Woodruff v. Wicker — 15 N.Y. Super. Ct. 613

Majority

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Woodruff, Plaintiff and Respondent, v. Wicker, Defendant and Appellant.

Headnote

1. When the holder of a bill of exchange, which has been accepted for the accommodation of the drawer, and has been entrusted to such holder to be negotiated by him for the benefit of such drawer, endorses and delivers it as security for his own performance of a contract which he employs his immediate endorsee to make, and such endorsee transfers it to a third person, the latter cannot recover against such prior holder and endorser without proof that the immediate en

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dorsee of the latter has some unsatisfied claim which it was endorsed to secure, or that the plaintiff took it in good faith, before maturity, for value paid.

2. When, on the trial of such an action, it appears that the plaintiff’s immediate endorser (if himself the plaintiff) could not recover, because nothing is due to him, or because he has no demand against the defendant—enough is shown to establish that the transfer to the plaintiff will operate as a fraud upon the defendant, as between him and his immediate endorsee, if the plaintiff is permitted to recover.

3. An endorsee, who is obliged to prove that a note or bill was endorsed to him, bona fide, and for value, before its maturity, in order to maintain his action, must prove, more than that the note or bill was seen “ in a batch of other notes in a place where the plaintiff usually kept his securities,” and the belief of the person seeing it there, that the plaintiff had advanced on the credit of that and other collaterals more than the amount of such bill.

(Before Bosworth and Woodruff, J.J.)

Heard, Dec. 18th, 1857 ;

decided, March 20th, 1858.

This action comes before the Court on an appeal by the defendant, Wicker, from a judgment entered on the verdict of a jury in favor of the plaintiff. It was tried in June, 1857, before Mr. Justice Woodruff and a jury. Jacob D. Woodruff is the plaintiff, and James C. Wicker and William P. Sackett are the defendants. The defendant Wicker alone answered the complaint. Fo questions arose upon the pleadings.

The action is brought against Wicker, as second endorser of a bill of exchange for $300, dated May 30, 1856, drawn by one McMakin on P. S. Devlin, payable 3 months after its date, to the order of the drawer, and endorsed by him and by the defendants, Sackett and Wicker.

It was accepted by Devlin for the accommodation of the drawer, and the latter placed it in the hands of the defendant Sackett, that he might raise money upon it for the drawer.

Sackett had, previously thereto, instructed one Bartlett to make a contract to sell for him 55 shares of Erie Railroad stock, at 55£, at a short date; Bartlett made such a contract; Sackett, at the time, owned no Erie stock; but the case does not show, expressly, that Bartlett knew that fact. Wicker and Sackett were jointly interested in the profits anticipated from this contract. A bond, called a “ Coal-carrying Bond,” belonging to Wicker, was placed by Sackett in the hands of Bartlett, to indemnify him against loss, on his contract to sell the 55 shares of Erie.

Wicker, wishing his bond, and to induce Bartlett to give it up

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to him, endorsed the bill in question, as did Sackett also, and it was then delivered to Bartlett, as a substitute for, and in consideration of, his surrendering the coal bond to Wicker, which he did do.

Bartlett, by order of Sackett, purchased 55 shares of Erie, to replace the shares he had contracted to sell; but whether before or after the delivery of the bill in question to him, does not appear. ISTor does it appear how much he contracted to pay for it, nor whether he, in fact, paid any thing for it; nor what was done with the stock so bought, nor whether he actually lost any thing by the transaction, or had'incurred any liability by reason thereof.

When the defendant had proved these facts, and had rested his case, “the plaintiff called one Frangen, as a witness, who, being sworn, testified:—I am the clerk and bookkeeper of Bartlett; I know Dr. Woodruff, the plaintiff; I know that the plaintiff received this note or draft from Bartlett, as collateral security, and made advances upon it before it became due, probably to Bartlett; I could not say the amount he advanced upon that, but more than the amount of the draft, on that and other collaterals.

“ Cross-examined.—I did not see the money paid or advanced; I have no means of knowing that the plaintiff made advances upon, or held the draft as collateral security, excepting from seeing it in a batch of other notes, in a place in Bartlett’s office where the plaintiff usually kept his securities; I don’t know when I saw it there; I was in the habit of keeping the collaterals for Dr. Wood-ruff at that time; I had the care of looking them over, and seeing when they became due; he made advances on that and other col-laterals ; I did not see plaintiff pay any money on this note, by check, or otherwise; I do not recollect of any entry on Bartlett’s books, showing that he had received advances on this note or draft; I don’t know the amount paid or, advanced by plaintiff on the draft, or whether the amount lent was repaid to him.

“ Re-direct.—I believe plaintiff did make advances on this; he did; he made advances on this and other collaterals.

“ Re-Cross Examination.—I have no other means of knowing that he did make advances, except as I have stated.

“ The plaintiff here rested his case.”

The defendants thereupon moved for a nonsuit, on the ground:

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1st. That it appeared that the plaintiff was not the lawful owner or holder of the draft.

2d. That the draft never had valid or legal inception.

3d. That the proof failed to show that the plaintiff held the note for value, or received it before it became due.

4th. That the whole transaction was illegal and void, being in contravention of the statute against stock-jobbing.

The Court denied the motion for a nonsuit, to which decision the counsel for the defendant duly excepted.

The defendaiits’ counsel then asked the Court to charge the jury, that if Bartlett had no title to the note or draft in question, no other party could derive a valid title thereto through him. Which proposition the Court refused to charge. To which the defendants’ counsel duly excepted. The case was thereupon submitted to the jury, under the charge of the Court, and the jury rendered a verdict in favor of the plaintiff, for the amount of said draft and interest, as claimed in plaintiff’s complaint, namely, for the sum of $315.63.

Judgment haying been entered on the verdict, Wicker appealed from it to the General Term.

JR. W. Van Pelt, for the appellant.

. Wbi. A. Coursen, for the respondent.

Even if it be assumed that the transaction between Bartlett and Sackett & Wicker was legal, so that the endorsement was a valid contract, and security in the hands of Bartlett, to the extent of any claim of the latter growing out of the transactions in relation to his contracts to buy and sell Erie stock, it does not appear that he has any such claim against either Wicker or Sackett.

Certainly, nothing is shown which would entitle Bartlett, if plaintiff, to a verdict for the amount of the note: as it does not appear that he has sustained actual loss on his contract to purchase, or on his contract to sell Erie stock, or that there is any actual liability resting upon him, by reason of either of said contracts.

. On such evidence, the defendant would be entitled to a verdict, if Bartlett were the plaintiff in this action. As the transfer of the

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bill by Bartlett to the plaintiff, under such circumstances, would operate as a fraud upon the defendant, if the plaintiff is permitted to collect it, the latter, in order to recover, must show that he took it in the usual course of business, before maturity, and paid value for it.

The testimony of Frungen, when carefully examined, amounts to only this: From seeing this bill “ in a batch of other notes, in a place in Bartlett’s office where the plaintiff usually kept his securities,” he believed, and had no doubt, and therefore stated as his conclusion from such premises, that the plaintiff had advanced, on this and other collaterals, more than the amount of the bill in question.

He states expressly, that he had no other means of knowledge than those already stated, and that he did not see any money paid or advanced on the bill in question, and that he does not know when he saw it in the place where the plaintiff usually kept his securities.

We think, that on such evidence the defendant was entitled to a nonsuit, on the ground that the plaintiff had failed to prove that he paid value for the bill; and that for the refusal of the Court to grant such motion, the judgment should be reversed, and a new trial granted, with costs to abide the event. (Clark v. Dearborn, 6 Duer, 309 , 312.)

Ordered accordingly.