Tappan v. Ely — 15 Wend. 362

Majority

p. 362

Tappan and others vs. Ely.

Headnote

An endorseraent]on the back of a promissory note, making its payment dependent on a contingency, does not effect its negotiability ; its only effect' is to give notice of the consideration to subsequent holders.

In a suit on such note by a subsequent holder, the maker may avail himself of any defence which he could set up against the payee.

Demurrer. The plaintiffs declared as the endorsees of two promissory notes made by the defendant, dated 20th April, 1828, payable to W.W. Edwards & Co. or order, one in six moúths and the other in twelve months after date'. The defendant pleaded that, at the time of the making of the notes, there

p. 363

was a condition endorsed upon them to the effect, that they were to be delivered to the payees by A. H. Ely, ( a person different from the maker, whose name is Giles S. Ely,) as seen rity for accepting for A. H. Ely to the amount of the notes ; and if A. H. Ely should well and truly pay the money «vising from certain funds to the discharge of the notes mad-, by the defendant, the notes to be void. The defendant then avers, that before the commencement of this suit, A. H. Ely did pay and satisfy to W. W. Edwards & Co. the amount for which they had accepted for him ; and that the notes were transferred to the plaintiff’s long after they became due, to wit, on the 1st October, 1829.- The plaintiff’sreplied, that A. H. Ely did not pay and satisfy to W. W. Edwards & Co. the amount for which they had accepted for him, in modo et forma, &c. To this replication the defendant demurred.

C. P. Kirkland, for the defendant,

insisted that, as the notes were not payable at all events, but were dependent on a contingency, they were not within the statute valid and negotiable notes, and consequently that the plaintiff’s were not entitled to sustain this action.

M. T. Reynolds,

contended that the negotiability of the notes was not affected by the endorsement of the condition. He cited 8 Johns. R. 485, 3 Cowen, 119.

By the Court,

The replication is clearly good. It is true that in England an endorsement on the back of a promissory note has been considered part of the note itself—that the note was conditional, and therefore not negotiable under the statute, 4 Campb. 126 ; 4 Barn. Ald. 25 ; Chitty on Bills, 60; but in Sanders & Ogden v. Bacon, 8 Johns. R. 485, this court decided that the endorsement on the back of the note was no part of the note; that its only effect was to show the consideration, and to operate as a notice to any person who might purchase the note. If this court was correct in saying that the endorsement is no part of the note itself, then the demurrer cannot be sustained, for the note on its face is perfect. No injury can accrue to the defendant, as

p. 364

he can maleé any defence which he could if the suit was bought jn the name of the payees.

Judgment for plaintiff on demurrer; leave to rejoin on payment of costs.