Hyperlawhypertext legal database Hartnett v. Adler 15 Daly (N.Y.) 69

← Cases

Hartnett v. Adler

15 Daly (N.Y.) 69 Court N.Y.C.P. Decision date 1888-12-03 English

Delivered by Larremore, Ch. J.

Contents

Majority

p. 69
Casilaer F. Hartnett, Respondent, against Samuel B. Adler, Appellant.
(Decided December 3rd, 1888.)

Headnote

The complaint in an action by the maker of a note against the payee alleged that the note was given by the maker to the payee for the special purpose of being discounted for the maker; that the payee had the note discounted, received the proceeds, and refused to pay them over to the payee and converted the same to his own use; and demanded judgment for the amount of the proceeds and interest. The payee in his answer denied each of these allegations, and alleged that the notes were given to him to be applied to an indebtedness of
p. 70
the maker to the payee, and that the payee was and. always had been the owner thereof. A verdict was found for defendant. Held, that, it appearing that both questions raised in such action had been passed upon by such verdict, the adjudication was conclusive as to either of the questions subsequently arising, and, in an action on the. note by an assignee of the payee after its maturity, -the maker was barred from setting up in defense that the note was diverted from its intended purpose.
The assignee for value of a note after its maturity may recover the face value thereof, notwithstanding that he paid a much less sum therefor. He stands in the position of an assignee of a chose in action, and not of an indorsee of commercial paper.
Appeal from a judgment of the General Term of the City-Court of New York, affirming a judgment of that court entered upon the verdict of a jury and an order denying a motion for a new trial.
The facts appear in the statements of facts in the opinions rendered on the decision by the General Term of the City Court referred to in the following opinion of the General Term of this court. The statement by McGowisr, J., was as follows :
“The complaint alleges the making of the promissory note for $1,000 by defendant to the order of James R. Watts, dated August 24th, 1885, payable three months after its date, and the delivery thereof to the said James R. Watts for value; the indorsement by Watts ; and that said note thereafter for value came lawfully into the possession of the plaintiff, who is now the lawful owner and holder thereof; that no part of said note has been paid, etc. The answer admits the making of the note (with another of the same date and amount and payable at same time), and alleges that said notes were made upon the condition and agreement that Watts (the payee thereof), would have the same discounted for and on behalf of the defendant Adler, and pay the proceeds thereof to defendant, and for no other purpose, and were not to be used for any other purpose; and alleges that if said Watts did transfer said notes or either of them to plaintiff, it was done after maturity. And, for a second defense, sets up a copartnership entered into about the 13th day of January, 1885, between defendant and Watts, for conducting a wholesale coal business, false representations made by said
p. 71
Watts to defendant, at the time of entering into said co-partnership, with intent to cheat and defraud defendant, etc. Plaintiff demurred to so' much of the answer as is contained in the second paragraph thereof.
Upon argument of the demurrer before Justice Nehrbas, the demurrer was sustained; and on November 25th, 1887, an interlocutory judgment was entered against the defendant, striking out from the answer so much thereof as was demurred to, and after the word “ Second ” in said answer, with costs. On January 6th, the action was brought on for trial before Justice- Browne and a jury. A motion for adjournment made bjr defendant having been denied, evidence was introduced by both parties; and on the part of plaintiff, among other evidence, a judgment roll in an action in the Superior Court, wherein Samuel B. Adler (the defendant herein) was plaintiff, James R. Watts (the payee of the note in question) was defendant; and which action was brought to recover the amount alleged to have been received by the said Watts on the discounting of the two notes hereinbefore referred to.
In the complaint therein it was alleged that the plaintiff, on the 5th day of September, 1885, made and delivered to the defendant two promissory notes for $1,000 each; one dated August 24th, 1885, or thereabouts (being the note inferred to in the plaintiff’s complaint herein), and the other dated September 5th, 1885, or thereabouts ; each payable three months after date, upon the following conditions and agreements by him, the defendant, viz: that he, the defendant, would have the same discounted for and on behalf of the plaintiff therein, and pay the proceeds thereof to him ; that the notes were delivered to the defendant for the purpose of being discounted for the plaintiff and for no other purpose; that the proceeds thereof were to be paid to the plaintiff, and that said notes were not to be used for any other purpose; that plaintiff informed him that he had had said notes discounted, and that, upon demand by him, the plaintiff, for the notes or the money, the defendant promised to pay the said moneys to him, setting a time when and naming a place where he would pay the same; that defendant has
p. 72
refused to pay said moneys, and still refuses to pay the same, but he has converted them to his own use, to the damage of plaintiff, $2,000.
Defendant,.in his answer to said complaint, first, denies-each and every allegation of the said complaint; second, alleges a copartnership entered into on January 13th, 1885, between said defendant and plaintiff, for the purpose of conducting the wholesale coal business, in the name of James R. Watts & Co., the dissolution of such copartnership on September 2d, 1885, the indebtedness of said plaintiff to said firm, the delivery by said plaintiff to the defendant of the two notes referred to in plaintiff’s complaint, and that said notes, when paid, were to be applied towards the payment of said indebtedness, the maturity of said note, presentation, demand of payment, refusal, and protest thereof; that said notes were never discounted or offered for discount; and that defendant now is and always lias been the holder and lawful owner thereof, for the purposes herein set forth.
After the testimony was closed, Justice Bbowne, on motion fV of plaintiff’s counsel, directed a verdict for the plaintiff for $1,126.50, amount of the note and interest; and judgment was entered thereon on February 20th, 1888, from which judgment and order, denying defendant’s motion for a new trial, and-from the interlocutory judgment entered November 25th, 1887, defendant appeals.”
The opinion by McGoWír, J., was as follows: “The action is brought to recover the sum of $1,000 and interest, the amount of a promissory note, bearing date on the 24tli day of August, 1885, made by Samuel B: Adler, the defendant herein, to the order of James R. Watts. The note became due three months after date, November 27th, 1885.
Wafts (the payee), indorsed the note before it became due, in November, 1885, and delivered it to the plaintiff in October, 1887.
The note was given to the payee for a valuable consideration, and Watts was the owner and holder of the note, until October, 1887, when he transferred it to the plaintiff herein.
Having received the note after its maturity, the plaintiff is
p. 73
chargeable with notice of all the equities existing between the original parties to the note; and plaintiff stands in the same position, as to any defense that Watts, the payee of the note, would have stood in, if he (Watts) had sued Adler; that is, any defense that Adler could have set up against Watts. He stands in the position of an assignee ; and Watts, the payee, and the plaintiff, are privies (First Nat. Bank v. Fourth Nat. Bank, 89 N. Y. 412 ; Bissick v. McKenzie, 4 Daly 265 ).
In the action brought in the Superior Court by Adler, the maker, against Watts, the payee, the note in question was in part the subject matter of the action ; the plaintiff alleging in his complaint that the note was given by him to defendant for a special purpose, to be discounted for plaintiff, that defendant had had the note discounted, received the proceeds, and refused to pay over the same to plaintiff, but that defendant had converted the same to his own use, and demanding judgment for the amount claimed and interest; defendant, in his answer, denying each of these allegations, and alleging that the two notes were given to him to be applied to an indebtedness of said plaintiff to him, and that he, said defendant, now is and has always been the owner thereof.
As to the ownership of the notes, as set up in defendant’s answer, the plaintiff therein testified, in his own behalf, as follows: “I heard Mr. Watts testify on- that trial had in the Superior Court. He testified that he had not parted with those notes, that these notes had not left his possession, except to go to the bank for collection.” When he was asked whether these notes were ever discounted, he said, No. Q. “ What did he say in regard to the possession of those notes from the time of their inception to the time of the trial? ” A. “He said that they were in his possession, that lie never had parted with them ; he showed them with the indorsement upon them ; stating that they came to him through the usual channel. He testified that he was the owner of them.” Evidence of the ownership of the note as set forth in defendant’s answer, was thus given upon the trial, and although at variance with the testimony of the plaintiff,
p. 74
was before the jury, and upon the whole evidence before them, the jury passed.
Justice Teuax, in his charge to the jury, submitted this issue to the jury, wherein he stated as follows: “ The defendant denies that the plaintiff gave him the notes to be discounted; the defendant denies that he discounted the notes, and he alleges that the notes were given by the plaintiff to him, in paj-ment of a debt that the plaintiff then owed to him, on a matter that related to a copartnership that had theretofore existed between the plaintiff and the defendant; those allegations and denials make the issue for you to try, and the only issue.”.
And the jury found, upon the evidence therein, that the note was made and delivered by Adler, the plaintiff therein, to the defendant, the payee, in part settlement of an indebtedness of Adler to Watts, that the note was never discounted or offered for discount, and that Watts, the defendant therein, was then and always had been the holder and lawful owner thereof, for the purposes for which it was given; the finding of the jury upon the evidence therein being in favor of the defendant and against the plaintiff upon all the issues.
The estoppel of said judgment extended to every material matter within the issues which were therein expressly litigated and determined; and also as to those matters which, although not expressly determined, were comprehended and involved in the thing expressly stated and decided, whether they were or were not actually litigated or considered (See Pray v. Hegeman, 98 N. Y. 358 ; Patrick v. Schaffer, 94 N. Y. 430 , and cases cited). And the judgment rendered therein is final and conclusive between the parties—Adler, the maker, and Watts, the payee—not only as to the matter actually determined therein, but as to every other matter which the parties might have litigated and have decided, as incident to or essentially connected with the subject matter of the litigation, within the purview of the original action, either as matter of claim or defense (Jordan v. Van Epps, 85 N. Y. 436 ; Fairchild v. Lynch, 99 N. Y. 368 ; Dunham v. Bower, 77 N. Y. 79 .)
p. 75
Every matter of claim or defense could have been litigated in the action in the Superior Court, between Adler, the plaintiff therein, the maker, and Watts, the defendant, the payee, which could be litigated in the action herein between Adler, the maker, and Hartnett, the plaintiff herein, the assignee of Watts, the payee.
As to the appeal from the interlocutory judgment rendered herein, on November 25th, 1887, appellant’s attorney presents no argument thereon, in his points submitted ; and no reference having been made thereto by him, in his argument of the appeal, it was, I think, conceded that such appeal was abandoned.
I find no errors made by the trial justice in the rulings made by him herein, which require correction ; and the final order and judgment must be affirmed, with costs.”
'The opinion by PlTSCHKE, J., was as follows:
“ This action was commenced to recover the sum of $1,000 apparently due on a promissory note made by the defendant to the order of Jas. R. Watts, and by him indorsed over to this plaintiff after maturity for $100 only. The complaint is in the usual form. The answer comprises defenses of a twofold nature, i. e., ‘ diversion ’ of the note from its purposes and after maturity, so that plaintiff is not a lawful or bona fide holder thereof; and, secondly, that there was no consideration, for Watts, the payee, was (according to defendant’s contention herein) not to transfer the note for himself, but had it only to get it discounted for the defendant’s use.
After putting in evidence the note, and showing the-transfer of it unto plaintiff after its maturity for only $100, the plaintiff rested. It consequently became incumbent on plaintiff to prove that he was a lawful- and bona fide holder of such note, and that there were no equities against the same. Evidence of a diversion of the note from its purpose was thereupon given on the defendant’s part. The plaintiff then introduced in evidence the judgment mil and judge’s charge in the Superior Court action of Adler v. Watts, relying
p. 76
thereon alone for proof on his part that when he received said note no defenses existed against the note. The plaintiff claimed an estoppel or res adjudicate/, thereby, between the indorser Watts and his indorsee, the plaintiff and defendant. A verdict was thereon directed for the plaintiff against defendant, S. B. Adler, for the full face amount of the note and interest.
The Superior Court case was brought to recover the proceeds of an alleged discount, obtained by Watts, of the note in question, and if he (Watts) had not yet had the note discounted, that action necessarily had to be dismissed, and a verdict given for Watts as defendant there. For that was the gravamen of the complaint there, and the main issue before the jury, therefore, who found for Watts thereon; and the result simply is, that no proceeds of a discount were then yet received by Watts for Adler to “ gather,” and there was nothing as yet to deliver up. Watts might realize some such proceeds the very next day after said judgment was entered, and then-another such Superior Court suit would at once lie, notwithstanding the judgment roll in that case between Adler and Watts. This self-evident statement, of itself, disposes of the supposed efficacy of said judgment roll as res adjudicata.
Plaintiff Hartnett in the present action, as transferee from Watts, asserts that Watts was absolute owner and lawful holder of the note in suit, for his own use. According to the defense pleaded herein, however, Watts was not entitled to dispose of or pass said note for his own benefit, but only to Adler’s use. In that aspect, Watts’ holding of the note would be a fiduciary one, the title to said note meanwhile remaining in his principal, Adler, who might follow and claim it anywhere, subject only to the nights of bona fide purchasers thereof for a valuable consideration (Comstock v. Hier, 73 N. Y. 277 ; Baker v. New York Nat. Exch. Bank, 100 N. Y. 33 ; Decker v. Matthews, 12 N. Y. 323 ): But Watts as indorsee after maturity was not such a bona fide purchaser (Newell v. Grregg, 51 Barb. 262 ) ; and he expended only $100 in the acquisition of this $1,000 note.
p. 77
The Superior Court judgment roll was perfected in November, 1886, while the note herein in suit did not leave Watts or pass unto plaintiff Hartnett until October, 1887. The complaint'in the Superior Court case against Watts alleged the making of the note in question, the agreement to discount it for the maker’s benefit, and that such discount on Watts’ part had occurred. The answer there was a general denial of these allegations, admitting, however, the making of the note to Watts ; and such answer also maintained that Watts took and held said note as absolute owner for his own « use. The judgment in that suit was a “dismissal” of said c'omplaint.
It is not the former recovery, but the decision of that which was. in previous contestation, that constitutes the estoppel of res adjudicata (Danby v. Brown, 79 N. Y. 390 ). A judgment is only Conclusive on those grounds it covers and the facts necessary to uphold it; and if the fact or rule of law apparently involved was immaterial to the issue or the controversy did not necessarily turn upon it, the parties are not concluded (Woodgate v. Fleet, 44 N. Y. 13 , 14; People v. Johnson, 38 N. Y. 65 .) Hence the present defendant is herein not estopped from disproving an allegation contained in the answer in the former suit, the truth of which was not involved in the judgment rendered in said former suit (Sweet v. Tuttle, 14 N. Y. 465 ). The burden to show (which may be by extrinsic evidence) that the precise question was not only raised but determined in the former action, rests upon the party making use of such former judgment as conclusive evidence thereon (viz., on plaintiff as transferee from Watts). If there be uncertainty whether or not the question was passed on, such judgment is not conclusive evidence (Bell v. Merrifield, 109 N. Y. 202 , and cases there cited, particularly 94 U. S. 351 , 606).
Thus, in Stowell v. Chamberlain ( 60 N. Y. 277 ), in a second cause between the same parties in regard to the same transaction, where the former judgment was for wrongful conversion, and the second in' assumpsit (both as herein), it was held that, in order to make such former judgment
p. 78
available either in bar or as evidence, it was necessary to show that the question of plaintiff’s title was passed upon in the first suit; for said previous judgment may have, passed on the fact that the defendant there had not had possession, and hence on that ground was found not guilty of conversion. That, judgment was therefore held not of itself to be conclusive in. the subsequent action between the same parties. That was just the present case. Similarly, as in Stowell v. Chamberlain (supra), when Watts was sued in the Superior Court for a conversion of the proceeds of a discount obtained by him on the note herein in suit, his answer there denying all possession of any such proceeds, besides a denial of Adler’s complaint generally (with a claim of absolute title to said note in Watts) that judgment, so there rendered, dismissing the complaint, may have passed on the fact that Watts was never possessed of any proceeds of the note, because he, till then, had not had it transferred or discounted, and this without at all deciding Watts’ title respecting it. Therefore that judgment r¿ll was, of itself, not conclusive herein ; and the defendant herein should not thereby have been precluded from proving his defense pleaded in his answer herein.
To obtain the benefit of a prior adjudication of a fact, it is entirely reasonable to exact, from the party asking such benefit clear proof that such adjudication took place (Bell v. Merrifield, supra). The Superior Court record did not show it; for there was nothing in it whereby it could be ascertained on which of the two possible grounds,—i. e., either a dismissal because no note proceeds were then yet procured or received by Watts, or because Watts was absolute owner and so himself entitled to all proceeds of the note— the said record proceeded and was based, and the evidence which was given in this action, dehors the record, did not fill the gap. As it was undisputed in the Superior Court case that Watts did not get the note discounted, and never had any proceeds, it was unnecessary to go beyond that for a verdict that defendant was clear of any claim for conversion in such former suit: and that, presumably, the verdict passed
p. 79
on, alone, it being, for such a finding in Watts’ favor there, utterly unnecessary to determine the nature of Watts’ title to the note, and the jury hence presumably did not. The Superior Court judgment is consequently not conclusive herein as res adjudicata on the question of Watts’ absolute title to the note in suit.
The present plaintiff took the said note from Watts after maturity, subject to all equities, and stands in the same position as to any defense herein thereto that Watts as payee of the note would have stood in had he been suing Adler (Lansing v. Ganie, 2 Johns. 300 ) ; that is to say, any defense Adler could raise against Watts, were he now the plaintiff, Adler can raise against Hartnett herein. This plaintiff is a mere assignee of the note, and Watts and he are privies. Hence the total failure of consideration in its inception was a good defense to this note, taken after maturity (Prall v. Hinchman, 6 Duer 354 ), and, as above demonstrated, Mr. Adler would, by such Superior Court record, not be estopped or barred herein, as against Watts as a plaintiff, from specially litigating the claim of Watts as alleged lawful owner of said note. The direction of a verdict in favor of the present plaintiff against Adler was, in consequence, entirely unwarranted.
Furthermore, if there thus existed a good defense between Adler and Hartnettythe same as between the maker and payee, provable herein, this plaintiff (were he a bona fide holder before maturity), could not in any aspect be protected or recover herein, beyond the extent of the consideration paid by him, which was only $100, and, moreover, for the said $1,000 note when overdue (Huff v. Wagner, 63 Barb. 231 , 232; Hargar v. Wilson, Id. 237 ).
Holds Danforth, J., in Nickerson v. Ruger ( 76 N. Y. 284 ), as follows: “ Only to the extent that the plaintiff has paid value for the note, can he recover; and not for that even, if he is chargeable with notice of the diversion of the note.” That was a case where similarly there existed a defense of diversion against the note sued on, and the complainant claimed, as an alleged bona fide holder without notice, the full
p. 80
amount of the note. Hartnett, however, was a taker of the note in suit after maturity thereof, and hence book it with implied notice of its real status, and the court below accordingly erred in directing a verdict in favor of plaintiff for the full amount of this note. In my opinion, the judgment and order appealed from should, for the above reasons, be reversed, and a new trial ordered.
Since writing the above, I find that the Common Pleas General Term, in Yonkers & N. Y. Fire Ins. Co. v. Bishop ( 1 Daly 449 ), specifically held that where a record discloses two issues, and the jury.finds generally for the defendant, both questions are presumptively res adjudicata, and that in a subsequent proceeding, in which one of such questions arises, it is for the party combating the record to show that it was not passed upon by the jury. According to this case, the onus rested on the defendant herein to prove that both questions, involved in the Superior Court action, were not adjudicated ; and as the defendant did not establish this fact, I reluctantly concur in the conclusion arrived at by Justiee McGown that the judgment and order appealed from must be affirmed, with costs.”'
From the judgment of the General Term of the City Court entered in accordance with the foregoing opinions, defendant appealed to this court.
Jacob F. Miller, for appellant.
An examination of the record in the Superior Court action shows that the suit was brought to recover the proceeds of two notes alleged to have been discounted by Watts, one of which notes is the subject of this action. This is the gravamen of the complaint, the recovery of the proceeds of the notes. At the trial the judge charged that if Watts had not had the notes discounted, no matter what he had previously said about it, he was entitled to a verdict. No other question was presented to the jury. They found for the defendant upon the charge. This estopped Adler only from asserting that Watts at that time had had the notes discounted. The action and verdict in no way established that Watts was the lawful owner or holder of the
p. 81
note in suit, or what was due on it. The subject matter of this suit is assumpsit. The plaintiff was obliged to prove, as the foundation of his claim, that his indorser, Watts,held said note, free from any equities when it was transferred to him, the plaintiff.
The subject matter in the first action was entirely different from this. The judgment, therefore, in Adler v. Watts, is not res adjudicata.
The party alleging the estoppel of a former verdict must establish that the same fact sought to be litigated in the second suit was in issue and litigated in the former one (Remington Paper Co. v. O'Dougherty, 81 N. Y. 474 , 489, and see the language cited from cases of Outram v. Morewood, 3 East 236 ; Boileau v. Rutlin, 2 Exch. 664 ; Lawrence v. Hunt, 10 Wend. 81 , citing Jackson v. Wood, 3 Wend. 27 , 8 Wend. 9 ; Vaughan v. O'Brien, 39 How. Pr. 515 , 519; and, to same effect, Kerr v. Hays, 35 N. Y. 331 , Bigelow on Estoppel, 37, and Clark v. Young, 1 Cranch 181 ; Cromwell v. Sac County, 94 U. S. 351 ; Woodgate v. Fleet, 44 N. Y. 10 , 13, citing People v. Johnson, 38 N. Y. 65 ; Mersereau v. Pearsall, 19 N. Y. 109 ; Sweet v. Tuttle, 14 N. Y. 465 ; Verplanck v. Van Buren, 76 N. Y. 347 ; Gardner v. Buckbee, 3 Cowen 120; Tuska v. O'Brien, 68 N. Y. 446 ; Bell v. Merrifield, 109 N. Y. 202 , 211, citing Stowell v. Chamberlain, 60 N. Y. 272 ).
Even if the defendant had set up in the Superior Court suit the amount due on the notes, as a counterclaim to the plaintiff’s demand, yet, if that issue was not litigated, the judgment in that suit would not be res adjudicata that the defendant should recover the amount of the notes. If this be true of Watts-, the indorser of the note, it must be true of the indorsee, this plaintiff, who took the note after maturity, for he can get no greater rights than his indorser had (Sweet v. Tuttle, 14 N. Y. 465 ; Dawley v. Brown, 79 N. Y. 390 ; Masten v. Olcott, 24 Hun 587 , and 101 N. Y.152).
The case of Yonkers & N. Y. Fire Ins. Co. v. Bishop ( 1 Daly 449 ), as bearing upon the question of res adjudicata, has no applicability to the case at bar. It was there held, that where the affidavit of the defendant in summary proceed
p. 82
ings to dispossess for the non-payment of rent raises two questions, and the jury finds generally for the defendant, both questions are presumptively res adjudieata, and that in a subsequent action for the same rent the verdict was presumptively res adjudieata on both points, and that it was for the plaintiff to show that the jury only passed on the question of demand. The answer to this is obvious. In all cases of summary proceedings to recover the possession of real property for non-payment of rent, the affidavit or petition must show at least two things: (1), that, as between the parties, the relation of landlord and tenant exists; and (2), demand for the rent due. As both the facts are necessary to sustain a summary proceeding for this purpose, and as both must affirmatively appear, the presumption is that both questions were litigated and determined, for no judgment could have been obtained otherwise.
This view was evidently entertained by the general term of this court in deciding the case of Yonkers & N. Y. Fire Ins. Co. v. Bishop (supra). It is quite clear that the court recognized, throughout its opinion, the possibility of showing, dehors the record, that issues included in it were not litigated and determined. . Its utterances, so far as they go, are in harmony with the views laid down by the Court of Appeals in Bell v. Merrifield ( 109 N. Y. 202 , cited above,) viz., that' upon the party claiming the benefit of a prior adjudication of fact, rests the burden of showing that such adjudication has been made.
Treadwell Cleveland, for respondent.
The first defense was res adjudieata, by the judgment of the Superior Court. As appears by the complaint and the answer in that action, precisely the same matter was set up in that action, as the ground of the cause of action, as was set up by the defendant herein, as the-ground of his first defense.
The defense of res adjudicata is available to the plaintiff in this action precisely as it would be available to Watts, the payee, were he the plaintiff. Hartnett, for this purpose, stands in fact in Watts’ shoes. He and Watts are privies (Leonard v. Barker, 5 Denio 220 ; Grriswold v. Jackson, 2 Edw.
p. 83
Chan. 466; Wells on Res Adjudicata, 122; First Nat. Bank v. Fourth Nat. Bank, 89 N. Y. 412 ; Bissick v. McKenzie, 4 Daly 265 ; Bigelow on Estoppel, 48 to 59, especially 57; Goddard v. Benson, 15 Abb. Pr. 193 ). The verdict was general, and must be taken to have decided the two issues litigated, including the existence of the agreement which, in this case, is set up as an equitable defense (Cornwall v. Sac County, 94 U. S. 351 ; Embury v. Conner, 3 N. Y. 522 ; Pray v. Hegeman, 98 N. Y. 358 ; Jordan v. Van Epps, 85 N. Y. 536 ; Patrick v. Shaffer, 94 N. Y. 430 ; Griffin v. Long Island R. Co., 102 N. Y. 452 ).
That the issue in this action is embraced within the issues of the former action is apparent on the pleadings. It is immaterial that the form of the action is here special assumpsit, and was there general assumpsit for money had and received to the plaintiff’s use. The forms of the actions may be widely different, and yet the issues the same (Rice v. King, 7 Johns. 20 ; Jones v. Scriven, 8 Johns. 453 ). If the same evidence would sustain both issues, they are identical, whatever the forms of the actions. This is the final test (Per De Grey, Ch. J., Hitchin v. Campbell, 2 W. Bl. 831, quoted by Lord Eldon in Martin v. Kennedy, 2 Bosanq. & P. 71; 2 Phillips on Evid. 27).
Where the issues decided in the first action are numerous, the judgment is presumed to be rendered upon them all. Accordingly, if the defendant in this case would overturn the presumption of res adjudicata here, he must show that Adler v. Watts was decided upon an issue other than that raised in this case, and that the issue here raised has not yet been determined by a jury (Yonkers & N. Y. Fire Ins. Co. v. Bishop, 1 Daly 449 , and cases; Hale v. Andrews, 6 Co wen 225).
The result reached is a desirable one. A transferee taking, although for value, after maturity, is presumed to have notice of all equities existing against his transferor. He is bound to beware of such equities. Correlatively he is entitled to avail himself of all rights which his transferor had—of all advantages which attach to the instrument itself as it comes
p. 84
into his hands. As the event shows, it is not the least of these advantages that the fact of consideration for this note has been once determined and is now res adjudicata. If the transferee here, the plaintiff, had investigated his transferor’s title, he would have found this former judgment, and upon the question of consideration he would have been set at rest by it. He would have been absolutely sure that no equity such as against an accommodation note existed here, and what he asks now is to be allowed to show - the verdict and judgment as proof,' of the best, speediest, and most conclusive sort, that no such equity existed against his assignor, and that therefore none could or did exist against him.

Statements of the facts involved on this appeal precede both of the opinions rendered by the General Term of the City Court; it is therefore unnecessary to restate such facts. It also seems to us best to take up the discussion of the main question without preliminaries, where the City Court left it.

In the first place, then, it may be said that we concur in the conclusion expressed in one of the opinions that the case of Yonkers & N. Y. Fire Ins. Co. v. Bishop ( 1 Daly 449 ) was a controlling authority upon the decision in the City Court. The cited case was a suit for rent. The defense was that, in a prior summary proceeding between the same parties to recover possession of the premises, the jury had found in favor of the defendant. In such proceeding two defenses had been raised, viz.: (1) Whether the rent was due ; (2) Whether there had been a proper demand. It is to be noticed that a finding favorable to defendant on either one of these issues would have been.sufficient to entitle him to the" verdict he received. Defendant was not required to have both questions determined in his favor in order to -obtain a dismissal of dispossess proceedings. But, as both questions had been raised and submitted, and the result had been a general finding for defendant, it was held that it would be presumed that both quéstions had been passed upon, and that* the verdict was presumí ably res adjudicata as to either of the questions subsequently

p. 85
arising, and therefore a bar to the claim for rent. We approve of the principle laid down in that case and think it is in accordance with sound sense. In fact we do not see how any other presumption could be entertained under such circumstances ; and the opportunity will always exist to overcome mere presumption by positive testimony when the same can be given.

In the prior action in the Superior Court between the present plaintiff’s assignor and the present defendant, there were raised two questions: the first was whether the note here in suit had been delivered by defendant to said assignor, simply that the latter should procure its discount for defendant’s benefit; and the second was, whether said note had been given to said assignor by defendant in payment of a bona fide debt. The general verdict in favor of plaintiff’s assignor in the Superior Court action was therefore presumptively an adjudication against the present defendant on both questions. Furthermore, counsel for plaintiff in the case at bar have not relied on a mere presumption. They have offered in evidence the judgment roll in the Superior Court action, which affords affirmative proof that the precise question here involved was actually submitted to and passed upon by the jury. The following is an extract from Judge Trttax’s charge upon the trial of such prior action, the person designated as plaintiff by Judge Trttax being the defendant Adler in this action, and the person designated by him as defendant being plaintiff’s assignor, the payee of the note in suit: “ The defendant denies that the plaintiff gave him the notes to be discounted; the defendant denies that he discounted the notes; and he alleges that the notes were given by the plaintiff to him in payment of a debt that the plaintiff then owed to him on a matter that related to a partnership that had theretofore existed between the plaintiff and defendant. Those allegations and denials make the issue for you to try, and the only issue.”

^ We find nothing, either in the authorities cited or in the arguments advanced on behalf of appellant, which leads to a different conclusion from that reached by the City Court. The recent tendency has been towards a widening of the

p. 86
scope of the doctrine of res adjudicata, so that the principle seems now reasonably well established, that when a question of fact has been once fairly litigated on its merits, the decision thereon shall be final as between the same parties and their privies, no matter how different may be the technical form of the action or proceeding in which such question subsequently arises. It is the duty of a court, in determining whether the principle of res adjudicata applies, to examine the record in the former suit, not for the purpose of spelling out some artificial theory on which the result may possibly have been reached without passing upon the question now raised, but for the sake of ascertaining whether, according to the ordinary processes of thought and significance of language, the court or jury must be presumed to have considered such question. We are of opinion that no fair-minded man could inspect the record in the Superior Court case without being convinced that both parties thereto intended to litigate the question of the ownership of plaintiff’s assignor in his own right of the note here sued upon, and also that the court and jury considered the verdict given an adjudication of such question.

We are further of opinion that the verdict was properly directed for the whole face of such note with interest, and that plaintiff is not to be limited in his recovery to the actual amount paid by him to his assignor on the purchase of the same. Plaintiff acquired the note after maturity, and he sues here not as an indorsee of commercial paper, but simply as assignee of a chose in action. His title as such would be good even if the assignment to him expressed but a nominal. consideration. It appears that he has paid a valuable consideration for the note, though the same is much less than the face thereof. The remarks of Danforth, J., in Nickerson v. Ruger (76 N. Y. at page 284), have no application to the case at bar. That was an instance of alleged fraudulent diversion of a note, and'Judge Dahfoeth’s remarks were made upon the express assumption that the fraud might exist and be shown, and in that event he said that “ only to the extent that the plaintiff has paid value for the note can he recover; and not for that even, if he is chargeable with

p. 87
notice of the diversion of the note.” Into the case at bar the element of fraudulent diversion cannot enter, because all equitable defenses were raised and disposed of in the Superior Court action, audit was therein decided that the note was given to plaintiff’s assignor in payment of a bona fide debt owed by him to defendant. Said assignor, being thus the lawful owner and holder of said note, had the option of collecting it himself, or of transferring it, as had been done; and his right to sue upon and enforce the payment thereof passed as an incident of ownership to his assignee.

The judgment and order appealed from should be affirmed, with costs.

Van Hoesen, J., concurred.

Judgment affirmed, with costs.

Cases cited