Williams v. Smith

Headnote

One to whom a promissory notehasJ>een transferred before due as collateral security for endorsementsTo~bc made him which are afterwards made, and who takes it without notice of a defence existing against it in the hands of the person from whom he received! t,js_enti tied to he treated as a bona fide holder in the commercial sense. .

Such holder, however, cannot recover upon the note beyond what is due on the endorsements against which it was designed to secure him. v

Assumpsit, tried at the Albany circuit in April, 1841, before Cushman, C. Judge. The action was - against the defendants as makers and endorsers of a promissory note of $4000, made by Smith, Green & Co., payable to the order of Daniel K. Green, and endorsed by the latter and A. Preston. The note was created for the purpose of taking up another note, of the same amount, running at the Oneida Bank. Both notes were against the same parties, except Preston, whose name was not upon the elder note; and who endorsed the note sued upon for the accommodation of the other parties, with the understanding that if it was not used to take up the other note, it should be destroyed. It was delivered to Norton, one of the makers, to hand to the Oneida Bank, but he let one Keeler have it to raise money upon; and Keeler assigned it, with various other choses in action and possession, to the plaintiff’s testator, as security to him against endorsements to be by

him made for Keeler, not exceeding $10,000. The endorsements were made; and there had been obtained out of the other property assigned to the testator, an indemnity for all his liabilities, except about $2400. It not appearing that the testator had notice of the purpose for which the note was intended, the circuit judge allowed the plaintiff to recover against all the defendants, Preston included, for the whole amount of the note. A new trial was now moved for on a bill of exceptions.