Amsden v. Smith — 48 N.Y. St. Rep. 305

Majority

p. 305

C. Henry Amsden et al., Pl’ffs, v. Charles R. Smith, Def't.

(Supreme Court, General Term, Fifth Department,

Filed October 21, 1892.)

Headnote

Bills and. notes—Fraud.

In an action upon a Bohemian seed note, the plaintiffs read the note in evidence and rested. The defendant gave proof tending to establish his defense that it was obtained by fraudulent representations, and also tending to show that plaintiffs were not bona fide holders. Held, that the case should have been submited to the jury, and that a direction of a verdict for the plaintiffs was erroneous.

Motion for a new trial on exceptions ordered to be heard in the first instance at general term, after direction of a verdict for the plaintiffs at the close of the evidence.

Garlock & Beach, for pl’ffs ; John Desmond, for def’t.

This action was brought to recover upon a promissory note given by the defendant in payment of twenty bushels of Bohemian oats at fifteen dollars a bushel, delivered to him by the agents of a corporation by the name of the Bohemian Oat &

p. 306

Cereal Company, of Ypisilanti, Mich., and in consideration of a written agreement of the company to sell for the plaintiff forty bushels of oats the following year, raised from the twenty bushels at fifteen dollars a bushel, the company to be paid by defendant thirty-three and one-third per cent commissions for selling.

The note was dated November 6, 1886, for $300, payable to J. M. Orcutt or bearer, due in twelve months, with interest.

The payee Orcutt was the agent of the company.

- The defendant interposed the defenses that the note was obtained from him by fraudulent representations and that the plaintiffs were not bona fide holders for value.

The plaintiffs produced the note, read it in evidence and thereupon rested the case. The defendant introduced evidence tending to establish that he was induced to make the note by fraudulent representations of the agent of the company. .

The general plan of the company’s operations in obtaining such notes is fully explained in the opinion of Justice Bradley, in Watson v. Blossom, 18 St. Rep., 726 , decided by this court, and afterwards affirmed by the court of appeals. It is not necessary to rehearse it here. It was held- in that case that the defendant’s evidence on the question of fraud should have been submitted to the jury.

The defendant’s evidence in this case tended quite as clearly to establish his defense of fraud as did the defendant’s evidence in the Watson case.

The enterprise, as understood by all the persons connected with it, was mainly speculative. The principal inducement to defendant to give the note were the representations made to him by the agents of the company as to the munificent profits his neighbors had realized out of similar transactions with the company the year previous; if the company had kept faith with his neighbors the defendant thought it would also treat him fairly, and he believed the representations and gave the note.

These representations were shown to be false; this evidence under the doctrine of Canajoharie National Bank v. Diefendorf, 123 N. Y., 192 ; 33 St. Rep., 389 , placed the burden upon the plaintiffs of showing they were bona fide holders for value. Instead of relying upon the doctrine of that case the defendant assumed the burden of the proof himself.

He sought the evidence from adverse witnesses, but, notwithstanding that, he succeeded in obtaining sufficient evidence, and not too much, so that it became a question for the jury.

The manner and circumstances under which Collamer became possessed of the note, and the transactions accompanying the delivery of it to the plaintiffs, tended strongly to show that neither Collamer nor the plaintiffs were innocent holders.

The fair inference, and one the jury would have been justified in adopting, was that the plaintiffs paid nothing for the note. They took it on the last day of grace, about noon. The circumstances of the alleged discount of the note by the plaintiffs as related by Collamer, and the subsequent transactions tend to show that the transfer was colorable, only.

p. 307

The case was left, taking the most favorable view of the evidence for the plaintiffs, in doubt as to whether either the plaintiffs or Collamer were bona fide holders for value.

The case should have been submitted to the jury and the direction of the verdict was error.

A new trial should be granted, with costs to abide the event of the action.

Dwight, P. J., and Macomber, J., concur.