text:
    Wilmot, and others v. Richardson, and others.
    A person, not a party to the action, and who is rendered incompetent as a witness hy reason of an agreement, subsequent to the transactions in question, making him a partner of one party as of a date prior to their occurrence, may he rendered competent hy an absolute assignment of all his interest in the subject matter of the action and in the business of his firm down to the time he actually became partner, on being also released by his partner from all liability to contribute by reason of the claim made in the action, and on being fully indemnified against any liability connected with said claim or action.
    The plaintiffs contracted to sell to one Patterson flour, and delivered to him one thousand eight hundred and ninety-seven barrels, and the defendants advanced to him, in good faith, on that and other flour, amounting in all to eight thousand one hundred and sixty-four barrels, large amounts from time to time, and consigned the whole to their Liverpool house. The plaintiffs, claiming that they hhd been induced to sell to Patterson hy fraud on his part, after a discovery of the alleged fraud, and with knowledge of the advances made by the defendants, and of their claims by reason thereof, and of such shipment of the flour, received an order, drawn hy Patterson on the defendants, for the net proceeds t>f the eight thousand one hundred and sixty-four barrels of flour, less, the defendants’ advances and charges, delivered such order to the defendants and received their written acceptance thereof, and, when such flour had been sold, received of the defendants and receipted for the net proceeds thereof and in full of such proceeds, as per their acceptance of Patterson’s said order.

      Held, that these acts amounted to a ratification of the transactions between Patterson and the defendants, and that'thereafter the only liability of the defendants to the plaintiffs was such as arose out of the written acceptance of Patterson’s order, and the agreement contained therein.
    The fact that the defendants had bad other large transactions with Patterson prior to the one in question, was not competent testimony upon the trial of the issue, whether the defendants acted in good faith in the transactions in question. It was irrelevant, and its admission erroneous.
    A witness, whose character has been impeached, cannot be supported by the testimony of a person who saw him for some six months, twelve years prior to the trial, and who had not subsequently seen him until within sixmonths of the trial, and had never heard him spoken of one way or the other, to the effect that, he considered him a credible Witness. To receive such evidence against objection and exception is erroneous.
    (Before Duer, Bosworth and Woodruff, J.J.)
    December 5, 1856;
    February 14, 1857.
    This action comes before the court on exceptions taken by the defendants at the trial, and there ordered to be heard, in the first instance, at the General Term.
    John Wilmot and Company are the plaintiffs, and do business in the city of New York. The firm of Thomas Richardson & Co., are the defendants, and do business in the same city; that firm consists of Thomas Richardson, James Spence, and Edward H. Patón. The defendants also did business at Liverpool, under the firm name of Richardson, Spence & Co. Samuel Nimmons became a partner subsequent to the transactions in question, but at the time thereof, had no interest in the business of the defendant’s firm.
    The complaint alleges that one Walter Paterson, in May, 1854, bought of J. Wilmot & Co. 1897 bbls. flour, for $15,104.87, to be paid in cash on delivery, representing that it was for Thomas Richardson & Co., and that they “were to advance the cash for the same.” That J. Wilmot & Co., on the 11th of May, delivered the flour on board ship, and on the 12th of May handed ship’s receipts to Patterson, relying on his promise to get the money from Thomas Richardson & Co., and at once pay it over. That on the 13th of May, Patterson paid $5000, stating that Thomas Richardson & Co. refused to advance as they had promised. That Thomas Richardson & Co. had already received the ship’s receipts from Patterson, and J. Wilmot & Co. on same 13th of May, threatened them to stop the flour; but they replied that the ship had already sailed, and that they need not be alarmed, as the money would be paid. That this threat and response were repeated on 15th of May. That J. Wilmot met Patterson by appointment, at Thomas Richardson & Co.’s office, May the 17th, to receive the money, when Richardson, claiming to be busy, requested them to call at 12 o’clock. That Wilmot called, accordingly, but, in the interim, Patterson had been suddenly induced, by Thomas Richardson & Co., to sail, and had sailed, for Europe. That - Thomas Richardson & Co. then offered to pay John Wilmot & Oo. the balance which might be due from them to Patterson, if released, which offer John Wilmot & Oo. declined. That Thomas Richardson & Oo. subsequently made certain payments, leaving a balance of $7648.96. That Thomas Richardson & Co. knew all the facts, and contrived this method of obtaining payment of a prior debt from Patterson.
    The defendants’ answer first puts in issue the whole com-, plaint, except the existence of their own firm, and that Wilmot and Patterson called when Richardson was busy, at about 10 o’clock, A. H., on 17th of May.
    The defendants answered, secondly, that they agreed to advance Patterson $7 per barrel on flour shipped by him to Richardson, Spence and Oo., of Liverpool; that between 28th April and 12th óf May, 1854, he accordingly shipped 8164 barrels flour, and delivered the bills of lading, &c., to Thomas Richardson & Co., and took the following advances:
    1854, April 29, . . . . . . . $19,000 00
    May 1, . . . . . . . 3,388 00
    “ 3, . . . . . . . 5,000 00
    “ 8, . . . . . . . 5,000 00
    “ 9, . . . . . . . 13,279 00
    “ 10, . . . . . . . 5,329 90
    “ 12, . . . . . . . 6,651 10
    That on the 17th of May, 1854, they accepted Patterson’s order in favor of Jno. Wilmot & Co. for the net proceeds of the 8164 barrels of flour, after deducting advances and charges, and that subsequently, on September 13th, 1854, they paid over such net balance to Jno. Wilmot & Oo., taking their receipt, expressed to be “ balance in full of preceeds of sales of flour, as per your acceptance of Walter Patterson’s order in our favor.”
    That Thomas Richardson & Oo. acted in good faith, in the usual course of business, without knowledge whence the flour was obtained, and that, “ with full knowledge of all the circumstances,” Jno. Wilmot & Oo. sued Patterson for the price of the flour.
    It was proved that, on May 5th, 1854, J. Wilmot & Co. sold to Patterson 1897 barrels of flour, at $7.93f per barrel; total price, $15,104.87, for cash, on delivery of ships’ receipts. 200 barrels were sent by them on board of the Dacotah, and 1697 on board the Washington. Hull, a witness for the plaintiffs, testified that the ship’s receipts were obtained on May 12, and further, that on that day, Patterson sent McKeon, his broker, for them; that Mr. Wilmot declined at first to give them up, but gave them to McKeon on being informed that “ Patterson said he could not pay for the flour till he got the receipts, asthey hadconsignedit to Thomas Richardson & Co., and they would not give the money till he got the receipts.” He also swore that he, Hull, gave the receipts to McKeon, and told him to go with Patterson, and not to deliver the receipts till'he got the money.
    Patterson was also sworn for plaintiffs, and testified that it was a purchase for cash, which by the usage, meant cash when called for. That Wilmot knew he was consigning flour to defendants’ Liverpool house and getting advances. That he received $13,279 as an advance on this flour, on the 9th of May, and delivered the bills of lading on the 12th of "May. Supposed he promised the bills of lading when he received the advance. That he gave them the invoice on or before May 9, 1854.
    On 16th of May, 1854, Thomas Richardson & Co. rendered to Patterson a complete and true account of their dealings and advances ; and on the morning of the 17th, Wilmot saw and took a copy of it. After this, and on 17th of May, Jno. Wilmot & Co. obtained from Patterson an order on Thomas Richardson & Co. for surplus proceeds of 8164 barrels of flour, and on same day obtained Thomas Richardson and Co.’s acceptance of it. The account sales of the Liverpool house were given in evidence by the plaintiffs. And it was proven that Jno. Wilmot & Co. received from the defendants, and receipted for the net proceeds according to the order and acceptance, as stated in the answer.
    Eleven witnesses testified that Hull was of bad reputation and unworthy of credit. The Judge at this point refused to hear any more impeaching testimony, and after some supporting proof, refused again. Defendants excepted to each decision.
    The bill of lading for the 200 barrels, per Docotah, was signed May 8, 1854. Those 200 barrels were insured by Thomas Richardson & Co., May 3, 1854; and the 1697, by the Washington, were insured May 8, 1854.

      Patterson did not pay J. Wilmot & Co. their whole demand. By some unexplained means he became embarrassed after he purchased, and conceiving that it would be some advantage to him, or for some other reason, concluded to go Europe. He did so on 17th May, at noon. J. Wilmot became alarmed on the 16th of May, and on the morning of 17th May, went with Patterson to Thos. Richardson’s to see what security could be got. Patterson concealed from Wilmot his intent to go Europe.
    An unsuccessful attempt was made to prove that Thos. Richardson & Co. connived at this secrecy and advised the departure.
    Patterson had known Thomas Richardson & Co. five or six years, and had known J. Wilmot and Co. only some weeks. And, by way of raising an inference of some fraud or collusion, the plaintiffs were allowed to prove that Patterson had had extensive dealings with the defendants; to which the defendants excepted.
    Patterson himself testified that the purchase from J. Wilmot & Co. was without any particular stipulation as to the time of payment. He also testified, that when he purchased the flour, and received the ships’ receipts, he honestly intended to pay. McKeon, the broker, being absent in Europe, was not examined. Patterson was not asked any questions tending to confirm Hull’s statement as to the mode of obtaining the ships’ receipts, or any special delivery of them; and he expressly swore that he never made any false or deceitful representations to the plaintiffs.
    The plaintiffs proved by Patterson, that when he went to Liverpool, the defendants’ house there seemed to expect him. He had mentioned it to defendants’ clerk in Hew York, (perhaps at the last moment). And the defendants offered to read the letter of their„Hew York house to the Liverpool house, on the 17th, stating the fact. The court excluded it, and the defendants excepted.
    On the 20th of May, 1854, the plaintiffs prosecuted Patterson, by attachment on contract, in the Supreme Court, for the price of the flour. J. Wilmot’s affidavit, in that case, sworn on that day, stating the sale and delivery of the flour to Patterson, was given in evidence. The fraud alleged was, in secretly departing with intent to defraud J. Wilmot & Co., and other creditors, or avoid process.
    Thé Judge, in the course of his charge, said,-that “on a fair ■ consideration of the evidence, there was no fraud on the part of the defendants, nor on the part of Patterson, in making the purchase.”
    He put the plaintiffs’ claim to the jury on the point of a conditional delivery. He said that defendants had acted indiscreetly in parting with their money three days before they received the bills of lading; that if they had paid over the money after receiving the bills of lading they would not be chargeable.
    In instructing the jury as to a conditional delivery, he presented the question thus: “ Did plaintiffs part with the possession of the receipts with the understanding that Patterson should do with them as he pleased, or with the understanding that he should get the money and pay for the flour ? If the latter, the sale was conditional ; if the former, it was absolute.” To each of these definitions of, or instructions as to, a conditional sale or delivery, the defendants excepted.
    On a motion for a nonsuit, the defendants insisted that both the complaint in this action and the affidavit in the attachment suit alleged an unconditional delivery, and that, in the absence of any evidence of fraud in the contract, the plaintiffs could not recover. The point was overruled, and the defendants excepted.
    The defendants requested the Judge to charge as follows:
    “ Second. If the plaintiffs sold the goods for cash on delivery, and afterwards delivered them on board, and also delivered the shipping receipts to Patterson unconditionally, such delivery was a waiver of any lien for the price, or any right to avoid the sale or to reclaim the goods, unless Patterson practised some fraud in obtaining the contract or in obtaining the delivery.
    “ Third. If the jury do not believe that the ships’ receipts were obtained by any of the means or pretences, stated by Hull as having been made by Patterson or McKeon for that purpose, there is not any other evidence in the case from which they could infer that any fraud was practised in obtaining the delivery of the ships’ receipts.
    “ Fourth. H Patterson, after the 12th of May, 1854, for the first time designed to go to Europe, and determined to conceal such intent, in order to avoid arrest, those circumstances would not constitute a fraud against the plaintiffs, or in any way affect the issue in this case.

      “ Fifth. If, on the 17th of May, 1854, with knowledge of the representations on which the ships’ receipts are alleged to have been delivered by them, and after seeing, by the account dated May 16, 1854, that the advances on the flour in question had been made on the 9th of May, the plaintiffs received the order on Thomas Bichardson & Co., for payment out of the net proceeds of their sales, caused such order to be delivered to the defendants, received the written acceptance thereof, and received and receipted for the net proceeds, such acts amount to a ratification o,r confirmation of the transactions between Patterson and the defendants, and, consequently, the plaintiffs cannot recover.”
    The court refused to give any of these instructions, and the defendants excepted.
    On the point of ratification he stated the facts, and charged thus:
    “ The fact you are to decide is, Whether or not Wilmot ratified the sale. If you believe that it was understood that Wilmot should receive this balance in full of his claim, then he is bound; if he did not intend to give up his claim, he is not bound.”
    To which submission of the point to the jury the defendants excepted.
    The verdict was for the plaintiffs, for $8160.77.
    The following points on the reception of evidence arose at the trial.
    The defendants called seven witnesses to support the character of Hull. Two of them knew nothing of his reputation, and could not say whether it was good or bad, but they were permitted to answer the question: “Do you consider him a credible witness?” To this decision the defendants excepted.
    The defendants offered as a witness, Samuel Nimmons. He was a clerk of Thomas Bichardson & Go. at the time of the transactions in question, but was subsequently admitted as a partner, by a retro-active agreement, from a period previous to these transactions.
    He was objected to as incompetent, and excluded. The defendants excepted.
    The defendants then gave in evidence their release of said Nimmons from any contribution to the claim in this action, and also a bond of indemnity to him, with sureties, admitted to be sufficient, against any liability connected with said claim or action, and also an assignment by Uimmons to the defendants, of all his interest in the flour aforesaid and its proceeds, and in the business of the copartnership, prior to the time of his actually becoming a partner. The Judge, nevertheless, ruled that said Uimmons was not a competent witness, and on his being again offered, excluded him. The defendants excepted.
    The questions of law arising upon the exceptions taken at the trial, the court there ordered to be heard in the first instance at the General Term, and the entry of judgment to be in the mean time suspended.

      jEdwards Pierrepont, for plaintiffs.

      C. O’Connor and J. P. Martin, for defendants.
   By the Court. Bosworth, J.

Was Himmons rightfully excluded from testifying? He was not a partner of the defendants at the time of the transaction in question, nor had he any pecuniary interest then in the business of the firms of which they were members. The agreement of the 13th of October, 1854, creates the only objection raised to his competency as a witness; that was executed after the property in question had been sold by the defendants, and the proceeds of it had come into their hands.

If the question of his admissibility was to be determined by the rules of the common law, why was he not a competent witness when he was last offered ?

At that time, he had assigned to the defendants, all his interest in the defendants’ firm, as to all business transacted prior to the 23d of October, 1854. The defendants had released him from all liability to contribute towards the payment of any judgment the plaintiffs might receive, or for the costs or expenses of this action. They had also fully indemnified him against all liabilities and claims, to which he could be subjected by reason of this action, or of any thing growing out of it, and against all damage by reason of his liability to contribute to pay any judgment that might be recovered in this action, or to pay any part of the ex-pensés thereof, or of the claims and demands of the plaintiff.

After those papers had been executed and delivered, it is difficult to perceive why his legal position was not precisely the same as it was before that agreement was made. From that moment" he ceased to have any interest in the result; whether the defendants succeeded or failed, was a matter of indifference to him in a pecuniary point of view.

Excluding the provisions of the Code, I think he was a competent witness, and that his rejection was an error which entitles the defendants to a new trial. (Clarkson v. Carter, 3 Cowen, 85; Lifferts v. De Mott & Ingersoll, 21 Wend. 136; Small v. Mott, 22 Wend. 403; Gregory v. Dodge, 14 Wend. 593 ; Lake v. Auborn & Hodgkins, 17 Wend. 18; Benedict & Lothrop v. Hecox, 18 Wend. 490).

It will not be seriously contended, that it was the object of the Code to increase the causes of incompetency to be a witness; on the other hand, it declares that a mere interest in the event, no matter how clear and direct, shall not render any person incompetent to testify, unless he be a party to the action, or one for whose immediate benefit it is prosecuted or defended. (Code, §§ 398, 399).

The Code retains the rule, that an interest in the event, shall disqualify, when the person offered as a witness is a party to the action, or if it is prosecuted or defended for his immediate benefit.

Such an interest excluded persons before the Code. By the pre-existing rules, a person for whose immediate benefit an action was prosecuted, if not a party to it upon the record, could be rendered a competent witness; that was expressly decided in Lake v. Auborn & Hodgkins, supra.

Without pursuing this question further, we think it quite clear, that as Nimmons was rendered incompetent to testify, solely by reason of the agreement of the 13th of October, 1854, that interest was wholly divested by the papers executed and delivered before he was last offered. From that time his position, in contemplation of law, was exactly the same that it was before the agreement of the 13th of October was executed, and he was a competent witness.

Next, as to the question of ratification. Patterson bought of the plaintiffs, 1897 barrels of flour. They had no interest in the residue of the flour, on which the defendants had advanced to Patterson. The defendants had made advances on 8164 barrels, all of which had been shipped to Richardson, Spence & Co. Before the 17th of May, the plaintiffs had in their possession, an account rendered by the defendants to Patterson, showing the transactions between them, the dates and amounts of their advances, and the number of barrels on which the defendants had advanced.

With full knowledge of all the frauds now alleged, (except the pretended fraud of Patterson’s going to Europe at the instigation of, or by connivance with some one of defendants’ firm) thejr received Patterson’s order on the defendants, to pay to the plaintiffs the proceeds of the 8164 barrels, less the advances previously made by the defendants upon it, and their charges. Before this was accepted, Patterson’s assent, written at the foot of the order, that no further advances should be made, by the defendants, unless by the consent of the plaintiffs, evidenced by their written order, was procured. The plaintiffs received this, with the written acceptance by the defendants of Patterson’s order.

By this act the plaintiffs certainly waived all right to claim that a sale of the flour by the defendants would be a tortious act, which would render them liable for a conversion of the flour. They assented to a sale of so much of the flour as had belonged to them, and obtained an agreement that they should be paid the proceeds of not only that flour, but of six thousand two hundred and sixty-seven barrels in addition, to which they had no right, less advances and charges.

The flour has been sold as that arrangement contemplated, and the whole proceeds of the flour have been paid to, and accepted by, the plaintiffs, in full performance of that arrangement.

Before the defendants accepted this order, they had refused to accept a draft drawn on them by Patterson, in favor of the plaintiffs, for $10,000, at sixty-five days from May 17, 1854. The defendants claimed to have advanced on the security of the flour, in good faith, with no notice of any facts which should induce any person to doubt the title of Patterson,-or the good faith of his transactions with those of whom he had purchased the flour. Under these circumstances, the plaintiffs accepted the three papers' before mentioned; viz., Patterson’s order on the defendants; an acceptance of it by the latter, and Patterson’s written consent that the proceeds should be paid to the plaintiffs, or to their order. Is' this transaction to have any effect, and, if so, what? If it does not amount to an abandonment of all claims upon the defendants personally, except under their written acceptance of Patterson’s order, then it,is not only of no benefit to them, but is prejudicial to their rights. By the verdict they are charged, not only with the actual proceeds of the one thousand eight hundred and ninety-seven barrels of flour, but with the exact price which Patterson agreed to pay the plaintiffs for it. The defendants, as the case has resulted, have been made to pledge the proceeds of the whole eight thousand one hundred and sixty-four barrels over and above advances, as security to pay what Patterson was owing the plaintiffs, and are held personally liable to pay the balance of the contract price. This result has been effected upon evidence which, being fairly considered, does not tend to prove any “ fraud on the part of Richardson, nor on the part of Patterson, in making the purchase.” So the Chief-Justice instructed the jury.

In the absence of fraud, either of Patterson or of the defendants, in the transaction, we think that the acts of the parties on and after the 17th of May, amount to an agreement between them, that the whole flour on which the defendants had advanced, should be sold by the persons to whom it had been consigned, and that the defendants might retain' out of the proceeds the amount of the advances which they had made on the security of the flour, and their charges, and that the balance of the proceeds should be paid to the plaintiffs. The advantage secured to the plaintiffs, was the contract of the defendants to pay to the former the whole net proceeds, beyond the advances and charges. This agreement has been fully executed on the part of the defendants. Any undeclared intent of the plaintiffs, in entering into the arrangement, cannot affect its legal operation, nor impose upon the defendants, or continue any liability on their part, which, in the absence of any such intent, would not exist. (Freeman v. Spaulding, 2 Kernan, 373.)

The affidavit made by John Wilmot, on the 2Qth of May, 1854, the third day after this arrangement between all the parties, afi firms that the sale and delivery to Patterson were absolute, an express promise by Patterson, subsequent to the delivery, to pay on the 17th the full contract price, and a failure to perform his promise. That affidavit was made to procure an attachment against the property of Patterson. An attachment can be issued only in an action for the recovery of money. (Code, § 227.) An affidavit which can authorize one to be issued, must show that a cause of action exists against the defendant. The cause of action stated in this affidavit, arose on contract, for goods sold and delivered to Patterson.

Without stopping to inquire whether the plaintiffs, after having instituted a proceeding to seize the property of one of the parties to this transaction, on an unqualified affidavit of an unconditional sale and delivery, are precluded from asserting the contrary, as a basis of different remedies, it is clear that the affidavit furnishes very strong evidence against the plaintiffs that the order of Patterson, as accepted by the defendants, was taken as a settlement of all claims of the former against the latter, except such as might justly be based upon the acceptance itself.

We think the defendants had a right to have the jury instructed in the terms of their fifth request, and that the instruction, that if Wilmot “ did not intend to give up his claim, he is not bound,” was erroneous. Some questions of minor importance, in relation to the admission of evidence, remain to be considered.

It is not apparent that the fact that the defendants had been in the habit of making advances to Patterson, or the fact that he had or had not made purchases from the plaintiffs prior to this, tended to throw any light upon the actual character of the transaction in question, or that they would authorize any inferences by the jury, in relation to the truth of the matters at issue, which they could not have made if no such facts had been proved. This evidence was received against the objection and exception of the defendants.

It is not easy to perceive on what principle its admission can be justified. The evidence being incompetent, and the defendants having excepted to its admission, an error was committed which entitles the defendants to a new trial.

Murray v. Smith, (1 Duer, 412,) was reversed by the Court of Appeals solely on that ground, although, in the opinion of the court, the evidence excepted to ought not to have influenced the verdict of the jury. When improper evidence has been given, and its reception was excepted to, the court will not, on a bill of exceptions, attempt to speculate as to its probable effect upon the conclusions of the jury, unless it can clearly see that it could not have had any influence upon them in forming their verdict.

We do not see that we can say this evidence might not have prejudiced the defendants’ case in the estimation of the jury.

The character of a witness on the part of the plaintiffs was thoroughly impeached, if credit is to be given to the impeaching witnesses. A supporting witness, who saw him for some six months, twelve years prior to the trial, and who had not seen him since then until within six months of the time of the trial, and .who had “never heard him spoken of one way or the other,” was allowed to testify that he considered him “ a credible witness.” To the admission of this evidence the defendants objected and excepted.

This decision cannot be sustained, unless it be a sound rule that a witness whose character is impeached may counteract the effect of the impeaching evidence by proof that, in the opinion of others who have but a slight acquaintance with him, and never heard him spoken of one way or the other, and who know nothing of his general character, he is a credible witness.

I presume no one holds the opinion that a witness can be impeached by the testimony of persons who really know nothing of his general character, and never heard him spoken of, that they do not consider him a credible witness. If such evidence is incompetent for the purpose of impeaching a witness, I think it equally so to sustain one who has been effectually impeached. In such cases, general character is the broadest form of inquiry admissible. Particular offences or vices cannot be proved or disproved.

The practical question is, has the witness such a want of moral character, taking the character which he has acquired among those who know it as the standard, that others cannot credit what he may say ?

We think the evidence received to sustain the character of the impeached witness was improperly admitted, and that on that ground also the defendants are entitled to a new trial.

The verdict must be set aside, and a new trial ordered, with costs to abide the event.


source: Caselaw Access Project

author: By the Court. Bosworth, J.

license: Public Domain

text:
    The President, Directors, and Company of the Nantucket Pacific Bank, respondents v. Horatio N. Stebbins. The same v. The same.
    One Potter, of Massachusetts, and Stebbins, the defendant, on the 15th of August, 1864, exchanged notes, each giving to the other his two notes, of the same date and amount, and having the same time to run. Potter, holding the two notes received from the defendant, on the security of them and of other notes, amounting in all to $11,956.04, procured the plaintiffs on the 23d of August, 1854, to discount his note of that date for $8000, payable ten days thereafter. He failed to pay his $8000 note. He was proceeded against as an insolvent, in Massachusetts, and on the 11th of October, 1854, Shaw & Swain were appointed trustees of his estate by a commission of insolvency, and he assigned his property to them as such trustees. When both of the said notes, so made by Stebbins, became due, and separate suits had been brought thereon, only $3614.67 of the other collaterals had become due, and they had been paid. When the said two actions were tried, and they were tried together, all of the other collaterals had matured and produced enough to pay the note which the plaintiffs discounted for Potter, into the sum of $196.11, including interest.

      Held, that the plaintiffs were entitled to judgment in the actions on the notes made by Stebbins for the amount of the notes, with interest and the costs of the actions; that each note was a good consideration for the one exchanged for it; that at the time Potter conveyed his estate to Shaw & Swain, as trustees in the insol- . vency proceedings, the defendant could not have compelled the notes made by him to be set-off against those he received in exchange therefor; that any equities which Stebbins might have, could only be considered and determined . in an action or proceeding, to which Potter, Shaw, and Swain were parties.
    That an order or provision in the judgments, permitting him to be discharged therefrom on paying to the plaintiffs the balance due to them from Potter on the $8000 note, and the costs of the twc actions, and the residue of the moneys into court, to abide its further decision, on application for such moneys to be made either by Shaw & Swain, or by the defendant, on due personal notice to the other of the time and place,of such application, secured to the defendant all the relief to which he was entitled in such actions on such a state of facts.
    (Before Duer, Bosworth and Woodruff, J.J.)
    December 13, 1856;
    February 14, 1857.
    These actions came before the court on an appeal by the defendant from the judgment rendered in each of them. They were tried before Mr. Justice Duer, without a jury, on the 26th of December, 1855, and the appeals were argued together, the facts in each case being substantially the same.
    The first action is on a note made by the defendant, dated the 15th of August, 1854, and payable to the order of Thomas Potter, two months from its date, for $1936.42; and indorsed by Potter to the plaintiffs. On the 7th of March, 1856, judgment was given for the plaintiffs for $2120.54 damages, and $136.28 costs.
    The second action is on a note of the same date as the other, made by Stebbins to order of Potter, payable three months from its date, for $2084.37, and indorsed by Potter to the plaintiffs. Judgment was given for the plaintiffs in this action, on the 7th of March, 1856, for $2270.39 damages, and $115.03 costs.
    The plaintiffs are a Massachusetts corporation, doing business at Nantucket, in that state, and have power to receive, hold, and own promissory notes, etc.
    On the 23d of August, 1854, the plaintiffs discounted for said Thomas Potter, of Nantucket, Massachusetts, his note for $8000, dated on that day, and payable ten days after date, to the order of William Mitchell, cashier at the Leather Manufacturers’ Bank in the city of Néw York.
    To secure the payment of his note, and to induce its discount, Potter deposited with the plaintiffs the following notes and acceptances as collateral securities, viz. t
    1 Note of E. W- (Gardner, due Sept. Í2W, 1854, for $ 924.00
    2 “ Horatio N. Stebbins, due Oct. 1518, “ 1936.42
    3 “ Samuel Woodward, due Oct. 2023, “ 1025.00
    4 “ Blow and March, due Nov. 14, “ 1665.67
    5 “ Horatio N. Stebbins, due Nov. 15ls, “ 2084.37
    6 “ Decker and Godine, due Nov. 24S7, “ 1320.58
    7 Acceptance of W. & F. W. Whittemore, due Jan. 1821,
    1855, for . . ...... 1500.00
    8 Acceptance of W. & F. W. Whittemore, due Jan. 22M
    1855, for........ 1500.00
    The total amount of these collaterals was, $11,956.04.
    The notes Nos. 2 and 5, are the notes on which these suits are brought.
    Potter failed to pay the note for $8000 at its maturity.
    On the 11th of Octover, 1854, an assignment of his property was made to John H. Shaw and Alanson Swain, by a commissioner of insolvency, under the insolvent laws of the state of Massachusetts, the said Potter being insolvent.
    All the above collaterals were paid on the days when they fell due, except Nos. 2 and 5, the notes of defendant, on which nothing has been paid.
    Defendant’s first note became due and was protested October 18,1854. On that day only $924 of the collaterals had come due, and only that sum had been paid on the $8000 note.
    Suit was brought on that note Nov. 3, 1854. On that day only $1949 of the collaterals had become due, in addition to the note in question, and only that sum had been paid on the $8000 note.
    Defendant’s second note came due and was protested Nov. 18, 1854. On that day only $3614.67 of the collaterals had become due, besides the notes of the defendant, and only that sum had been paid on the $8000 note.
    Suit was brought on the second note, Nov. 25, 1854. On that day only $3614.67 of the collaterals had become due, besides the notes of defendant, and only that sum had been paid on the $8000 note.
    On the 25th of Jan., 1855, after the last collateral was paid, there remained due to the plaintiffs the sum of $183.23 on the $8000 note, and that sum, with interest from that date, is still due thereon.
    The two notes in suit were given by defendant to Potter in exchange for two notes of the same date, tenor and amount respectively, made by Potter to the order of Stebbins, and payable at the Leather Manufacturers’ Bank in the city of New York.
    These notes were not paid by Potter, and when they became due Potter failed to take them up. Defendant was the holder and owner of them at the time of the commencement of these actions. One of these notes, viz., the $1936.42-100 note was indorsed by Stebbins, and he had it discounted, and received the money on it; and afterwards, on the day it became due, he paid the money and took it up, and has since been the holder of it. The other note, viz., the $2084.37-100 note, was not used in any way by defendant, but held by him ever since it was made.
    They were afterwards proved by the defendant before the Commissioners in Insolvency.

      The exchange of notes between defendant and Potter was made in the city of Few York.
    This statement of facts was admitted to be true, but the right to object to proof of any of such facts and to their relevancy was reserved.
    The defendant’s counsel objected to the relevancy of such of the foregoing facts as related to the insolvency of Thomas Potter, or to the assignment of his property by a commission of insolvency under the insolvent laws of Massachusetts, or to the two notes of Thomas Potter held by defendant, having been proved by the defendant before the commissioner in insolvency.
    The court overruled the objection, and the defendant’s counsel excepted.
    The said statement of facts and admission were there'received in evidence.
    The court made its decision on the 6th of March, 1856, and decided that, it appearing to the court as a conclusion of law upon the said facts, that if upon the said facts any equities arise in favor of the defendant, in respect to the note on which this suit is brought, such equities can only be considered in an action or proceeding in which the said Thomas Potter and his assignees are before the court; and it therefore appearing that the said facts constitute no defence to the plaintiffs’ suit, but that the plaintiffs, either in their own right, or as trustees of the said Thomas Potter, and persons claiming through him, are entitled to recover from the defendant the whole amount of the said note with interest.
    The court made an order, in each action, simultaneously with the decision thereon, that on perfecting judgment, an execution might be issued to collect the costs, but none should be issued to collect the damages short of thirty days.
    That if within the thirty days, the defendant should pay the costs and sheriff’s fees, if any, to the plaintiffs, and should also pay the damages with interest, into court, to abide its further order, and give notice thereof, the execution should be countermanded. If he failed to make such payment and give notice within the thirty days, execution might be issued forthwith for the whole judgment, and then the further provisions of the order should be of no effect.
    It then further provided, that if the moneys were paid and notice given within the thirty days, the plaintiffs, within thirty days thereafter, should servé on Potter, Shaw and Swain, in person, a copy of said order, and upon filing with the judgment record, proof of such service, by affidavit or admission, the plaintiffs should be discharged from all liability to Potter, Shaw and Swain, or to either of them, or to any person claiming under them for or on account of the notes, or either of them, or the proceeds thereof; that the defendant might apply to the court, at any Special Term, for the moneys so paid into court, upon petition, on proof of personal service of it, on Potter, Shaw and Swain, at least forty days before the time named for presenting it, if served out of the state, and at least twenty days if made in the state.
    That Potter, Shaw, and Swain, or either of them, or any one claiming under them, might apply to the court at Special Term for the moneys so paid into court, on petition and due proof of personal service thereof on the defendant at least twenty days before the time named for presenting it.
    The order in each action was in the same terms, except that the order in the first action permitted execution to be issued forthwith to recover not only the costs of that action but also $196.11, parcel of the damages, being the balance, with interest, due to the plaintiffs from Potter, over and above the amount realized from the other collaterals, on the security of which his note for $8000 had been discounted.
    Judgment was entered in each action on the 7th of March, 1856, absolute and unconditional in its terms, for the recovery of the amount of the note and interest, with the costs of suit.
    The defendant duly excepted to so much of the decision of the court, made in each action, as decides as conclusions of law:
    That if upon the facts, any equities arise in favor of the defendant in respect to the note on which this suit is brought, such equities can only be considered in an action or proceeding in which the said Thomas Potter and his assignees are before the court, and that said facts constitute no defence to the plaintiffs’ suit; but that the plaintiffs, either in their own right or as trustees of the said Thomas Potter, and persons claiming through him, are entitled to recover from the defendant the whole amount of said note with interest:
    That the president, directors, and company of the Nantucket Pacific Bank, the plaintiffs, do recover of Horatio N. Stebbins, the defendant, the amount of the note and interest, besides costs and disbursements.
    The defendant also excepted to so much of said decision, as found as facts, that on the 11th day of October, 1854, an assignment of his, (the said Thomas Potter,) property, was made to John H. Shaw and Alanson Swain, by a commissioner of insolvency, under the insolvent laws of the state of Massachusetts, the said Potter being insolvent; and that the two notes of Potter, held by defendant, were proved by the defendant before the commissioner in insolvency.
    The defendant also excepted: that any testimony relative to the insolvency of, or assignment by said Thomas Potter, or to the proof of said notes before the commissioner, was irrelevant and inadmissible.
    That the decision is contrary to law, and against the evidence.
    The answer of the defendant stated that the two notes in question, with others, were transferred by Potter to the plaintiffs to secure his indebtedness to them; that they had realized enough from the other collaterals to pay them in full; the making of notes by Potter in exchange for those in suit; that they are owned by the defendant and unpaid; that after the exchange of notes between Potter and the defendant, Potter was proceeded against as an insolvent, in Massachusetts; that Shaw and Swain had been appointed therein trustees of his estate, and he had assigned his property to them as such trustees; that these suits were in truth prosecuted for the benefit of said Shaw and Swain, and set up as a counter-claim in either action' the note made by Potter, and given to defendant in exchange for the note sued in such action, and prayed that the note made by Potter might be set-off against the corresponding note made by the defendant and delivered in exchange therefor, and that the note made by the defendant should be surrendered to him, and the complaint be dismissed, with costs.

      F. Tillou, for defendant and appellant,
    made and argued the following points:—
    I. The plaintiffs held the note as collateral security only, with other collaterals, to secure a loan by them to Thomas Potter. On payment of Potter’s indebtedness to them, all the surplus col-laterals reverted to Potter as the party beneficially interested in them.
    II. The plaintiffs have been paid all Potter’s indebtedness to them, except $183.23. All beyond that amount is prosecuted for the benefit of Potter, who is the party beneficially interested, and whom the plaintiffs represent as his agent; and the note set up in the answer is a good set-off beyond the $183.23 and interest, and beyond this the plaintiffs are in precisely the same position that Potter would be were he the plaintiff. (Barbour on Set-off, p. 71, and authorities cited; id. p. 115 to 129, and authorities; 2 R. S. 4th Ed. 354, § 12, sub. 7; Coppin v. Craig, 7 Taunton, 243; Hawkins v. Whittin, 10 Barn. & Cress. 217; Dixon v. Cass, 1 Barn. & Adolph. 343.) (a.) The plaintiffs, nor Potter’s assignee in insolvency, can claim any better or superior equities than Potter himself could.
    III. The question of the insolvency of Potter, under the laws of Massachusetts, or any proceedings thereunder, is immaterial and cannot arise in this case, to the prejudice of Stebbins’ defence or set-off. (Hoyt v. Thompson, 1 Selden, 320; Hoyt v. Thompson, pr. Paige, J., p. 350, 351; Barbour on Set-off, p. 115 to 129.) (a.) The defendant objected to the testimony of such insolvency.
    IV. The statutory insolvent proceedings against Potter, in Massachusetts, whereby his property was assigned to a commissioner in bankruptcy, under the insolvent laws of Massachusetts, did not operate to transfer the debt due by the appellant Stebbins, a resident of this state, as maker of the note in suit, or so as to prejudice or affect his right of set-off or counter-claim, or other defence as against Potter. And the foreign assignees of Potter stand in precisely the same position as against Stebbins, that Potter himself would, if there had been no insolvent proceedings had against him. (Hoyt v. Thompson, 1 Selden, p. 320; Hoyt v. Thompson, pr. Paige, J., p. 350 and 351, and authorities cited; Abraham v. Plestero, 3 Wend. 538; Johnson v. Hunt, 23 Wend. 89; Willett, president v. Waite, 12 Howard Sp. T. R. p. 34.)
    V. So long as Stebbins held the note of Potter before his insolvency or bankruptcy, it can be set-off against the note in suit. (Barbour on Set-off, 115 to 129; ex parte Hall Co. Bank Laws, 553; Root v. Taylor, 20 John. 137; Smith v. Brinckerhoff, 8 Barbour, 519, affirmed; 2 Selden, 388; Hancock v. Entwistle, 3 Term. R. 435; Coppin v. Craig, 7 Taunton, 243; Collier v. Jones, 10 Barn. & Cress. 777; Dixon v. Evans, 6 Term R. p. 57.) (a.) That Stebbins did so hold the note.
    YI. The judgment was against law, and should be reversed, with costs.
    YH. The stay of proceedings under the order should be extended, so as to preserve the rights of the appellant, in case he should deem it advisable to appeal bom the furtller judgment of this court.

      West & Clover, for respondents.
   By the Court. Bosworth, J.

The note, on which the first action was brought, matured on the 18th.of October, 1854. That on which the second action was brought, matured on the 18th of November, 1854. The first action was commenced on the 3d of November, and the second on the 25th of November, 1854.

On the 23d of August, 1854, the plaintiffs discounted for Thomas Potter his note of that date, for $8000, payable ten days after its date, on the deposit of the two notes in suit, with others, as collateral security. When the second action was commenced, the amount due to the plaintiffs, on the $8000 note, exceeded the aggregate of the two notes in suit.

Thomas Potter was a citizen of Massachusetts. On the 10th of October, 1854, before either of the two notes in suit had become due, Potter being insolvent, an assignment of his property was made to John H. Shaw and Alanson Swain, by a commissioner of insolvency, under the insolvent laws of the state of Massachusetts. The effect of such an assignment, according to those laws, is not stated in the case, nor are the laws themselves referred to. The fact that such an assignment was made is alleged in the defendant’s answer, and was admitted on the trial. It was also admitted that the defendant proved, before the commissioners in insolvency, the notes made by Potter and given to the defendant in exchange for the two in suit. The admissibility of proof of these facts was objected to by the defendant, but not the nature or sufficiency of the proof.

The assignment must be deemed effectual to transfer to the assignees, Shaw & Swain, all the right, title, and interest of Potter, to the notes in suit. That gave them a right to claim of the plaintiffs the surplus of the collaterals over and above the amount necessary to satisfy the $8000 note.

If the present defendant had instituted an action on the 10th of October, 1854, against Potter and the plaintiffs, before the assignment to Shaw and Swain, to compel a set-off of one set of notes against the other, it would have been of no avail. The plaintiff would have had a right to have the amount of the two notes then applied towards the payment of the $8000 note. Neither the notes made by the defendant, nor those made by Potter, were due when that assignment was made. The note of llOSOylnr, made by Potter, had been discounted for the defendant, and from that time until he took it up, on the day of its maturity, he was not the owner of it. The notes made by the defendant cannot be set-off against those made by Potter, under the Revised Statutes, in relation to set-offs, because neither of the notes was due at the time of Potter’s assignment in insolvency.

Courts of equity follow the law in regard to matters of set-off, unless there is some intervening natural equity going beyond the statutes of set-off, which constitute the general basis of set-off at law. (Howe, et al. v. Shephard, 2 Sum. 412; Gordon v. Lewis, et al. ib. 633-634.)

It is also a general rule, that one of two persons indebted to each other, may file a bill to compel a set-off, if the debt owing to himself is due, though the one owing by himself is not due, if the other party is insolvent; but he cannot do so before the debt owing to himself is due. (Keep v. Lord, 2 Duer, 78; Bradley v. Angel, 3 Coms. 475.)

But that rule is applicable only to the parties themselves, when no rights of third parties have intervened. That is not this case.

If Potter had owned the notes in suit when they matured, and had then been insolvent, it may be true that the present defendant could have maintained an action to compel a set-off of the one set against the other. But this case does not present any such question. There is no allegation in the answer, that there was any expectation or agreement that one note should be set-off against the other, or that Potter should pay at maturity the notes made by Stebbins. The inference, from the allegations of the answer, as well as from the facts found by the court, is that it was expected each party would pay the notes made by himself, and that the notes of the one were the consideration given for those oí the other.

I think it quite apparent, that the legal and equitable rights of the defendant upon the facts, as they existed at the time of the trial, depend upon the effect of the insolvent proceedings in Massachusetts, and upon the effect, also, of the act of the defendant, in proving before the Commissioners in Insolvency, the two notes made by Potter.

Shaw and Swain are necessary parties to any proceedings which may be had to determine those rights.

The utmost relief to which the defendant is entitled, is exemption from liability to the plaintiffs, on paying to them $196^-, and their costs in both actions, with interest, and the residue of the judgments into court to abide its further order. That relief the court, at Special Term, intended to secure, by the order dated one day prior to the judgment. Such further order will be made when the relating rights of the defendant and of Shaw & Swain to such residue have been determined by an action to which they are all parties, or otherwise. The judgment in the first action should be modified so as to secure to the defendant an opportunity to claim the relief to which he may show himself entitled, by adding to it these words, viz., “And it is further adjudged, that this judgment may be satisfied, and, also, all liability of the defendant to the plaintiffs by reason thereof, on payment, by the defendant to the plaintiffs, or to their attorneys, within thirty days, of the two sums of $196r¡7¡7 and of $136-^-, with the interest thereon, and the costs of this appeal and the residue of said judgment, with inter est thereon, into the United States Life Insurance and Trust Company, to the credit of this action, to abide the further order of the court, upon a final determination of the rights of the defendant, and of John H. Shaw and Alanson Swain, assignees of Thomas Potter, under insolvent proceedings in the state of Massachusetts, or of their successors in office, in respect to such residue.

“ It is further adjudged that, in order to determine the right to such moneys, the defendant may apply to this court, at Special Term, by petition, for an order that they be paid to him, on due proof of service of a copy of said petition, and of notice of the time of presenting the same upon the said plaintiff, and the said Potter, and the said Shaw and Swain, or the successor in office of said Shaw and Swain, such service to be made at least forty days before the day designated for presenting the said petition; a copy of this judgment to be served on each of said persons, together with the said petition and notice.”

In the second action, the sum to be paid to the plaintiffs, or their attorneys, is $115-^-, with interest, and the costs of the appeal. The residue of the judgment, with interest, to be deposited. And the judgment in the second action will be modified accordingly, by adding to it the provisions directed to be added to the judgment in the first action.

In other respects, the judgments must be affirmed, with costs.


author: By the Court. Woodruff, J.

text:
    George M. Prall v. George W. Hinchman.
    Ho action can be maintained against the indorser of a promissory note by indorsees in whose hands it was placed for a special purpose, when it appears that to their knowledge the purpose for which it was delivered to them had wholly failed, and that it was their duty to have returned the note to the party from whom they had received it.
    The objection in such a case to a recovery is equally fatal, whether the suit is brought in the names of the indorsees or in that of a nominal plaintiff for their benefit.

      Held, that as it clearly appeared from the evidence in this case, that the plaintiff had paid no value for the note, had not retained its possession, and had not directed the suit to be commenced, he could not be regarded as a bona fide holder, and not being the real party in interest, had no right under the Code, to maintain the action.

      Meld, that one of the original indorsees was properly rejected as a witness on behalf of the plaintiff, upon the ground that it was for the immediate benefit of himself and bis partners that the suit was prosecuted.
    The question, whether the suit is prosecuted for the immediate benefit of a witness offered on the part of the plaintiff, is a question of law which it belongs to the court alone to determine.
    Hence, all the evidence bearing on the question must be addressed to the court, and when other witnesses are examined, to prove the incompetency of the witness, as having an immediate interest, he cannot be examined to contradict them by proving his own competency. He is no more competent for this purpose than to testify to the merits of the case.
    Prder denying a new trial affirmed, with costs.
    (Before Duer, Bosworth and Woodruff, J.J.)
    Dec. 15, 1856;
    Feb. 14, 1857.

      Appeal by the plaintiff from an order, at Special Term, denying a new trial, upon a case and exceptions.
    The action was by the plaintiff as indorsee, against the defendant, as the indorser of a promissory note for $1198.86, made by Young and Ward, and payable to his order.
    The cause was tried before Duer,' J., and a jury, in October, 1856, and upon the evidence given, and the motion of the defendant’s counsel, the Judge dismissed the complaint. The plaintiff’s counsel excepted to the decision.
    The substance of the pleadings, the evidence given, and the exceptions taken on the trial, and the questions of law argued by the counsel on the hearing, are all fully stated in the opinion of the court.

      J. G. Dimmich, for the plaintiff,
    contended that the complaint ought not to have been dismissed, and that the order denying a new trial ought, therefore, to be reversed. He cited Gage v. Kendall (15 Wend. 640); Gurney v. Barnes (25 Wend. 411); Code, § 113.

      James T. Brady, for the defendant,
    cited Foot v. Collins, (21 Wend. 109,) and James v. Archer, (22 Wend. 480,) to prove that a Judge has power to nonsuit after evidence has been given on both sides, and he cited Rudd v. Davis, (3 Hill, 287, affirmed; 7 Hill, 529,) to prove that to warrant a nonsuit in such a case, it is not necessary that the evidence for the defence should be conclusive. It is enough that a verdict for the plaintiff would be set aside, as against the weight of evidence. The counsel then insisted, upon a review of the whole evidence, that it established completely the defence set up in the answer, and that the Judge, upon the trial, could not do otherwise than dismiss the complaint, or direct the jury to find a verdict for the defendant.
   By the Court. Woodruff, J.

The complaint in this action is founded upon' a promissory note made by the firm of Young & Ward, payable to the order of; and indorsed by the defendant; and, in making title to the note, the plaintiff avers no other indorsement, but professes to derive title directly from the plaintiff, and through his indorsement only; thus, he avers “that the said note was by the said defendant, Greorge W. Hinchman, indorsed in blank and delivered to the plaintiff.”

The answer sets up as a defence, that the note was indorsed by the defendant without consideration for the accommodation of the makers, for a special purpose, and upon the express understanding that it should not be used unless the makers, (who were then embarrassed,) succeeded in procuring an extension of credit from all their creditors, in which event, the note was designed to be used as a security to the firm of Young, Bonnell & Sutphen, creditors of the makers; that although the note was left in the hands of one of the members of the firm of Young, Bonnell & Sutphen, they had knowledge of the condition upon which the defendants indorsed the note, and that the makers failed to procure the contemplated extension. That the plaintiff is not the lawful holder and owner of the note; that if any transfer has been made to him, such transfer was without consideration, and that the note is still the property of Young, Bonnell & Sutphen, for whose benefit this suit is prosecuted. Other matters are set up in the answer, but they are not material to this appeal.

On the trial, the plaintiff having read the note in evidence, and proved protest and notice to the defendant, it was shown on the part of the defendant, by the testimony of one of the makers of the note, that the note was indorsed by the defendant for the accommodation of the makers; that the makers were at the time engaged in an endeavor to procure an extension from their creditors ; that Young, Bonnell & Sutphen would not consent to such extension unless indorsed notes were given them; that the defendant’s indorsements upon this and other notes were for that reason procured; but the indorsements were given upon an agreement that the notes should not be used at all unless the extension was obtained, and the defendant was particular in requiring that the notes should not go out of the maker’s hands. Sutphen of the firm of Young, Bonnell & Sutphen, was informed of the transaction, and of the condition upon which the indorsement was given. Pending the negotiations with the creditors, the notes were delivered to Sutphen, but, although meetings of the creditors were had, the efforts of the makers to procure an extension failed; and the witness stated that “ the reason why he did not demand the notes after the extension fell through, was negligence.”

To this evidence there was no contradiction. Indeed, upon this branch of the case no other witness was examined.

It is, therefore, obvious that Young, Bonnell & Sutphen had acquired no title to the notes as against the defendant. The note was indorsed by the defendant for a special purpose, indorsed without consideration, and was not to be used except in a contingency which never happened, and of all this, Young, Bonnell & Sutphen had notice before the note was placed in their hands. They could not recover thereon against the defendant.

The defendant, then, in order more fully to impeach the plaintiff’s title, read in evidence the deposition of the plaintiff himself, taken, due, bene esse, in this cause, in which he testified, that upon a certain occasion before the note became due, Mr. Young, (of the firm of Young, Bonnell & Sutphen,) being at dinner with the plaintiff at his house in Jersey City, proposed to him to purchase the note now in question, and that he (the plaintiff) “ told him if their names (Young, Bonnell & Sutphen) were on it, he would give $1000 for it.” That before he left he (Young) said that plaintiff could have it, and left the note with him; but at that time the names of Young, Bonnell & Sutphen were not on it.

If the transaction had terminated here, so far as the bargain was to be judged of, it is possible that a payment or tender of the $1000 would have entitled the plaintiff to retain the note, though not indorsed by Young, Bonnell & Sutphen, and, perhaps, he would have had. a right to demand the indorsement of that firm in fulfilment of the apparent agreement of Young, implied in the facts stated; and, perhaps, he might if he chose waive their indorsement, and insist upon retaining the note on paying the $10QO. But the parties did not stop here; within a day or two after the above conversation, Young, Bonnell & Sutphen sent for the note, and the plaintiff returned it to them-, and he testified that he never saw it afterwards, and he does not know who gave directions to sue it, and he has paid no costs of protest, nor lawyer’s fees.

Besides this, he testifies that at the time of the above conversation with Young, he had in the hands of Young, Bonnell & Sutphen over $1000, all of which he subsequently drew out, and that the account between them is, he thinks, closed.

It is true that he says he was told by “the bookkeeper,” “it might have been three or four months after the conversation,” and of course long after the note became due,that Young, Bonnell & Sutphen had charged him with $1000; but he does not say that he ever assented to the charge, nor that the note with Young, Bonnell & Sutphen’s indorsement thereon was ever delivered to him or placed in any manner at his disposal, nor that he ever consented to buy it, or did buy it, without such indorsement. The extent of his further evidence on the subject is this: “ Mr. Young once asked me what he should do with it, and I told him to put it through.”

It is quite apparent, from this state of the proofs, that the title to this note never passed out of Young, Bonnell & Sutphen. At no moment have they been in a position to compel him to pay the $1000, and he has neither accepted any transfer of the note to himself nor had any actual possession or control of the note since he voluntarily returned it to them, and so far from having paid value therefor, he has withdrawn from their hands the money they held, and, as he understands it, closed his account with them.

It is not material to go further, or indulge in merely probable inferences;if it were, it would appear in no slight degree probable that Young, Bonnell & Sutphen never did indorse the note until after this suit was brought, and after the de lene esse examination of the plaintiff himself, when it appeared material that they should do so in order to exhibit an apparent performance of the understanding with Young, to which the plaintiff had testified, in which' defendant’s offer to give $1000 for the note was on the condition that they would indorse it. This probability is made very strong by the fact that the complaint sets out no such indorsement, but avers title in the plaintiff by direct indorsement to himself by the defendant. It is hardly probable that the plaintiff, having made it one of the conditions of his purchase that Young, Bonnell & Sutphen should indorse the note, would consent, when a suit became necessary, and his recovery was placed in- doubt, to strike out their indorsement on the trial. But it is needless to found any thing upon this possible or probable state of the case.

It is plain, upon the plaintiff’s own testimony, that he had no title to the note, nor any possession or control over it, unless the mere fact that Young, Bonnell & Sutphen had caused a suit to be brought thereon in his name is sufficient to overcome the inferences from his own testimony.

But it is argued that the plaintiff, by his attorney, having produced the note on the trial, indorsed in blank, shows a legal title in himself, and the possession of the note on the trial not being shown, as between him and Young, Bonnell & Sutphen, to be mala fide, the defendant can suffer no prejudice, because a recovery by the plaintiff will operate as an effective bar to any other suit in whose name soever brought.

Two answers suggest themselves: First, the defendant has shown, without contradiction, a state of facts which make it unjust that he should pay, and under which he is not legally liable to pay this note to any one, except he be a Iona fide holder for value, Without notice of the conditions of his indorsement; the plaintiff is not such a holder. And, second, the Code requires that the suit shall be brought in the name of the real party in interest. The act of Young, Bonnell & Sutphen, in placing the note in the hands of an attorney, to be sued in his name, when he had no title to the note, and had parted with no value therefor, and when they had no right of action thereon, did not prima facie, at least, make him the real party in interest.

We have no hesitation in saying that, upon the proofs as given,, the suit was prima facie brought by Young, Bonnell & Sutphen, for their own benefit, and that the use of the plaintiff’s name (he being the brother-in-law of one of .them) was a mere artifice, by which they sought to compel the defendant to pay the note, which they had no right, either legal or equitable, to enforce.

Under such circumstances we are clear that a verdict for the plaintiff would have been against evidence, and that the Judge, therefore, committed no error in ordering the complaint to be dismissed, if no evidence offered by the plaintiff was improperly rejected, nor any was received from the defendant which was legally inadmissible.

Several exceptions were taken on the trial by the plaintiff’s counsel. Our attention was called to one only, either by the points of counsel or by his argument of the appeal. The others were not claimed to have been well taken, and have probably no foundation.

The plaintiff’s counsel did, however, suggest that the Judge erred in not permitting Sutphen to testify on behalf of the nominal plaintiff, and he insists that if he had been permitted to testify he might have stated facts which the plaintiff either did not know or which he had omitted to state, which, if true, would show either that the plaintiff was a bona fide holder for value, or that the witness’s firm held the note under circumstances which would entitle them to recover, had the suit been in their name.

The witness was rejected, upon the ground that he was one of the parties for whose immediate benefit the suit was brought. It is apparent, then, that even if it be assumed that he could have testified to facts showing Young, Bonnell & Sutphen’s original right to enforce the note, that evidence would not obviate the objection. It still appeared prima fade established that the suit was brought for their benefit.

It was rather a bold offer, to show by Sutphen that the plaintiff was a bona fide holder for value, or the legal owner in any sense, in opposition to the testimony of the plaintiff under oath, or when the plaintiff was not himself aware of any facts constituting him such owner. But it is not, perhaps, for that reason to be condemned, unless it be true that when a plaintiff (examined as a witness by the adverse party) makes admissions which show he is not the real party in interest, he is concluded thereby.

But the ruling was, we think, right upon this ground: as the case stood, it was prima facie established that the suit was prosecuted for the immediate benefit of the witness and his copartners. In that state of the proofs, the court were to decide whether he was a competent witness. The decision of that question is, of course, always a question for the court, and none the less so because it involves the very question in issue, or upon which the jury are to pass. (Schapp v. Scadietzky, 1 Abbott, 366; Doe v. Davis, et al., 10 Ad. & El. N. S. 314.)

When a witness is called, the adverse party may either examine him preliminarily, or examine other witnesses to show that his interest is such as to render him incompetent; and if the fact be established, the court must reject him. If the proof be by other witnesses, the witness so called cannot be examined to contradict them, or prove his own competency. He is no more competent for this purpose than he is to testify to the merits of the cause.

The Code, in providing (§ 398) that no person shall be excluded by reason of bis interest, adds expressly, (§ 399,) that this shall not apply to one for whose immediate benefit the suit is prosecuted.

The witness, when called, stood before the court¡prima fade, in the condition described in this exception, and was, therefore, prima fade incompetent. Had the plaintiff called other witnesses, and shown that the witness had no interest, or that the witness had assigned or released all his interest before suit was brought, he might then have been examined.

We think there was no error in rejecting him when offered.

The order appealed from must be affirmed, with costs.


author: By the Court. Hoffman, J.

text:
    Charles F. Weber and Carl Graseman v. George R. Sampson and Lewis W. Tappan.
    'this action was brought hy the plaintiffs to recover their commissions, as brokers, for procuring a charter-party for a ship on a voyage from Calcutta to London. The defendants held the legal title to the ship, but held it as mortgagees, and were not in possession. The charter-party was not signed by them, and there was no proof that the person by whom it was signed, and who employed the plaintiffs, acted by their authority, or that they had ratified his acts.

      Held, that, under these circumstances, the defendants were not liable for the commissions claimed, and that the complaint was properly dismissed. A mortgagee of a ship, if he is not in possession, although the legal title may be vested in him, and the ship be registered in his name, is not liable, as owner, for supplies furnished, or services rendered, to the ship. To render him liable an express contract is necessary.
    Judgment for the defendants affirmed, with costs.
    (Before Hoffman and Slosson, J.J.)
    January 9;
    February 14, 1857.
    Appeal from a judgment, in favor of the defendants, dismissing the complaint with costs.
    The cause was tried before Chief-Justice Oakley, and a jury. The plaintiffs having rested, the defendants moved for a dismissal of the complaint. The plaintiffs then offered to produce some further evidence, which is hereafter noticed. The Judge held, that the testimony, including what was offered and treated as proven, could not sustain the plaintiffs’ claim, and granted the motion to dismiss the action. To this the plaintiffs excepted.

      A motion for a new trial was heard at Special Term, before Mr. Justice Bosworth, and the same was denied, and final judgment was entered. From this the appeal is taken.
    The facts are sufficiently stated in the opinion of the court.

      J. Owen, for the plaintiffs and appellants.

      J. C. Carter, for the defendants and respondents.
   By the Court. Hoffman, J.

The action is brought to recover from the defendants the amount of commission alleged to be due to the plaintiffs, as brokers, for procuring a charter for the ship Rockland. The allegation is, that the defendants were owners of the vessel, or trustees holding the legal title, or mortgagees in possession, and in law liable as owners; that Horace B. Tibbetts, as their agent, employed the plaintiffs; that they effected the charter, and were to receive five per cent, commission.

The charter-party produced in evidence, is dated New York, February 12, 1851, and is between H. B. Tibbetts of New York, part owner and agent of the good ship Rockland, and Messrs. Ewbank and Gray, of London, merchants. It describes the vessel as now in the berth in New York, for San Francisco, California, and stipulates that she shall, with all convenient speed, sail and proceed from California to Calcutta in the East Indies.

The plaintiffs allege that the said Tibbetts had full power to bind the ship and her owners by the terms of the charter-party. The vessel was to proceed from Calcutta to Europe, to be addressed to Graseman & Co., London; and it was declared in the charter-party, that a commission of five per cent, on the gross amount of freight of such charter was then due to the said firm. The plaintiffs compose it.

It appears that one Plateniu's acted as agent, and on behalf of the plaintiffs, in the transaction.

From this statement, it is obvious that the liability of the defendants must depend either upon such an ownership or interest, as of itself will render them presumptively responsible, or an express undertaking to be so contracted by themselves, or through an agent sufficiently authorized.

The evidence establishes that Tibbetts was originally the full owner of the vessel, the enrollment of which was issued on the 28th of January, 1851, in New York. On the 28th of January, he executed a hill of sale of such vessel to the defendants, a firm at Boston, in the usual form of a transfer, except in the following clause: “ To have and to hold the said ship, etc., unto them the said Sampson and Tappan, as trustees, their executors and assigns, to the sole and proper' use, benefit, and- behoof of them, the said Sampson and Tappan, as trustees, their executors and assigns for ever.”

On the 30th of January, 1851, George R. Sampson, one of the defendants, made “ the oath of ownership, swearing that he and Lewis W. Tappan were co-partners, and were the true and only owners of the said ship or vessel, called the Rockland.

Upon this, the usual register was granted to the defendants, dated the 3d of February, 1851. The register issued in January was cancelled, property changed.

In April, 1851, the master took command of the ship in the port of New York, having been employed by the defendants for a voyage to San Francisco. She proceeded to that place, thence to Calcutta, where a cargo was taken in, with which she came to Boston.

At Calcutta an agent of Ewbank & Gray applied to the master, offering to supply a cargo, under the charter-party, for London. The master informed him that he had nothing to do with it, and should not recognize it.

The plaintiffs’ counsel produced, in evidence, a letter from the defendants, dated April 25th, 1851, in which they say that “they had nothing to do with the ship, beyond a certain advance made Mr. Tibbetts on her.”

After the motion for a nonsuit, the plaintiffs offered to prove as follows:—

That at the date of the charter-party, and before and afterwards, until the vessel sailed for San Francisco, she was managed in New York by H. B. Tibbetts; that by his instructions she was employed to go to San Francisco; that he engaged freight and supplies, and equipment; that these acts were recognized by Sampson and Tappan, who paid the bills of such goods as were supplied in New York by Tibbetts.

Upon the testimony produced by the plaintiffs, it is rendered clear that the defendants were in fact mortgagees of the vessel, and took possession of her about the beginning of April, 1851. The voyage to Calcutta and back appears to have been for their benefit, and under their control.

It is well settled that a mortgagee of a vessel not in possession, is not responsible for wages, repairs or supplies, in the absence of any express contract under which his credit is relied upon. (King v. Franklin, 2 Hall, Sup. Ct. Rep. 1; Birbeck v. Tucker, 2 Hall, 121; Brooks v. Boudsay, 17 Rich. 441; McCartee v. Huntingdon, 15 Johnson, 298; Hesheth v. Stevens, 7 Barbour, S. Ct. Rep. 488; Milne v. Spinola, 4 Hill, 177.)

The case of King v. Franklin, in this court, bears a close resemblance in its facts to the present. Had the question been a liability for supplies or repairs, it would be decisive.

But the question here cannot be entirely controlled by this rule. On the 12th of February, 1851, when the charter-party was executed, Tibbetts was the mortgagor in possession. The defendants had a bill of sale of the 28th of January, not even absolute, but upon certain trusts, and these were undoubtedly the security of their advances. They had taken the usual oath of ownership, and changed the registry of the vessel, but these circumstances all existed in King v. Franklin, and were all held insufficient to vary the actual legal relations of mortgagor and mortgagee established by the evidence.

There are other legal relations between a mortgagor and mortgagee of a vessel, which bear upon this question.

By an English statute, (6 Geo. 4, C. 110, § 45,) the party taking a transfer of a vessel by way of mortgage, is to be noted as such by an entry in the book of registry, expressing that he holds her as security. He is then not to be deemed the owner of the ship any more than if a transfer had not been made, except so far as may be necessary for the purpose of rendering the vessel available for sale or otherwise, for the payment of the debt.

In Dean v. McGhie, (4 Bingham, 45,) a mortgagee got into possession of the ship immediately upon her return from a voyage, and claimed the freight of the goods on board. It was held that he was entitled to it as against the assignees in bankruptcy of the mortgagor. The right to growing freight passes with the ship.

In Kersevell v. Bishop, (2 Crampton & Jervis, 529, and 2 Tyrwhit’s Rep. 603,) the mortgagor had fitted out the vessel after the mortgage, and she returned from her voyage with a cargo on board. The mortgagee took possession when she was in the harbor, but before getting into dock. It was held that the mortgagee was entitled to the freight remaining unpaid.

In Morison v. Parsons, (2 Taunton, 407,) which was before the statute, the owner had chartered a vessel and then assigned her. He afterwards assigned the charter-party to a third person. It was held that the assignee of the ship was entitled to the freight earned subsequently to the assignment.

Chinnery v. Blackbrim, (1 H. Black. 117,) may probably be overruled, or materially affected by the later cases I have cited. But the observation of Lord Mansfield remains still the general rule, that “ until the mortgagee takes possession, the mortgagor is owner to all the world, and entitled to the profits.”

The act of Congress, of July 29th, 1850, appears to have been complied with. The bill of sale was deposited in the office of the collector in Hew York, and the new register issued.

It must be conceded upon the facts stated, and the cases cited, that the charter-party in question was valid against every one except the defendants, the mortgagees. But I do not see how the conclusion can be avoided, that when they chose to assert their rights of ownership, they could supersede a charter-party.

It is difficult to distinguish such a case from the common one of a mortgagee of real estate. A lessee put into possession after a mortgage could be ejected. Although our statute has prohibited the action of ejectment in such a case, yet upon a sale under a decree of foreclosure, the same right to avoid such a lease would arise.

Yet if this be the strict right of the mortgagee, I apprehend much less testimony should be required to prove his sanction to a charter-party made by a mortgagor, than when the question relates to the power of a mere stranger as an agent.

We find in this case, that the plaintiffs, through Platenius, their agent, were apprised in the charter-party itself.that Tibbetts was not acting on his own account merely. He is described as part owner and agent. They were bound to know his true position, and the extent of his agency, or they relied upon his responsibility alone.

The evidence shows merely the employment of Tibbetts, after the master of the defendants took possession, to supply the vessel and fit her out, and the master was always to consult him. It is manifestly insufficient to show any ratification or recognition.

From what took place at Calcutta, as deposed to by the master, it is plain that the defendants, if they knew of the charter-party, repudiated it.

The facts which we are to assume would have been proved under the offer, would establish a management, and agency in New York of the vessel until she sailed; that by his instructions she was employed to go to San Francisco; that he engaged freight and supplies, and the equipment; and that these acts were recognized by the defendants, who paid the bills of such goods as were bought in New York by Tibbetts.

Put all this in the strongest language in a power of attorney, and it would still be impossible to hold, that it could establish either a ratification of a charter-party to commence in Calcutta and terminate in England, or an authority to enter into such a charter-party.

Admitting that the powers of a ship-husband would sanction a charter-party like this, or one which should transfer the entire ownership and control for the voyage, the case falls short of proving that Tibbetts occupied that position, or was clothed with such extensive powers.

The judgment must be affirmed, with costs.