McDonald v. Johnson — 46 N.Y. St. Rep. 838

Majority

p. 838

David A. McDonald et al., Pl’ffs, v. Albertus B. Johnson, Impl’d, Def’t.

(Supreme Court, General Term, Fifth Department,

Filed June 23, 1892.)

Headnote

1. Bills and notes—Good faith—Charge.

In an action upon a promissory note claimed to have been fraudulently obtained, it is not reversible error to refuse to charge that if the plaintiffs discounted the note at an usurious rate of interest, more than six per cent, it was a circumstance tending to show bad faith on their part, where the court has charged that the large discount might be considered by the jury in determining whether plaintiffs were innocent holders of the paper.

2. Same—Public policy.

While the original payee of the note might not be permitted to recover on it, it will not be held void on the ground of public policy in the hands of bona fide holders for value before maturity.

Motion by the defendant, Albertus B. Johnson, for a new trial on exceptions taken at the Genesee circuit June 24, 1891, ordered to be heard at the general term in the first instance.

William Carter, for def’t; T. P. Heddon, for pl’ffs.

This action was brought by the plaintiffs, who are private bankers, to recover upon a promissory note in the sum of $190, given November 22, 1889, and payable January 1, 1891, which was made by the defendant, Albertus B. Johnson, and endorsed by the other defendant. The note was obtained from Johnson by one Toal, who represented himself as the agent of a corporation known as The Pennsylvania Seed Company, Limited. The transaction was the customary Bohemian oats fraudulent scheme, in which all the parties to the arrangement seem to be equally culpable. So far as the questions arising on this appeal are concerned, it is not necessary to go into the facts of the principal transaction.

After the defendant had made the note, it was negotiated in the usual way to the plaintiffs, who paid in cash therefor the sum of $165. The plaintiffs were well acquainted with the defendant, who was a depositor in their bank. The note was transferred to the plaintiffs before maturity, and the verdict, of the jury shows they were bona fide holders thereof for value, and hence had neither notice or knowledge of the original taint existing in the paper. The defendant in making and delivering the note to the' payee manifestly intended to'put it in circulation. Though it was executed by the maker as a part of a joint fraudulent scheme, such circumstance did not in any manner defeat the inception of the note at that tima It follows, therefore, that this verdict must be upheld, unless it was arrived at by some erroneous methods, or through erroneous instructions given by the court.

The learned counsel for the defendant argues that a new trial should be granted upon the ground that the court refused to charge that if the plaintiffs discounted the note at an usurious rate of interest, more than six per cent., it was a circumstance tending to show their bad faith in the purchase of the paper.

p. 839

We think the request to charge in this instance was not specific enough to enable counsel to raise the point which he now argues. He nowhere made a proposition that the court should submit to the jury for their consideration the question whether or not the circumstance that the plaintiffs obtained the note for twenty-five dollars less than its face value could be considered by them in determining the question of their good faith. The court in the charge in chief instructed the jury that the large discount might be considered by them in determining whether or not the plaintiffs were innocent holders of the paper; the question was entirely left for the jury’s consideration.

It is further contended by the counsel for the defendant, that the note should be declared void on the ground of public policy. Had the action been brought by the original payee of the note or by any person engaged with Toal and'the defendant Johnson in the scheme to defraud, that question would be considered, and doubtless in the administration of the well-established rule, neither party to the scheme would be permitted to use the court to help himself as against another party thereto; but we venture to think that the public would suffer through the proposed violation of the ancient law protecting commercial paper in the hands of bona fide holders for value before maturity, quite as much as it would be benefited by an effort to apply the doctrine of public policy in condemnation of this transaction.

The case having been properly submitted to the jury, and its verdict having been rendered for the plaintiff upon all of the issues, we think the judgment should be entered upon the verdict.

Defendant’s motion for a new trial denied, with costs, and judgment ordered for the plaintiffs upon the verdict.

Dwight, P. J., and Lewis, J., concur.