Geyer v. Brewster — 19 N.Y. St. Rep. 351

Majority

p. 351

Adam Geyer, App’lt, v. Henry D. Brewster et al., Resp’ts.

(Supreme Court, General Term, First Department,

Filed November 24, 1888.)

Headnote

Bills and notes—Tbanseeb aetee maturity—Rights oe holdeb.

Where promissory notes after maturity and dishonor are received by the holder, he takes them subject to all equities and defenses. If before the transfer, the notes had been paid, the holder acquires no rights by the transfer to him.

Appeal from a judgment in favor of the defendants entered upon the report of a referee.

A. Edward Woodruff, for app’lt; J. L. Bennett. for resp’ ts.

The three notes in question, were made by the defendants, Brewster and Decker, and indorsed by the defendants, Lawrence Bros. Co., and Henry E. Lawrence, and Lawrence Bros. Co., delivered them so indorsed to a firm known as Geyer Bros., composed of Phillip and Frank Geyer.

Geyer Brothers were indebted at the time of the making of these notes in suit, to Lawrence Bros. Co., and were unable to meet such indebtedness, whereupon Lawrence Bros. Co. loaned them this paper to enable them to meet their obligations.

p. 352

The notes so loaned had been received by the Lawrence Bros. Co., from their customers Brewster and Becker, in the ordinary course of business, so far as appears. The amount of the indebtedness of Geyer Brothers to the Lawrence Bros. Co., was much larger than the aggregate of the three notes embraced in this action. Geyer Brothers had the notes discounted at the National Bank of Rahway, N. J., which bank held them at the time of their maturity respectively, and caused them to be severally protested for non-payment. A few months subsequently to the dishonor of the notes, they found their way into the possession of the plaintiff, Adam Geyer, through Phillip Geyer, one of the firm of Geyer Brothers. It is at this point of the case that the material evidence offered by the respective parties is directed.

It appears that after the maturity of the notes, five other promissory notes were made by the defendants Brewster and Becker, which were likewise indorsed by the Lawrence Bros. Co. and Henry E. Lawrence, the latter of whom was an accommodation indorser upon all of the paper, and the same were placed in the hands of Phillip Geyer, under an agreement on his part by which he should take up and cancel the three notes for which this action is brought.

Phillip did not, in form at least, cause the three notes in the action to be cancelled. But there was a time when he and the plaintiff went to the National Bank of Rahway and, upon the plaintiffs delivering to the bank a considerable sum of money, at least several thousands of dollars, the bank parted with this paper, but did not, so far as the evidence discloses, cancel it.

The vital question is, therefore, in my judgment, whether or not the transaction at the bank of Rahway amounted to a transfer or sale of those notes to Phillip Geyer or whether it amounted to a payment of them. If it was a payment, in point of fact, it is quite clear that the plaintiff can have no action upon them.

The evidence bearing upon this question is not altogether satisfactory, but it is such that the referee seems to have been borne out in his conclusion upon this branch of the case. In behalf of the plaintiff it is contended that as a part of the transaction at the bank there was received by the plaintiff a written assignment of a judgment recovered by the bank against the Geyer brothers, and that inferentially, at least, these notes formed a part of the consideration or cause of action resulting in that judgment. The evidence on this breach of the case is meagre.

The judgment record in the action of the bank against Geyer Bros, is not before us.

p. 353

All that is given in evidence is the assignment of the judgment itself. That instrument contains a recital, in effect, that on the 2.0th day of January, in the year 1882, the bank recovered a judgment at the Union county circuit court against Frank Geyer and Phillip Geyer, partners trading as Geyer Bros., for the sum of $5,125.12 debt, and four dollars cost of suit. This does not even raise an inference that these notes in question were part of the cause of action in that case.

Two of the notes could not have been embraced in that action, because, bearing date October 17, 1881, at three months, they did not mature until after the date of the judgment, namely, the 20th day of January, 1882. As to the note bearing date October 1, 1881, at three months, there is a total lack of evidence either way, and as the case was shaped at the trial the burden of proof was upon the plaintiff to establish that these notes, or some of them, were the subject matter of the judgment, and having failed in that, no inference of a transfer from the bank to the plaintiff Adam Geyer can be drawn from the execution and delivery of the assignment of the judgment.

On the other hand the testimony shows conclusively that the notes were not delivered by the bank to the plaintiff, but were delivered by it to Phillip Geyer who retained them for several months before they came into the hands of the plaintiff.

A preponderance of the evidence, in my judgment, shows that the transaction at the bank, after the maturity of the notes, was a payment of them and not a sale of them to the plaintiff.

If this be so, it follows that the plaintiff, having received them after maturity, and after dishonor, can maintain no action thereon.

The judgment should be affirmed, with costs.

Van Brunt, P. J., and Bartlett, J., concur.