nothing more than discrepancies between the evidence of the witnesses and the facts stated in the prayers, in regard to immaterial matters, and therefore could form no sufficient ground for reversal. As to the three first prayers of the defendant, they presented propositions nearly, if not entirely, the converse of those presented by the prayers of the plaintiff, which were granted. And as we have said that the plaintiff’s prayers were, in principle correct, it follows that the three prayers of the defendant were properly refused by the Court below. ■ 3. The only remaining question to be considered, is that in regard to the onus of proof, as to what debts and the amount thereof, for which the. plaintiff is entitled to recover. This question is presented by the fourth prayer of the defendant. It must be recollected that this action is brought, not for the recovery of the face of the note unconditionally and in all events, without reference to the debts intended to be secured by it, but for the recovery only of the amount due on the debts for which the note was taken as collateral security. This is all that the plaintiff, in its prayers for instruction to the jury, claimed to recover. And, indeed, that is all that it is entitled to recover, it being conceded that the note was taken as collateral security merely. In such case, while the plaintiff is entitled to be treated as a holder for value, it is only so to the extent, necessary to protect the. debts intended to be secured. Stoddard vs. Kimball, 4 Cush., 604;. 6 Id., 469; Roche vs. Ladd, 1 Allan, 436 ; Williams vs. Chaney, 3 Gray, 215 ; Mayo vs. Moore, 28 Ill., 428; Gillen vs. Hubber, 4 Green, 155; Grant vs. Kidwell, 30 Mo., 455 ; Tarbell vs. Sturtevant, 26 Vt., 513 ; Williams vs. Smith, 2 Hill, 301. — 571 — Such being the case, it was clearly incumbent upon the plaintiff to show what debts were embraced by the security, and the amount due thereon. This was the measure of the plaintiff*’s right of recovery, and, as in all other cases, it was, the right of the defendant to insist that the plaintiff* should establish the existence and extent of its claim. There was no presumption the one way or the other as to the state of the account between the plaintiff and the payees in the note. What amount of drafts was discounted before, or what amount after, the receipt of the note by the plaintiff, was fixed by no presumption. And as the plaintiff did not sue for or claim the face of the note unconditionally, but as collateral security merely, the jury could have had no criterion by which to ascertain the amount of their verdict, independent of proof as to what was due on the debts intended to be secured by the note. The onus of this proof was clearly on the plaintiff. In re Boys, L. R., 10 Eq., 467. The presumption in support of the plaintiff’s title to the note is a matter quite distinct from the question of the extent of its right of recovery thereon, in a case like the present. The fourth prayer of the defendant, as we read it, was a concession of the plaintiff’s right to recover on the note, as well in respect to pre-existing as to contemporaneous or subsequent debts, for which the note may have been taken as collateral security; but it called upon the Court to instruct the jury, that if they found that the note had been furnished the payees to be pledged to the plaintiff as security for certain debts, but not pre-existing debts and the plaintiff sought to recover in respect to any pre-existing debt, the onus of proof was upon it to show that such debt was contemplated and intended to be secured by the indorsement of the note. This the plaintiff was bound to do, to entitle it to recover any amount claimed to be due on a preexisting debt. The plaintiff was bound to show what debts were intended to be secured by the note, and the amounts — 572 — remaining due in respect thereof. We think, therefore, that the fourth prayer of the defendant should have been granted, as by its refusal some disadvantage may have been suffered. (Decided 25th June, 1874.) Being of opinion that there was error in the ruling of the Court below in the first exception, and in its rejection of the defendant’s fourth prayer, we must reverse the judgment, and award a new trial. Judgment reversed, and new trial awarded.