France v. Dickinson — 24 N.Y. St. Rep. 446

Majority

p. 446

Charles B. France, Resp’t, v. Henry M. Dickinson, App’lt.

(Supreme Court, General Term, Second Department,

Filed May 13, 1889.)

Headnote

Promissory notes—Bona fide purchaser.

In an action on a promissory note, it appeared that the note was given by defendant in payment of certain shares of stock, under an agreement that the payee should hold the note until the stock was sold, and then out of the sales the note was to be paid, and not to be paid if the stock was not so Id. The note was sold and came into the hands of plaintiff, a bona Jide purchaser, for value, before maturity. Meld, that the agreement ¡made no defense to the note if it was violated, and that plaintiff was entitled to recover. Pratt, J., dissenting.

Appeal from a judgment entered on a verdict directed Iby the court.

The action was based on a promissory note made by defendant.

James McKeen, for app’lt; John L. Hill, for resp’t.

J.—This evidence shows no defense to the note which is the basis of this action. It is given to a Mr. Sterns under the following circumstances: “Mr. Sterns said it was desirable that the stock should be controlled by & few persons; asked me to take 50,000 shares to control the stock, and asked me to give him notes for the amount; he quoted the stock at fifteen or twenty cents a share, and said that by a few parties controlling it, it would bring the price up in value; * * * he assured me that he would hold the notes, keep the notes in his possession till such time as the stock was disposed of, * * * and when the stock was sold I should' have credited to his account, if there was anything over and above their face it should be credited to my account, and the notes could be paid after the sale of shares of stock, and if the stock was not sold, the notes were not to be paid.”

This-transaction is a purchase of stock by the defendant under an agreement that the seller could hold the notes until the stock was sold, and then, out of the sales, the notes were to be paid, and not to be paid if the stock was not sold. Under this arrangement the notes had a valid, legal inception, and were delivered thereunder. Sterns sold the note to Wilde, and Wilde to plaintiff, before it matured.

The case does not rest alone upon the transaction. Wilde, before he purchased the note, went to the defendant and was told by him that “ so far as giving the note to Sterns was concerned, I supposed it was all right, but that it was distinctly understood that the note was not to be negotiated.”

p. 447

Wilde purchased on the faith of this statement-There was no denial of the note itself, or its consideration, or of its delivery. It was not to be negotiated by the person to whom it was given. This agreement made no defense to the note if it was violated, and if there was a deeper meaning in it, the defendant should have stated it when he was asked about the note in such a way as to indicate a design to purchase it if it was a good note. The-plaintiff was an innocent purchaser of negotiable paper for value, and was entitled to recover. Stalker v. McDonald, 6 Hill., 93 ; Seneca Co. Bank v. Neass, 5 Den., 329 ; Comstock v. Hier, 73 N. Y., 269 .

The judgment should, therefore, be affirmed, with costs,

Dykman", J., concurs; Pratt, J., dissenting.