Stevenson v. Heyland

By the Cou/rt Wilson, C. J. This action was brought on a promissory note, given by t^e defendants to Dodge, Stevenson & Co., and which was before maturity indorsed to the plaintiff, without recourse, in payment of an antecedent and existing debt. The court below charged the jury as follows: “If you believe that this note was received by the plaintiff in payment of a precedent debt, then the defendants may set up the same defenses as against the plaintiff as they could have done against the payees of the note had the action been brought by them.” To this charge the plaintiff’s counsel excepted: its correctness is the principal question before the Court. It would seem now to be a well settled rule of commercial .law, that where the negotiable note of a third person is, before its ma [202] turity, taken in good faith as pa/ymmt of a precedent debt, the indorsee is entitled to protection, as a holder for value, against any equities between the antecedent parties. Swift v. Tyson, 16 Pet. R.; Goodman v. Simons, 20 How. U. S. R. 343; Blanchard v. Stevens, 3 Cush. 152; 1 Am. Lead. Cases, 4th Ed. 334-5-6; Bank of St. Albans v. Gilliland„ 23 Wend. 312; Bank of Sandusky v. Scoville, 21 Wend. 115; White v. Springfield Bank, 3 Sand. S. C. R. 222; N. Y. Marble Iron Works v. Smith, 4 Duer, 362. See also Younys v. Lee, 12 N. Y. 554. We are referred to the cases of Coddington v. Bay, 5 J. C. R. 54; 20 J. R. C. 37, and Stalker v. McDonald, 6 Hill, 93, as being in conflict with this doctrine, but an examination of these cases shows that the question before the court in each was, whether a person receiving and holding such note as collateral security for the payment of a precedent debt, is a holder for a valuable consideration within the meaning and policy of the mercantile law. There was no question before the court in either case, as to the effect of a transfer in pa/ymmt of such debt. The loose expressions of any of the judges on the last question, were extra-judicial, and show only what was their private opinion on this question. See White v. Springfield Bank, N. Y. Marble Iron Works v. Smith, and Youngs v. Lee, ante. We think the charge of the court below was in this respect erroneous, and as this question seems to be decisive of the case, we deem it unnecessary to examine any other’. The order appealed from is reversed, and new trial ordered.