Majority
p. 128White against Kibling. NEW-YORK, May, 1814.
Headnote
Where a negotiable note "was paid, before it became due, to the payee, by the maker, who took a receipt in full, and the note was after-wards, before it became due, endorsed by the Pemtorsee rfthe"nfact1of such payment before the note was delivered lieiaTL't The endorsee took the note subject to such payment. An endorsee of a promissory petent witness meTt°of ait Yy Evidence1"" of whYir'dead’ swore to at á aTaute/isYdsmssibie, tho’ ed with the objection1 is110 Sialf’orT that ground ; for it will then be presumed that of^heYormer suit and trialTHIS was an action of assumpsit. The cause was tried at the Jefferson circuit, the 16th of June, 1813, before Mr. Justice Yates. The plaintiff gave in evidence a promissory note, dated 17th of May, 1808, by which he promised to pay Simeon Daggett, or order, two hundred and twelve dollars, on or before the 1st of January, 1811, with interest, and endorsed by Dag- 0
The defendant’s counsel offered to prove that the note was endorsed originally by Daggett to one William Otis, and that, at time 80 made the endorsement, he informed the agent of Otis that the defendant had paid the note; and that Otis, , . . when he transferred the note to the plaintiff, was informed of t*16 same fact. The plaintiff objected to this evidence, unless the defendant first proved that the note was endorsed and trans- , ferred, after it became due; but the judge overruled the objec- .- UVIi*
Ackley, a witness for the defendant, testified, that in May or June, 1809, Otis delivered the note in question to him, and requested him to get it endorsed by Daggett. The witness soon a^er saw Daggett, and requested him to endorse it, which he 0^jecte^to’ saying the defendant had paid the note to him, and that he had given a receipt to the defendant for the amount. Daggett, however, endorsed the note, on the express condition that the witness should keep it, and not let Kibiing know of it, until the 20th of August, when he agreed to be at Ellisburgh, where Otis resided, and pay it. The witness accordingly kept ^ie note in his hands until after the 20th of August, and then delivered the note to Otis, informing him of the conversation , , , . ° , _ which had passed between the witness and Daggett.
Another witness, Cole, testified, that he was at the house of Qfá$ jn qie winter of 1809, when Kibiing told Otis the note in question had been paid, and that he should not pay it again. Otis produced the note, which was not then endorsed by Daggett, and the defendant produced the receipt in full. Otis said the note had been delivered to him by Daggett, as security for another note, signed with Daggett to the plaintiff. The wit
p. 1291. That the note in question having been endorsed and transferred before it became due, and before the alleged payment by the maker, evidence of such payment was inadmissible. AVhere a note is negotiated before it is due, the holder cannot be affected by any dealings or transactions between the maker and payee.[7] Where a note is transferred before it is due, the maker is not allowed to show payment, or to impeach the consideration,, unless to prove a fraud in its original creation;[4] and it is only where it is negótiated after it is due, that any such defence is allowed. . Again, this note was. actually delivered to Otis in 180.8, and before the
ness further stated that Otis was dead; that on a former trial of the cause, in the court of common pleas of Jefferson county, from which it was removed to this court, Otis was a witness, and testified that the note was first deposited with him in the autumn of the year 1808, in the manner mentioned by the witness; that in February, 1809, Kibling informed him, Otis, of the payment of the note; that the endorsement of it was afterwards obtained, and it was delivered to the plaintiff towards payment of his demand against Daggett and Otis, on their note above mentioned; that, at the time he so delivered the note to the plaintiff he informed him of the payment of it, and of the manner in which the endorsement from Daggett had been obtained, and told the plaintiff he might take the note and make what he could from it. This evidence, as to what Otis testified at a former trial, was objected to by the plaintiff’s counsel; but the judge admitted it on the ground that Otis was dead. The defendant then produced and proved a receipt given by Daggett to the plaintiff, which was objected to by the plaintiff’s counsel, but admitted by the judge. The receipt was as follows: “Chester, January 3, 1809, received of John Kibling, jun. the .full demand which I hold against him, dated the 1 Tth of May last, which was given for a certain lot of land in Ellisburgh, bping for value received.”
The. jury, under the direction of the judge, found a verdict for the defendant.
■ A motion was made to set aside the verdict, and for a new trial.
N. Williams, for the plaintiff contended,
p. 130time of the alleged payment, though not then endorsed. This was a valid transfer of the note, at that time, and Daggett ivas hound, when called upon at any time afterwards, to endorse the note. It is not essential, to the transfer of a note, that it should be endorsed at the time of its delivery to the endorsee,[7] provided the endorsement is afterwards made. Again, it is a general principle of law, that where one of two innocent persons must suffer, by the act of a third, he who enabled such third person to occasion the loss ought to sustain it.[4] The plaintiff is an innocent endorsee; and the defendant, who pag suffered the note to remain in his hands after it was paid, ought to sustain the loss, or to seek his remedy against Daggett, the payee, if he has fraudulently endorsed it. Again, the evidence of the payment was improper and illegal. The receipt and declarations of Daggett, the endorser, who was no party to the suit, ought not to be allowed to defeat the right of a bona fide holder. The terms of the receipt are peculiar and remarkable, and may well induce a suspicion as to its fairness. The evidence of Cole, as to what Otis swore, as a witness at the former trial, was not admissible, without producing the record or postea. The rule, that testimony of what a witness swore at a former trial is not admissible, unless accompanied with the postea, was recognised by this court in Beals v. Guernscy.[5] Sedgwick, contra. The note was not regularly endorsed or negotiated; it was delivered as a pledge, or for collateral security merely. Daggett, evidently, did not mean to negotiate it. Notes payable to order are transferable only by endorsement. Though the note was not due, yet, as the plaintiff took it, knowing that it had been paid, he took it subject to such payment. Notice of the equities of another before the execution of a contract, or the payment of the money, is equivalent to a notice before the contract.[6] The plaintiff having taken the note, with full knowledge of its being paid, does not stand in ^ie situation of an innocent and bona fide holder; and having such notice, it can malee no difference whether the note was negotiated before or after it was due. The defendant was justified in making the payment, not having any knowledgé of the transfer of the note. The note produced to him was not endorsed; there was no evidence, therefore, of the transfer of the title ©r property in the note. For aught that appeared, Otis
p. 131may have been the agent of Daggett.[7] It cannot be pretended that the payment was fraudulent, as it regarded Otis, or the plaintiff, unless clear and positive notice of the transfer or assignment to him was shown.
e e The verdict is clearly according to the justice of the case. The testimony is abundantly sufficient to show a payment of the note to the payee, and that the fact of such payment was communicated to the plaintiff, before the note was transferred or delivered to him. The only doubt that can arise is, as to the competency of the evidence admitted to prove the payment. This evidence principally consisted in the proof of what was sworn to by William Otis on a former trial of this cause, in the common pleas of Jefferson county. It was objected that this testimony was not admissible. As a general' proposition, this objection was not well taken, and was, therefore, properly overruled. There was no pretence that Otis, if living, would not have been a competent witness, and no such objection could have been made; for, even admitting him to have stood in the character of an endorsee of the note, yet he was a competent witness to prove a payment,[1] We must presume that the pendency of the former trial was admitted, as no objection appears to have been made, at the trial, on that ground. This testimony was, then, properly admitted; and shows, con-elusively, that when the note was delivered to the plaintiff, he was informed that it had been paid, and of the manner in which the endorsement, by Daggett, the payee, had been procured. There was no pretence that the payment to Daggett was fraudulent. If so, it was matter which ought to have been submitted to the jury. But the case does not furnish evidence from which ¡the jury could reasonably have inferred fraud. The motion for a now trial must, therefore, be denied.
Judgment for the defendant-.
(a) (a) 2 East, 450, Shitty on Bills, 284. Peake’s N. P. 6. 52.