Yale v. Dart — 43 N.Y. St. Rep. 789

Majority

p. 789

Edward P. Yale et al., Resp’ts, v. Henry C. Dart et al., App’lts.

(City Court of New York,

General Term,

Filed December 29, 1891.)

Headnote

1. Bills and notes—Accommodation paper.

Where a promissory note is'made or a draft accepted for the accommodation of the payee, but without restriction as to its use, an endorsee taking it in good faith as collateral security for an antecedent debt of the payee, without other consideration, occupies the position of a holder for value and can recover thereon of the maker or acceptor.

51. Same—Evidence.

Evidence of a conversation between defendant and another person held in a large room divided in two by a partition eight or nine feet high with :an open door, is not admissible as against plaintiff who was in the other part of such room, in the absence of evidence as to the power or extent of the latter’s sense of hearing.

Appeal from judgment in favor of plaintiffs.

E. Y. Stillman, for app’lts; T. E. Dewey, for resets.

This action was brought against the acceptors •of a draft drawn by Carlos A. Smith in favor of the plaintiffs.

The defendants on the trial admitted all- the allegations of fact in the complaint, and took the affirmative of the issues set up in the answer. The case was tried before Mr. Justice Fitzsimons on September 14, 1891, and a' verdict was rendered for the plaintiffs.

The questions to be considered on this appeal are the exceptions taken by the defendants to the exclusion of testimony, the excep

p. 790

tians taken to the refusal of the court to direct a verdict for the defendants, and exceptions taken to refusals to charge the jury. -

The defendants in securing the affirmative .admitted the allegations in the complaint.

This included the acceptance of the draft, and that the same was for a valuable consideration. Even if this was disputed, the-defendants proved by the deposition of Smith read at the trial that there was a valid consideration for the acceptance of the defendants in the indebtedness of Smith to the plaintiffs.

Once the question of consideration being disposed of, there are-but two defenses left to consider; one, that the acceptance was solely for the accommodation of the plaintiffs, and upon the express agreement that the same should be protected by the plaintiffs ; and, second, a subsequent acceptance by the plaintiffs of another draft from Smith in payment of the draft in suit. There is no claim or defense that Smith misappropriated or diverted the draft. The law is well settled, under such a state of facts, that where a promissory note is made for the accommodation of the payee, but without restriction as to its use, an endorsee taking in good faith as collateral security for an antecedent debt of the payee and endorser, without other consideration, occupies the position of a holder for value, and can recover thereon against the' maker.

The precedent debt is a sufficient consideration for the transfer, and no new consideration need be shown. Continental National Bank v. Townsend, 87 N. Y., 9 ; Grocers' Bank v. Penfield, 69 id., 504, 505; Schepp v. Carpenter, 51 id., 602; Benjamin v. Rogers,. 126 id., 69; 36 St. Rep., 393 .

There must be a fraudulent diversion from the original object and design in order to constitute a misappropriation' made in this case.

The objection at folio 34 of the case was properly sustained. A partition some eight or nine feet in height enclosing and practically making two rooms separated the plaintiff Bryan and the witness Dart. True the door connecting these rooms was open, but there is no evidence as to the power or extent of Bryan’s, sense of hearing.

For all that appears touching this branch of the case Bryan might have entirely lost his sense of hearing.

It would be decidedly illogical to permit the defendant Dart to-give his evidence of a conversation between himself and Smith, although not had in Bryan’s presence, and thus bind Bryan by the same, simply because he, Dart, thought Bryan ought to have; heard it.

We think the questions of fact were properly presented to the. jury and find no error committed by the trial judge.

For these reasons, judgment should be affirmed, with costs.

Ehrlich, Ch. J., concurs.