Strickland v. Leggett — 50 N.Y. St. Rep. 451

Majority

p. 451

Erwin Strickland, Resp't, v. Richard L. Leggett, App'lt.

(Supreme Court, General Term, First Department,

Filed December 16, 1892.)

Headnote

1. Stock—Bona fide purchaser—Burden of proof.

In an action on a note given by defendant to one M., defendant counterclaimed for certain stock given to M. as collateral for said note. Plaintiff claimed to have purchased said stock as an independent transaction, without knowledge that it was collateral. Held, that the burden of proof was upon defendant to establish his allegation that plaintiff took and held them as collateral.

2. Same.

Where the only evidence on the question of good faith in the transfer

p. 452

was that oí M., who testified that nothing was said _ on the subject of collateral, Held,, that it was not necessary for plaintiff'to take the stand ana deny notice.

Appeal from the judgment entered upon the verdict of a jury-in favor of the plaintiff, dismissing appellant's counterclaim, and from an order denying defendant’s motion for a new trial in an action against the indorser of a promissory note.

Charles D. Ridgway, for app’It;

Freling H. Smith, for resp’t.

This action was upon a promissory note made by the defendant, payable to the order of N. Gr. Miller & Co., and indorsed to the plaintiff. Miller & Co. received from the defendant 100 shares of a certain railroad company’s stock, as collateral security for the payment of the note. These shares were also transferred by Miller & Co. to the plaintiff, and the question which was litigated at circuit was with regard to this latter transfer. There was no defense to the note, but the defendant interposed a counterclaim for the value of the shares. He alleged that the shares were transferred with the note, and that the plaintiff took them just as Miller & Co. held them, namely, as collateral to the note. The plaintiff, on the other hand, claimed that the purchase of the shares was independent of the note, and that he knew nothing at that time about their being collateral. The burden wasmpon the defendant of establishing his averment; for, previous to the sale to plaintiff, he had transferred the stock into Nathan Gr. Miller’s name upon the books of the company, and thus enabled Miller to give a good title to a purchaser for value. Thg main question, therefore, was whether the plaintiff, when he purchased these shares, had notice of the fact that Miller & Co. held them as collateral to the note, or whether he was put upon inquiry. We have examined the record and find no evidence to support the defendant’s contention on this head. On the contrary, the only witness who gave any testimony about the transfer (Nathan Gr. Miller) stated distinctly that when he sold the stock to the plaintiff nothing whatever was said “ upon the subject of collateral.”

It seems that, after the sale to plaintiff, Miller signed a paper in which he stated that he had sold these securities, and described them as “ the notes and collateral of R. L. Leggettbut this paper was not exhibited to the plaintiff, and his counsel’s possession of it upon the trial was fully explained by Miller. It seems that this paper was also produced in obedience to an order for its inspection. That proved that the plaintiff had the paper in his possession when the order was made, but not that he had it at the time of the purchase of the shares. It was clearly shown that Miller had possession of the paper long after the purchase, and that he subsequently delivered it to the plaintiff’s attorney. When the plaintiff made the purchase he had no knowledge of this paper, or notice, direct or indirect, that the stock was collateral. There was no reason why the plaintiff should take the witness stand and deny notice. There was nothing to deny until something was proved, and the defendant rested, not only without proof of notice, but with affirmative proof to the contrary. ' The

p. 453

judgment and order denying the motion for a new trial should be affirmed, with costs.

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