author: By the Court. . Bosworth, J.

text:
    Arnold v. The Rock River Valley Union R. R. Co., A. Hyatt Smith, and J. Bodwell Doe.
    An answer which denies that the endorser of a note received due notice that payment of it had been demanded and refused, does not make a notary’s certificate of the facts inadmissible as evidence, although the answer be verified. To produce that result, an affidavit must be annexed to the answer, denying the receipt of notice of non-payment. An answer containing such a denial, would not satisfy the statute. An answer, like a plea before the Code, performs only the office of a pleading, and whatever its allegations, does not affect the question as to the nature of the evidence admissible to establish controverted facts.
    An instrument, which, in its terms and form, is a negotiable promissory note, does not lose that character because it also states, that the maker has deposited bonds as collateral security for its payment, and that he agrees, on non-payment of the note at maturity, that they may be sold in a manner, and upon a notice specified, and he will pay any deficiency necessary to satisfy the note, and the expenses of such a sale.
    The whole sum named, being made payable to order, on a day certain, in money, and absolutely, and the collateral contract, relating solely to the money promised to be paid, and being in addition to the principal contract, and not in terms, or legal effect, a modification of it, the note, as to the sum promised to be paid absolutely, is negotiable, and the endorsers of it maybe charged and prosecuted as endorsers of negotiable paper.
    (Before Bosworth and Woodruff, J.J.)
    January, 1856.
    This action came before the court on an appeal from a judgment in favor of the plaintiff. It was tried before Oh. J. Oakley, and a jury, on the 19th of March, 1855.
    The action was brought upon an instrument, in the words and figures following, viz:—■

      “Hew York, January Slst, 1853.
    “$5,000.
    “ Six months after date, the Rock River Valley Union Railroad Company promises to pay to the order of A. Hyatt Smith and J. Bodwell Doe, for value received, at the Hanover Bank of this city, five thousand dollars, having deposited with Elisha Peck, as collateral security and pledge for the payment of this note, ten bonds of the said Railroad Company, of one thousand dollars each, numbered as follows—758, 759, 760, 761, 762,763,776,783,784, 786— and we hereby give the said Peck full power and authority, on the non-payment of this note at maturity, or at any time thereafter, to sell said bonds at the brokers’ board, in this city, or at public or private sale, or so many as shall pay this note, on giving six days’ notice, by advertising in the Journal of Commerce, in this city, and apply the proceeds of said bonds to the payment of this note; and in case the proceeds thereof, after paying the principal and interest due thereon, with all expenses of sale, shall be insufficient, we hold ourselves bound to pay the balance on demand. “A. Hyatt Smith, President.

    [i. 8.] . “Wm. A. Lawrence, Secretary.”
    The complaint avers an endorsement of the note by Smith and Doe, and that it was passed to the plaintiff before maturity. That it was duly presented at the place mentioned for payment, and that payment was demanded, and refused; and that due notice of such demand and refusal was given to each of the endorsers.
    The defendants, by their answer, put in issue the facts of the note having been duly passed to the plaintiff, or of its having been so passed before maturity. They say that it was made by the company, without-any consideration, and was endorsed by Smith and Doe, for the accommodation of the company, and entrusted to one Chittenden, to raise money thereon for the use of the company. That the company had never received, nor had Chittenden ever paid any consideration therefor. That Chittenden, in violation of the trust reposed in him, transferred the note, without any consideration paid to or received by him at the time, and that the plaintiff did not give, or part with, any consideration therefor.

      All the defendants deny a presentment at the place mentioned for payment, and the endorsers deny that due notice of demand and non-payment was given to them, or either of them.
    Upon the trial, a notarial certificate was given in evidence, which stated that the note was presented to the paying teller of the Hanover Bank, and payment of it demanded, on the third of August, 1853, and that payment of it was refused; also, that notices of the protest were given to the endorsers, by duly depositing the same in the general post-office in New York, addressed to the parties respectively, at Janesville, in Wisconsin, as directed by the holder.
    This certificate was objected to as incompetent evidence, upon the grounds that the answer, which was verified, denied that due notice of demand and non-payment of the note had been given to the endorsers, or to either of them, and that the notary must be called to prove the facts, necessary to establish protest and notice.
    The plaintiff, having rested, upon producing this document, the counsel of the defendants moved for a nonsuit, on the grounds:—

      First. That the instrument given in evidence was not a promissory note, but an agreement, on the part of the company, to pay the difference between what the bonds might bring on a sale and $5,000, should the proceeds of such sale be less than that sum, and the expenses of the sale; and that the defendants, Smith and Doe, were not liable thereon.

      Second. That if such instrument were a promissory note, then it" was the duty of the holder to have sold the bonds, and applied the proceeds in payment of the note, and until such sale and ascertainment of the deficiency, the defendants, Smith and Doe, could not be liable.

      Third. That the facts stated in the notarial certificate were not sufficient to fix the said Smith and Doe as endorsers.
    The Judge denied the motion, and exceptions were duly taken.
    The plaintiff was then further allowed to prove, and did prove, that Janesville, Wisconsin; was the place of residence of Smith and Doe.
    The counsel of the defendants offered to prove that the bonds mentioned in the instrument could have been sold in the city of Hew York, and were worth, at its maturity, a larger amount than the sum mentioned, and all expenses and interest.
    The Judge excluded such evidence, and an exception was taken.
    An application to amend the answer, hy alleging in it such matters, so as to remove one objection taken to the evidence, viz., that no such facts were stated in the answer, was also denied, and the refusal excepted to.
    A verdict was then taken for the plaintiff for $5,570.27, the amount of the note and interest, on which judgment was entered.
    The defendants appealed from the judgment.

      J. F. Develin, for appellants:

      H. E. Mather, for respondent.
   By the Court. . Bosworth, J.

The objection, that the certificate of the notary could not be admitted as evidence, is untenable. To exclude it, the statute requires the defendant “to annex to his plea an affidavit, denying the fact, of having received notice of non-acceptance, or of non-payment, of any such note'or bill.” (2 R. S. 2d edit. 212, § 46.) The defendant insists, that the answer, in substance, contained such a denial; and that the answer, being verified, it was as effective, as a distinct affidavit annexed to it, to deprive the plaintiff of all right to read the - certificate. To this there are two answers:—

First. The answer denies “that due notice of such demand and non-payment was given to them, or either of them,” (the endorsers.)

It does not, as the statute requires, deny that notice was “ received.” An affidavit, in the words of this part of the answer, would not preclude the certificate from being read as evidence.

Second. The court has no right to interpolate words into the statute. The statute was not designed to affect the rules of pleading, nor to make a plea or answer perform any new office. An answer, merely denying that a notice was received, would deny an immaterial fact, and one not averred. If it did not deny that due notice had been given, the plaintiff would be entitled to judgment on the answer, if his right to recover depended, according to the pleadings, solely on the question, whether due notice had been given to the endorsers.

It cannot affect a plaintiff’s right to recover, that the endorser never received notice of protest, if it is proved or is admitted to have been served, in time, and in a proper manner.

An answer can contain, only a general or specific denial of each material allegation of the complaint controverted by the defendant, or a statement of new matter constituting a defence or counter claim. (Code, § 149.)

A denial, of having received notice of protest, is not a denial of any allegation of the complaint; nor is it a statement of any new matter, constituting a defence or counter claim.

A party can make such an affidavit as the statute requires, provided no notice has been received. Whether it has, or has not been received, is known to the endorser personally. When an endorser has not actually received notice, he has a right to infer that none has been given. He may well be supposed to be ignorant of the name of the witness who will be called, or of the particular evidence that will be attempted to be given, to prove notice.'

If a notice has been actually received, he must know when it was served, if the service was personal. If it was served by mailing it, the post-mark will show the time of service. In the latter case, he can prepare for the trial of the question of due notice.

If he has not, in fact, received any notice, he will labor under a disadvantage, in preparing for the trial. The statute malees it incumbent upon him, in order to deprive a plaintiff of the right to use a notary’s certificate, to annex to his plea, or answer, an affidavit, denying the fact of having received notice. To hold, that he may work the same result by other means, is to modify the statute, and make pleadings perform an office not known prior to the Code, and, impliedly, if not, expressly, prohibited by the Code itself.

The objection, that the instrument, sued upon, is not a negotiable promissory note, is deserving of more consideration.

We do not think there is any thing in the objection, that it is, in effect, a contract to pay the difference, between the amount of the proceeds of the bonds, after a sale thereof, and the amount of the note. The holder is not, by its terms or legal effect, precluded from suing upon it, until after the bonds shall have been sold. When the day of payment had passed, his right of action was perfect, and a recovery might be had against all the parties, for the whole amount, if there was no objection to a recovery, except the one, that the bonds had not been sold.

The only important question, is this: Is an entire contract, part of which is, in form, a good promissory note, but which also contains a special contract, in relation to the money promised to be paid, a good promissory note, negotiable by statute, as to so much of the contract as is, in form, a promissory note ?

By this instrument, ten bonds are pledged, as security for the payment of the $5,000. By it, Elisha Peck is made a trustee, to hold and sell the bonds, and apply the proceeds. The mode of sale is agreed upon; and, on pursuing the mode specified, the maker agrees, to pay the balance that may remain, after applying the proceeds in satisfaction of all expenses of the sale, and in reduction of the principal and interest due thereon. See Allen v. Dykers & Alstyne, (3d Hill, 593.)

The terms of this contract do not modify that part which contains a promise to pay, absolutely, to the order of the persons named in it, a sum certain, and on the day specified.

The only objection is, that it contains a contract, collateral to the promise to pay the $5,000, by which the maker of the paper may be subjected to a liability, which the law would not impose, upon the mere fact, of a deposit of the bonds as collateral security, without any special agreement as to the manner of selling them.

It will hardly be pretended, that, in the absence of any special agreement, the pledgee of stocks, deposited as security for the payment of a note of the pledgor, discounted by him, could sell, in the manner, and upon the notice, specified in this contract, and apply the proceeds, first, to pay all expenses of such a sale, and the residue on account of the principal and interest, and then, as a matter of course, recover the balance due on the note. The pledgor of the stocks would not be concluded by a sale, made in such a manner, and on such a notice, in the absence of any special contract in relation to it.

It cannot properly be said, therefore, in this case, as was said in Wise v. Charlton, (4 Ad. & E. 786,) that the instrument recites, or contains nothing, except what the law would imply. In that case, the note merely recited the fact that title deeds had been deposited as security.

The essentials of a negotiable promissory note, as stated in elementary books and in adjudged cases, are, that it must be payable at all events, not dependent on any contingency, nor payable out of a particular fund; and that it must be for the payment of money only, and not for the performance of any other thing, or in the alternative. (Cook v. Satterlee, 6 Cowen, 108.)

In Bolton v. Dugdale, (4 Barn. & Ad. 617,) the instrument was, in form, a promissory note, as to a promise to pay £30 and interest. By it, the maker also promised to pay a sum, which was uncertain, to a third person, in part of interest, and “ the remaining stock and interest,” or the balance, on demand. This was held not to be a promissory note. The sum payable to the third person being uncertain, left; the sum, payable to the payee, uncertain. That case, therefore, does not touch the proposition, that a note ceases to be negotiable, because it contains a collateral contract, in no way modifying the terms, or legal effect, of that part, which, by itself, is a promissory note.

In Davies v. Wilkinson, (10 Ad. & E. 98,) the instrument contained a promise to pay to Charles Davies or order £695, in four instalments, one of £200, and two £150 each, and one of a £100, at times specified, and the remaining £95 was to go as a set-off against certain matters specified. The court held it, in form, a promissory note, as to the sum of £600.

Lord Denman said, “ It is a note, up to a certain point, but it ends, ‘ £95 to go as a set-off for an order of Mr. Reynolds to Mr. Thompson, and the remainder of his debt, owing from C. Davies to him.’ I think that takes from it the character of a promissory note, and makes it an agreement.”

Littledale, J.—“ To be a promissory note, the writing should be One entire instrument. Here the instrument, as to £95, is not a promissory note.”

Patteson, J—“ This is an instrument to pay £695, in the whole, by the means stated. The £95 was not to be paid to Davies, and could not be payable to his endorsee: the instrument, therefore, was not a promissory note.”

There may be said to be this difference between that case and the present. In that case, the whole sum promised to be paid, was not payable to the payee named in it, or to his order, or to bearer. Part of an entire sum promised to be paid, was not payable in money, nor to the person to whose order the residue was made payable. In this case, the whole sum is payable in money absolutely, and to the order of two of the defendants.

In Storm v. Sterling, (28 E. L. & E. R. 108,) the question was raised upon an instrument, in terms, very much like-those of the one now under consideration. The court, after stating the arguments for and against the proposition, that the instrument was a promissory note, forebore to decide the question. It is, probably, a just inference, that the- court was not willing to express an opinion that the instrument was clearly a promissory note, unaffected ,as such, by the collateral, or additional contract which it contained. Some of the remarks of Lord Campbell, however, indicate that he inclined to that view of its character.

In Willoughby v. Comstock, (3 Hill, 389,) an action was brought by an endorsee of an instrument very similar to the one in question, but less special in its provisions, against the maker, and a recovery was had; but the point, that it was not negotiable, was not taken.

In the present case, the collateral, or additional contract, which the instrument embodies, relates solely to the money promised to be paid. It provides a security for the payment of the money, prescribes'the mode of converting the security, how the proceeds shall be applied, and the extent of the maker’s liability under the collateral contract, after the security shall have been exhausted in the manner stipulated.

If this collateral contract had been written on a separate instrument, although executed and delivered cotemporaneously with the note, the fact of its having been so made, would not affect the negotiable character of the note itself. The pledge, or collateral security for the payment of the note, would in equity belong to every successive bona fide holder of the note for value. Although, therefore, the endorsement of .the note would not, in law, transfer any title or right to the security created by the collateral contract, yet, in equity, it would work such a transfer. As this collateral, or additional contract, does not, in any respect, modify any clause of the note itself, nor affect in any manner the liability of any party to it, as such party, (unless it deprives the note of its negotiable character as such, which is the point to be determined,) we do not see that any injuridhs consequences can result, from holding, that the note, notwithstanding the addition of such contract, continues as to its negotiability, unaffected by it.

Such'an instrument is quite different from one which, in addition to a note perfect in form, should contain a contract having no relation to the money promised to be paid, and wholly independent of it. If the additional contract was for the sale or leasing of land, or the sale or exchange of personal property, or related to any other distinct and independent subject, there would be many reasons for declaring the instrument not negotiable, which can have no application to that under consideration.

Instruments like the present, are of common use. The persons endorsing them, undoubtedly intend to stand in the position, and to incur the liabilities of endorsers of commercial paper, and if charged at all, to be charged by the means by which the liability of all endorsers becomes fixed. Allowing an instrument, like that in suit, to be treated and enforced as a negotiable note, cannot be made a precedent for holding instruments negotiable, which, in addition to containing a promise for the absolute payment of money, contain promises for the performance of other acts, having no reference to, or connection with, the money promised to be paid.

We are of the opinion, that the plaintiff is entitled to enter a judgment on his verdict.


source: Caselaw Access Project

author: By the Court. Woodruff, J.

license: Public Domain

text:
    Brooks, Respondent, v. Christopher, impleaded, &c., Appellant.
    "Where a promissory note was given by an under-tenant for rent payable in advance, and came in due course of business to the hands of the plaintiff, for value, a dispossession of such under-tenant by the superior landlord, for the non-payment to him of the rent afterwards becoming due to him by his immediate lessee, is no defence to the plaintiff’s action on the note.

      Quere, Whether, where such dispossession took place after the under-tenant had himself made default, by not paying his note, the eviction would have constituted any defence to an action on the note by the lessee himself? It seems not.
    The court will not reverse a judgment on the report of a referee, upon an alleged erroneous finding of the facts, unless such finding be so clearly against evidence, or without evidence, as to create a reasonable apprehension of his bias, partiality, or mistake.
    It is not enough that the court see such reason to doubt the correctness of the finding, that they would have sustained the report if the referee had come to the opposite conclusion, or that the court think they should, upon the evidence, have found otherwise than he has done.
    Where, on the trial, a referee received evidence of the declarations of a third party, but with a proviso that such evidence should be struck out, if the defendant did not supply other proposed evidence bringing such declarations home to the plaintiff, by showing his assent thereto, or adoption thereof, and afterwards the referee, for the want of such supplemental evidence, struck out such declarations, and so reported.
    The court would not interfere with the report, unless the defendant excepted to such provisional reception of the evidence, or, at the close of the case, obtained a specific ruling thereon, and then excepted.
    (Before Boswobte and Woodbuef, J.J.)
    January, 1856.
    Appeal from a judgment on the report of a referee.
    The facts, and the questions argued, are fully stated in the opinion of the court.

      R M. Harrington, for the appellant, defendants.

      8. P. Nash, for the respondent, plaintiff.
   By the Court. Woodruff, J.

This action is brought by the plaintiffs to recover the amount of a promissory note made by the appellant, and by the payee therein named, endorsed to one T. B. Clark, for the rent of certain premises leased by the latter to such maker and payee, jointly, and payable on the 4th day of May, 1854, (i. <?., fourteen months after the date thereof, March 1st, 1853.)

The premises, so leased, were held by the said T. B. Clark, under a lease from the owners of the premises. And in the lease from T. B. Clark, to the defendants, he covenanted, that, “ on paying the rent reserved, (and for a part of which the said note was given,) they should quietly enjoy the premises during the term of his demise.”

The answer of the defendants avers, that the plaintiff is not the owner of the note, but that the same is the property of the said T. B. Clark. It states the demise by Clark, and avers that, by reason of his (Clark’s) non-payment of his rent, to the superior landlord, the defendants were ejected from the premises, whereby the consideration of the said note has wholly, or partially, failed.

The referee reports, and so was the uncontradicted evidence, that the dispossession, by the superior landlord, did not take place until the 19th of May, 1854, fifteen days after the maturity of the note; and the documentary evidence, produced by the defendants, showed, that the summons, in the proceedings taken for that purpose, by the owner of the premises, was issued on the 10th of May, six days after the maturity of this note. The defendants were then in default, by the non-payment of their own rent, for which this note was given.

If, therefore, this was a controversy between T. B. Clark and the defendants, it would be difficult for them to charge upon him a violation of his covenant, for quiet enjoyment, when they had not, themselves, performed the very condition, upon which that covenant, by its terms, depended. He might say to them, and non constat, but he would truthfully say to them: “ Had you paid the rent reserved to me, I should have paid the ground-rent to the superior landlord, and so have protected you, in the peaceable and quiet enjoyment of the premises.” The covenant, for quiet enjoyment, &c., was not, in fact, broken, until that enjoyment was disturbed—i. e., until the actual dispossession.

But, without resting the decision upon this view of the subject alone, and without inquiring how far the decision in Giles v. Com stock (4 Comst. 270)—that an eviction, after rent has become payable, is no defence to an action upon a covenant for the payment of the rent—would prevent the tenant from setting up such an eviction, as a failure of the consideration of a note, given for the rent of a term not then expired, this case must, I think, be disposed of, upon the ground upon which the referee has apparently placed his decision. He has found, distinctly, that the note came into the hands of the plaintiff, in due course of business, before the maturity thereof, and for a valuable consideration. And, inasmuch as the alleged eviction took place after the maturity of the note, it necessarily so came to his hands (if the finding is correct) without notice of the alleged failure of consideration. It is unnecessary to do more than state, that unless this statement of the plaintiff’s title was found, by the referee, without evidence, or against evidence, the plaintiff was entitled to judgment, whether the consideration of the note had or had not failed.

There was undoubtedly evidence, on the part of the defendant, warranting a suspicion that one P. I. Clark, the brother of T. B. Clark, had the control of the note, and that the plaintiff was willing to accede to any arrangement by way of deduction from the amount of the note to which the Clarks would agree; and there was evidence that indicated that P. I. Clark was active in causing the note to be put in suit, and even that the plaintiff, when applied to, after the suit was commenced, appeared not to know any thing about this note. Indeed, had the referee found, upon, the whole evidence, that P. I. Clark, and not the plaintiff, was the real owner of the note, I think his finding must have been sustained; it by no means follows that his present finding should be set aside.. The proof showed that the plaintiff is a brother-in-law of the Clarks; that he was on terms of confidence and intimacy with them; that he had endorsed for them to a very large amount; that this very note had been endorsed by him, and, with such endorsement, had been discounted by a bank in Middletown ; and that he, as endorser, had to take it up. This clearly constituted him the owner of the note for value, succeeding directly to the rights of the bank which had discounted it before its maturity.

It was not very remarkable that he should have been willing to yield to any arrangement that was just as between the defendant and. the Clarks, not only because of his relationship to them, but because there was some evidence that he had security. But these expressions of willingness did not necessarily indicate that he intended to abate any thing from his claim on the note; they are rather the expression of his sense of what it would be just for the Clarks to do,, and are not inconsistent with the expectation, that if they allowed any thing to the defendant, it would be by aiding in the payment of the note, or procuring such a deduction by a just arrangement with himself also.

Under such circumstances, and with the distinct fact before us that the plaintiff, as endorser, had been required to take up this note, and had thereby acquired the title for value, we cannot say that the finding of the referee is without evidence, or that it is so against evidence as to indicate bias, partiality, palpable mistake, or other error on his part, which furnishes ground for a reversal.

The defendant, however, complains that the declarations of T. B. Clark, when offered in evidence by him, were admitted, “subject to be stricken out if no evidence should be introduced to show their adoption by the plaintiff,” and that the referee did reject this evidence when making up his report.

It must suffice to say, on this subject,—

First. That the evidence was properly rejected by the referee. The declarations of T. B. Clark, in the absence of the plaintiff, and at no time assented to by the plaintiff, were not competent evidence to impeach the plaintiff’s title, nor, indeed, to affect his right to recover on any ground.

Second. There is no exception to this rejection of this evidence, and the defendant may, upon the papers, be taken to have acquiesced in it, and,—

Third. If the defendant chose to acquiesce in such a provisional admission of evidence, he should (if he wished to make it the subject of exception) have obtained a specific ruling thereon, when the case was closed, and had his exception noted.

The ruling, therefore, being in itself correct, there is in this no ground for interfering with the report of the referee.

The iudgment must be affirmed, with costs.


author: By the Court. Bosworth, J.

text:
    Brown & Field, Assignees of Ryckman, v. Wilmerding.
    A purchase of property, at an auction sale, made by the owner of it, at his residence, is not necessarily fraudulent and void, as against a subsequent bond fide purchaser of such property from the same owner, while it continues in his actual possession, merely because the first purchaser did not take an immediate delivery of it, and retain a continued and actual change of possession.
    The question, in such a case, is one of actual intent. And if a jury find, upon sufficient evidence, that the first sale and purchase were made in good faith, and without any intent to hinder, delay, or defraud the creditors of the vendor, or those subsequently purchasing from him, the verdict will not be disturbed.
    (Before Boswoeth and Woodbufjt, J.J.)
    January, 1856.
    This action came before the court, on a motion by the defendant, for a new trial. It was brought to recover the value of a billiard-table and two chandeliers. The plaintiffs- claimed title, under an assignment, made to them, on the 28th of November, by Garrett W. Ryckman, Jr., of all his property, in trust, for the benefit of his creditors.
    The property in question was originally owned by one Edward H. Hudson. On the 12th of May, 1853, there was an auction sale at the house of Hudson, Ho. 107‘West Fourteenth street, of all his household furniture. At such sale, the billiard-table was bought by Ryckman, at $290, and the chandeliers, at $30 each, they being in the house, and sold with the furniture. They were purchased to be removed to Otsego county, and put up in the Cooper House, which was kept by the plaintiffs. Hudson consented that the articles might remain at 107 West Fourteenth street for two weeks. Within that time, Ryckman called to get them, and also soon thereafter, when Hudson made the excuse that he was busy, and could not then give the time to have them taken down.
    About the 25th of May, 1853, Hudson sold this house, to one Gould, and, on the 26th, also sold him the billiard-table and chandeliers.
    In June, 1853, Mr. Gould sold them to Mr. Wilmerding, the defendant. The plaintiffs, after the assignment by Ryckman, ascertained that these articles were in the possession of the defendant. They demanded them, of the defendant, on the 9th of September, 1854. The defendant refused to deliver them to the plaintiffs, alleging that he had bought them of Charles Gould, for a valuable consideration, and without notice. Thereupon this action was brought. It was tried before Mr. Justice Slosson, and a jury, in March, 1855.
    Some other facts are stated in the opinion of the court.
    The Judge charged the jury, that the sale to Ryckman, not having been accompanied by any delivery, was, presumptively, fraudulent, as against subsequent purchasers, and that the plaintiffs were bound to show, affirmatively, that the property had not been left with Hudson with a fraudulent intent against purchasers; that if the jury were satisfied, upon the evidence, that there was no such fraudulent intent, they should find a verdict for the plaintiffs; that Ryckman had a right to leave the property with Hudson, unless he did so with a fraudulent intent.
    The defendant’s counsel excepted to the two last propositions.
    The presiding Judge further charged, that the question for the jury to determine was this: Was the sale made in good faith, and without any intent to defraud creditors or subsequent purchasers ?
    The defendant’s counsel thereupon requested the presiding Judge to charge the jury as follows:—
    1st. That where one, of two innocent persons, must suffer, by the fraudulent acts of a third, that one should bear the loss, whose acts, or omissions, have enabled such third person to defraud the other.
    2d. That if, after the said sale, Ryckman permitted Hudson to have the apparent ownership, and right of disposing of the said property, the jury, under all the circumstances of the case, would be warranted in believing, that Hudson was enabled to effect the subsequent sale to Gould, by the acts and omissions of said Ryckman, and, in such case, to find a verdict for the defendant.
    3d. H the jury believe that the property was purchased from Hudson by Gould, for a valuable consideration, in the usual course of trade, without notice of any adverse claim, or of any circumstance which might lead a prudent man to suspect such adverse claim; and that Ryckman, by his own direct voluntary act, conferred upon Hudson the apparent ownership of the property, the title of Gould, and of the defendant, claiming under him, should be protected, and a verdict rendered for the defendant.
    The presiding Judge thereupon said to the jury, that if the plaintiffs had satisfied them, that the sale to Ryckman, which was, presumptively, fraudulent, was made in good faith, and without any intention to defraud creditors or subsequent purchasers, the plaintiffs were entitled to a verdict; and the Judge refused to charge as requested by the defendant’s counsel, except as before charged, and the defendant’s counsel excepted to his refusal so to charge.
    The jury found a verdict for the plaintiffs, for three hundred and fifty dollars damages.

      S. Nicoll, for the defendant,
    made and argued the following points, in support of a motion for a new trial.
    I. The evidence of the case conclusively establishes, that both Gould and the defendant were bond fide purchasers of the chattels in question, without notice of any claim to the same, on the part of Ryckman.
    II. The sale to Ryckman was unaccompanied by any delivery, nor was there any indication of a change in the ownership of the property. The billiard-table and gas-chandeliers remained as they had been put up in the house of Hudson, who continued to have the same apparent power of disposing of them as he had before enjoyed.
    III. Wo sufficient reason was given, for dispensing with an immediate delivery of the property. The articles were capable of being removed, without delay. Under these circumstances, the continuance of the possession, in the vendor, would have been held, prior to the revision of the laws, conclusively fraudulent, as against a bond fide purchaser. (Jennings v. Carter, 2 Wend. 446.)
    IY. The question of fraudulent intent, within the meaning of the Revised Statutes, is not limited to an actual mental or moral intent to commit a wrong. Its existence may be established, without the presence of crime or turpitude, in all these cases, where a party must be held to intend, the necessary or natural consequences of his own acts. In passing upon the question, as one of fact, the jury are bound, in a proper case, to determine the intent, without reference to the .motives of the parties to the transaction. In this respect, the law has not been altered, except in transferring the decision of the question from the court to the jury. (Griswold v, Sheldon, 4 Comstock, 581; Story’s Eq. Juris., vol. 1, §§ 185, 258, 349.)
    Y. The present case was submitted to the jury as a question, simply, of mental fraud; the charge of the presiding Judge evidently tended to create an impression, with the jury, that they were only to pass upon the question as one of an actual mental intent to commit a fraud.
    YI. The presiding Judge also erred in charging the jury, that if they were satisfied the property had not been left with Hudson with a fraudulent intent, they should find a verdict for the plaintiffs; and that Ryckman had a right to leave the property with Hudson, unless he did so with a fraudulent intent. These remarks were calculated to divert the attention of the jury from the real question at issue.
    YU. The refusal of the Judge to charge the several propositions presented on the part of the defendant, was erroneous.
    1. The evidence in the case fully authorized their being submitted for the consideration of the jury; they were obviously’ relevant and had a direct bearing upon the question of fraudulent intent.
    2. An unqualified refusal to submit them to the jury was in effect instructing them that such considerations had nothing to do with the case, and was, in fact, confining the jury to the simple question of moral or mental fraud.
    3. The defendant had a right to have the said propositions submitted, on the ground that the jury might find that the acts of Ryckman operated as an estoppel in pais, irrespective of any question of fraudulent intent. (Pickering v. Busk, 15 East. 44; Lingham v. Biggs, 1 Bos. & Pul. 82; Gregg v. Wells, 10 Adolph. & Ellis, 90; Stephens v. Baird, 9 Cow. 274; Thompson v. Blanchard, 4 Comstock, 303; White v. Springfield Bank, 3 Sand. S. C. 223; Fatman v. Loback, 1 Duer, 354; Carpenter v. Stilwell, 12 Barb. 128; Saltus v. Everett, 20 Wend. 267.)
    YHI.—The verdict was against the evidence, and a new trial should be granted on that ground.

      JD. B. Baton, contra.
   By the Court. Bosworth, J.

The property in question, and other property, was bought by Ryckman on the 12th of May, 1853, at an auction sale of the household furniture of Hudson, which took place at the residence of the latter, in New York city. The aggregate amount of Ryckman’s purchases was about $2,000. This was paid, and all the property was delivered at the time, except that in question.

In November, 1853, Ryckman assigned all his property to the plaintiffs for the benefit of creditors.

On the 25th of May, 1853, Hudson, having the actual possession of the property in question, sold it to Charles Gould, and the latter sold it to defendant, in June, 1853. Gould and the defendant were, severally, bona fide purchasers for value.

The plaintiffs, finding the property in the possession of the defendant, made a demand on the 9th of September, 1854, for a delivery of it, and that being refused, they brought this action to recover its value.

The defendant insists, that the sale to Ryckman was fraudulent and void, as against himself and Gould as subsequent purchasers.

That was the question to be determined at the trial. The jury have found that the sale was made in good' faith,, and without any intent to defraud creditors.

There is no ground, upon the evidence, for pretending, that either Ryckman, Gould, or the defendant, was not a purchaser for value, believing that he acquired title, nor that either did not buy intending to take, and retain possession, as such purchaser.

The sale to Ryckman was by one having authority to make it, and as between the former and Hudson, passed the title. If this property had been removed by Ryckman, with that bought at the same time, no question like that now presented could have arisen.

Ryckman, designing to place the property in a public house, which he was erecting at Cooperstown, obtained permission of Hudson to let it remain in his houfee between two and three weeks. Within that time, he called for the property, and Hudson said he was busy, and could npt have the billiard-table taken down then.

This property, never having been delivered to Ryckman, the statute makes the fact, that there was not an immediate delivery followed by an actual and continued change of possession, unless such an explanation of it, as the statute prescribes, is given, conclusive evidence, that it was fraudulent and void, as against the defendant.

This threw on the plaintiff the burden of proving, that the sale was made in good faith, and without any intent to defraud the creditors of Hudson, or persons subsequently purchasing from him.

The plaintiffs gave evidence, tending to establish that the sale was so made, and that all reasonable efforts were made, within two weeks after the sale, to obtain possession of the property, with a view to remove it to Cooperstown. The sale was not absolutely fraudulent and void as to subsequent purchasers, because the property was not immediately removed.

The reasons why an immediate delivery and removal of the property was not had, were to be weighed by the jury, in determining the questions which they were to decide.

The court instructed the jury, that the sale was presumptively fraudulent; that the burden of proof was cast upon the plaintiff, to show affirmatively, that the sale was made in good faith, and without any intent to defraud creditors, or subsequent purchasers. That if they found these facts in favor of the plaintiffs,they were entitled to a verdict.

We think this charge presented to the jury the true questions to be determined by them.

The first request to charge, made by the defendant, the Judge properly disregarded.

There is nothing in the evidence given laying a foundation for such an instruction to the jury. If the billiard-table had been left in the possession of a vendor, who was engaged in the business of selling such articles, and at the place where his business was transacted, and the defendant, or Gould, had purchased it there, the instruction asked might have been a proper one. But the acts or omissions of Ryckman, in not immediately removing, and retaining an actual and continued change of the possession of the property, no more enabled Hudson to commit a fraud on third persons, than lending the same property to him would have done.

Allowing a person to have actual possession of chattels, unless there is some other fact connected with it, is not an act which holds him out to the public as owner, or as authorized to sell it as his own. The doctrine of caveat emptor, as to any title the purchaser may acquire, applies. The mere fact that it was bought from one in possession of it, does not preclude the true owner from asserting his title.

These views, if correct, show that the Judge at the trial did not err in refusing to charge in the terms of the second request.

There is no ground for pretending that Ryckman permitted Hudson to have the apparent right of disposing of the property, unless naked possession created, apparently, such a right.

All that the Judge could properly be required to say, with respect to the matter of such request, was covered by the propositions which he submitted to the jury.

It is not necessary to say any thing further, by way of illustrating the proposition, that it was not erroneous to refuse to charge in the terms of the third request.

The action was submitted to the jury, under proper instructions from the Judge, and the order denying a motion for a new trial must be affirmed.


text:
    Benedict v. Caffe & Cutter, D. T. Youngs, and Esther Ann Catlett, Executrix of Henry Laverty, deceased.
    When the maker of a note, payable at no "place named, at the time of making it, has a known place of business, but, before its maturity, fails and makes a general assignment of all his property to one of the endorsers, for the benefit of creditors, and the assignee transacts his business of assignee at such place, that fact alone, will not make a presentment of the note, and a demand of its payment at that place, sufficient to charge the endorsers. 2. If it has ceased to be the maker’s place of business, a demand must be made of him personally, or at his place of residence. 3. When neither has been done, the question becomes one of due diligence to find the maker, or his place of residence.
    In an action against the endorser of a note, endorsed for the accommodation of the maker, when the defence is, that it was usuriously discounted at its first inception, the purchaser, having bought it from a third person, after it was so endorsed, may show that the seller, by authority of the endorser, represented it to be business paper, and that it was purchased, relying on the truth of such representations.
    And, in such a case, a plaintiff may give in evidence papers, executed by the endorser, and delivered to the seller, as evidence of his authority to so represent, and the declarations, accompanying such delivery, averring such a purpose, although the papers, by these terms, may not be evidence of such a fact. Especially may this be done, when the terms of the paper are not necessarily inconsistent with the truth of such accompanying declarations, although the paper is dated, and was delivered, after the note was sold, and the representations were made, on the faith of which the note was bought.
    (Before Bosworth, Hoffman and Woobrbff, J.J.)
    January, 1856.
    This action was brought against the defendants, upon a note, which, with its endorsements, reads as follows, viz,:—
    $1,484. New York, 3d August, 1853.
    Four months after date, we promise to pay, to the order of D. T. Youngs, fourteen hundred and eighty-four dollars—value received. (Signed) Caffe & Cutter.
    Laverty having died after the action was brought, Esther Ann Catlett, his executrix, was made a defendant. The action was tried before Mr. Justice Slosson, and a jury, in June, 1854, and the plaintiff recovered a verdict against Caffe & Cutter, for $1,540.82, and against Youngs and the executrix of Laverty, for $1,453.78.
    The defendants, Youngs and Catlett, moved for a new trial, on the ground, that the verdict was against evidence, as well as on account of exceptions to the ruling of the Judge, which motion was denied. A judgment having been entered on the verdict, the defendants, Youngs and Catlett, appealed to the General Term, from the judgment, and from the order, denying a new trial.
    When the note in question was made, Caffe & Cutter did business, as partners, at 18 John street, in the city of New York, and had, for several years prior thereto. On the 3d of October, 1853, they failed in business, and made a general assignment of their property, for the benefit of their creditors, to the defendant Youngs. The case did not «disclose the terms of the assignment. Youngs transacted the business, of assignee, at the assignors’ former place of business, 18 John street. P. Caffe, one of the firm, continued to resort to this place, for some three or four weeks after the failure. When the note matured, it was presented to some one, but to whom, did not distinctly appear, at 18 John street, for payment, and, not being paid, it was protested, and notice thereof was given to the endorsers. Ho other effort was made to find the makers, or whether they had a place or residence in the city. The question was raised, whether this was a sufficient presentment. The Judge charged, that the presentment and demand were sufficient. The charge of the Judge, and requests made of him to charge in relation thereto, and his refusal to charge as requested, and the exceptions taken, are fully stated in the opinion of the court.
    Another ground of defence was, that each endorser endorsed the note for the accommodation of the makers, and, when first negotiated, it was sold to the plaintiff, by Dore & Robinson, brokers, acting on account of the makers, at a discount exceeding the rate of seven per cent, per annum.
    It appeared, that Youngs & Laverty had endorsed largely, for the accommodation of Caffe & Cutter, for several years, prior to the date of the note in suit, and that the note in suit was so endorsed by them.
    The note was placed, by Michael Caffe, a clerk of Caffe & Cutter, in the hands of Dore & Robinson, to be negotiated by them, for the benefit of the makers, and they sold it to the plaintiff, on the 15th of August, 1853, for $1,384.
    The plaintiff attempted to prove, that Dore, who conducted the negotiation, represented the note to be business paper, and was authorized by Laverty to so represent, and that he bought the note, relying on the truth of these representations.
    The material evidence, on that point, is stated in the opinion of the court.
    The plaintiff put in evidence, a paper, signed by Laverty, in these words, viz.:—
    This is to certify, that my endorsement on the notes of Messrs. Caffe & Cutter, in favor of Mr. Daniel T. Youngs, is for a valuable consideration. (Signed) Henry Laverty.
    Hew York, 18th August, 1853.
    Witness, (Signed) E. R. Knapp.
    He proved, that it was in the possession of Dore, at or about the time of its date, and so continued, until the 26th of Sept., 1853, when it was destroyed at Laverty’s request, but not until after he had executed and delivered, to Mr. Dore, a paper of the latter date, of which the following is a copy, viz.:—
    Caffe & Cutter, note ac. Dan’l T. Youngs, endorsed
    Hy. Laverty, due . . . £1,000 00 Do. do. do. 4-7 Oct., 1,498 40 Do. do. do. 12 Nov., 1,206 00 Do. do. do. 18-22 Nov., 1,484 50 Do. do. do. 3-6 Dec., 1,484 00 Do. do. do. 16 Nov., 1,372 30 Do. do. do. 7-10 Nov., 630 50 Do. do. do. 13-16 Dec., 942 64 Do. do. do. 20 Dec., 1,232 00
    Henry Laverty, note ac. Caffe & Cutter, . . 21 Nov., 1,080 00
    $11,930 84
    This is to certify, that my endorsements on the notes of Caffe & Cutter, in favor of DI. T. Youngs, as also on my note account Caffe & Cutter, for $1,080, sold by Dore & Robinson, are for a valuable consideration. The above statement of said notes is supposed to be correct.
    (Signed) Heney Laveety. [l. s.] New York, September 26th, 1853.
    Witness, John S. Isaacs.
    The admissibility of each paper was objected to by the counsel of the executrix. The objection was overruled, and the decision excepted to. The testimony, in relation to the circumstances under which the first paper was destroyed, and the second one given, appears in the opinion of the court. •
    So much of the charge, as relates to the fact of Laverty having authorized Dore to represent the paper as business paper, and the effect of such representations, if made by such authority, as it is necessary to state, was as follows:—
    Did Laverty make Dore his agent in the negotiation and sale of this paper, and authorize him to represent it to the purchaser as business paper ?
    According to Dore’s statement, he called on him in 1851, and told him that Caffe & Cutter would hand him paper, with his endorsement, for sale, and he requested Dore to use his exertions to sell it, saying it was business paper. If you believe that Laverty meant that this request, (that Dore should use his exertions to sell the paper,) was to be understood by Dore as applying to all such paper of Caffe & Cutter, with his (Laverty’s) endorsement, as he, Dore, should receive for any future time, until the request should. be countermanded, then this was an authority to Dore to negotiate the sale of the note in question, and Laverty would be bound by his representations, made in the course of that agency.
    To this ruling, and to the submission of this question of agency, defendants’ counsel excepted.
    As to Youngs, there is no evidence that he ever authorized Dore & Robinson to sell this paper. He knew that they had paper of Caffe & Cutter to sell, but no agency could be created without his act.
    If you shall believe the paper was accommodation paper, then (the discount at more than seven per cent, being as to such paper usury) you must find a verdict for all the defendants, unless you believe that the note was represented to be business paper by their authority, and that it was discounted by the plaintiff on the faith of such representations, and without the knowledge that it was accommodation paper. If the endorsers authorized Dore & Robinson to negotiate and sell the note, then they are bound by Dore’s representations in the course of that agency; but, as I have already stated, there is no evidence to show such an authority on the part of Youngs.
    To this the executrix of Laverty excepted.
    If the paper was for value, then the defence for usury fails; or, if the paper was accommodation paper, and Laverty authorized Dore & Robinson to sell it, then, being bound by his representations, the defence of usury fails, as to Laverty.
    To this defendants excepted.
    As against the endorsers, the plaintiff can only recover the amount he actually paid, but against Caffe & Cutter the whole amount of the note.
    The jury found a verdict in favor of the plaintiff,. against the defendants, Caffe & Cutter, for $1,540.82, and against the defendants, Young and the Executrix, $1,453.78.

      W. Bliss, for defendant Catlett.

      John A. Bryan, for defendant Youngs.

      J. Larocgue, for plaintiff
   By the Court. Bosworth, J.

Is the charge of the Judge, that No. 18 John street was a proper place to present the note for payment, correct? Caffe & Cutter, the makers of the note, commenced business in 1846. The note in question matured the 6th of December, 1853. On the 3d of October, 1853, the makers failed in business, and made a general assignment of their property for the benefit of their creditors, to the defendant Youngs. The sign on the outside of the building was not removed. Their office, or the rooms in which the firm had done its business, was on the second floor of the buildings. On the door, opening from the hall into their place of business, there had been a sign, bearing the name of Caffe & Cutter. On their failure, this sign was removed, and one bearing the name of Daniel T. Youngs, assignee, was put on the door. P. Caffe, one of the firm, continued to resort to his former place of business, for three or four weeks after the failure. The testimony tends to show, that he ceased to go there, about a month before the note matured. Youngs, the assignee, occupied the rooms formerly occupied by the firm, in transacting the business devolved upon him by reason of the assignment. The Judge charged, that 18 John street, after it ceased to be the place of business of Caffe & Cutter, being adopted by the assignee as the office for the transaction of the business of the estate, was the proper place of presentment. To this charge, the counsel for the executrix of Laverty, and the counsel of the defendant, Youngs, severally excepted, and requested the Judge to charge that it was not sufficient to present it there, unless that was also the maker’s place of business, and that if they had no place of business, the presentment must be at their residence, or to them personally.

The Judge refused to charge otherwise than as above stated, and the counsel of the executrix excepted, as did also the counsel of Youngs.

The charge affirms, that a presentment made at 18 John street,: was sufficient, although it may have ceased to be the maker’s place of business, merely because a general assignee, of all their property for the benefit of their creditors, had adopted it as his office for the transaction of the business of the estate.

We think this ruling erroneous. Youngs was not a general agent of the makers of the note, to transact their business as such agent, at 18 John street, or elsewhere.

He had no right to use the proceeds of the assigned property to pay the debts of his assignors, except'in such order of priority as the assignment prescribed. Creditors of the same class, if there was not enough to pay them in full, would be entitled to be paid pro rata. Youngs, as assignee, was trustee of an express trust. He was not an agent of the assignors, in any sense in which that word is employed, in treating of the relation of principal and agent, and the consequences resulting from it to the parties, or to third persons. In whatever he did, or could properly do, as assignee, he was acting as principal, no more subject to the control of the assignors, than to that of their creditors, and subject to no other actual control from either, than they could obtain by action, to compel him to perform the.duties devolved on him by the assignment, or to make good any losses caused by a violation of his duty, or a failure to perform it. Eo authority has been cited, which sustains the decision made at the trial.

The rule seems to be settled, that even the "known bankruptcy or insolvency of the acceptor of a bill, or of the maker of a note, will not excuse the failure to present it to him personally, or at his place of business or residence, for payment, Eeither will they excuse the omission to give notice to the endorser. (Ohitty on Bills, 386; 3 Kent’s Com. 95.)

Where no presentment has been made to the maker personally, or at his residence or place of business, the inquiry generally is, whether, under the circumstances of the case, due diligence has been used, the general principle being, that due diligence must be used to find out the party, and make the demand. (3 Kent, 96.)

But the charge, as given, entirely withdrew that question from the consideration of the jury. We certainly cannot say that any facts were proved, which the court was authorized to hold, amounted, in judgment of law, to due diligence.

The sign of Daniel T. Youngs, assignee, on the door of the office, or former place of business of Caffe & Cutter, was a formal notice to all persons seeking them, that it had become the place of business of another person, and had ceased to be their place of business. The firm had been in business, in this city, some seven years. There is no evidence that the slightest inquiry was made to ascertain the residence of either of the makers. On such evidence, we cannot say that due diligence was used to find the makers. The charge made being erroneous, the executrix of Laverty, and the defendant Youngs, are entitled to a new trial on that ground.

If the case had disclosed the contents of the assignment, it might have appeared to be a general assignment of all the property of the assignors to Youngs, the first endorser, upon trusts, and among others, to firSE pay all notes made by the assignors, on which Youngs had been, or might be made liable as endorser. If so, the Mechanics' Bank of New York v. Griswold, (7 Wend. 163,) is an authority, that neither demand, nor notice, would have been necessary to charge Youngs, ás endorser. But the case does not disclose the terms of the assignment made by Caffe & Cutter to Youngs.

The questions most difficult of solution, relate to the effect that the'jury might properly give to the representations testified to have been made by Laverty to Dore, and to the paper which Laverty executed and delivered to Dore, in connection with the other evidence relating to the same subject matter. These questions affect only the executrix of Laverty.

We have no doubt that the note and the endorsements were without consideration, and that the note never had any legal inception, until it. was negotiated to the plaintiff, on the 15th or 16th of August, 1853, at a greater discount than at the rate of seven per cent.

Independent of the effect that may be given.to the paper, and to these verbal representations, and to the fact that the plaintiff may have bought the note, relying on the assurance that it was business paper, the plaintiff would have no right to recover. The note not having had any legal inception before the plaintiff bought it, and he having bought it at a discount exceeding the legal rate of interest, it would be void for usury, if there were no other evidence affecting its validity.

It is not pretended, whatever may be the proper meaning of the paper of the 26th of September, 1853, or whatever it may be deemed to represent, that the plaintiff is in a position to claim, that he bought, relying on the truth of its statements. It was not in existence, until more than a month after the note in question was negotiated to the plaintiff. And the jury were expressly told, that if Dore was to be believed the paper of the 18th of August was not properly before them, and might be considered as out of the case. If the jury had not believed him, their verdict should have been for the defendants.

The Judge instructed the jury, “ that if the endorsers authorized Dore and Robinson to negotiate and sell the note, then they are bound by Dore’s representations in thecourse of that agency,” but that there was no evidence to show^mch an authority on the part of Youngs. The verdict, as to him, is, therefore, clearly against evidence. Caffe & Cutter have not appealed. The views hereinafter expressed have reference solely to the executrix of Laverty.

Dore testified as follows: “Mr. Laverty called upon me, in July, 1851, stating to me that Caffe & Cutter would hand me paper for sale with his endorsement, requesting me to use my endeavors to sell it, stating that it was business paper.” “ I commenced negotiating notes of Caffe & Cutter, endorsed by Laverty, about three years since, in 1851.” (The trial of this action commenced on the 21st of June, 1854.) “ Mr, Laverty called upon me in regard to negotiating their paper in 1851. I used to see him two or three times a week. After the failure of Caffe & Cutter, Mr. Laverty wanted the paper which he had signed,” (meaning the paper of the 18th of August,) “to be returned to him, which I refused. Mr. Laverty requested the first paper. I told him I could not give it up, because I held it as security for my representations.”

Laying out of view, for the present, the true meaning of the paper of the 26th of September, if Dore is to be credited, it is difficult to say, that his testimony would not justify the inference, that Laverty applied to Dore as early as June, 1851, to solicit his aid in selling paper, made by Caffe & Cutter, and endorsed by himself, and assured him that it was business paper. That this assurance was given to increase his facilities for selling the paper, and with the expectation that he would make the same assurance to those to whom he might apply to purchase it. A difficulty, that arises at the outset, is whether this statement can be seen, or is shown, to have any connection with paper made two years subsequently.

If Dore is to be credited, then there is sufficient evidence to justify a jury in believing, that Laverty knew, or supposed, before he executed the paper of the 26th of September, that Dore had represented, or assumed to have represented, on negotiating the paper of Caffe & Cutter, endorsed by himself, that it was business paper. Instead of "denying his authority to have so represented, with respect to all or any of such paper, he obtained from Dore a surrender of the first paper, which, by its terms, applied to all notes made and endorsed like the one in suit, and gave in its place one, applicable to ten notes particularly described, and including the one in suit. Whatever the paper, on a strict criticism, may be thought to mean, it was desired by Dore, and may be supposed to have been- given by Laverty, as a voucher or assurance that the representations which the former had made, respecting the notes it embraced, were made by his authority.

If these views are correct, then there was evidence enough to justify a submission of the question, whether Laverty intended to assure Dore, and to authorize him to assure those with whom he might negotiate, that all the notes of Caffe & Cutter, endorsed by himself, which should be handed to him, by Caffe & Cutter, to be sold, down to and including the sale of the one in suit, was business paper, and to warrant their finding that he did.

Benedict, the plaintiff, testified, that he asked Dore if it was legitimate business paper, and he said it was. Dore did not say to whom the notes belonged; that if the witness had known it was accommodation paper, he would not have taken it. This evidence, if credited, would justify the jury in finding, that Benedict bought the note, relying on the assurance that it was business paper, and by reason of the representations, to that effect, made to him by Dore.

I do not overlook the fact, that the Judge decided, while Benedict was under examination, that any statements which Dore might have made to Benedict, as to the character of the paper, were not admissible, in evidence, as against the endorsers. But this decision was made before any evidence had been given, that Dore negotiated the notes at the instance of Laverty, and was authorized by him to represent it to be business paper.

It needs no argument to show, that, when enough has been proved to entitle the plaintiff to go to the jury, upon the question whether Laverty authorized Dore to represent this note to be business paper, the plaintiff will have a right to show, if he can, that Dore did so represent, and that the plaintiff bought the note, relying upon such representation, and believing it to be true.

The paper of the 26th of September, does not import more, than that Laverty had been paid a consideration for endorsing the paper. At the same time, its terms are not inconsistent with the idea, that he had negotiated the note, for value, in the course of his business, and, in that way, had received a consideration for his endorsement. But they furnish no evidence of that fact.

Still, the circumstances under which it was executed—the conversation had, between him and Dore, at the time; the reasons assigned, by Dore, for refusing to surrender the paper, of the 18th of August, until this had been delivered to him—made this paper admissible as evidence, bearing upon the question, whether Laverty authorized, and intended to authorize, Dore to represent this to be business paper, with a view to influence third persons to buy it, relying on such representations.

Although the paper does not import, that Laverty had so negotiated the note, and, therefore, may not be so drawn as, of itself, to furnish evidence that the note was of the business character, that he had authorized Dore to represent, yet, as it was sworn to have been furnished, that Mr. Dore might be able to show that he was thus authorized, the fact, that he gave it under such circumstances, might, in the estimation of a jury, very properly be regarded as corroborating his statements, in respect to the authority originally given, and as illustrating the point, to what period, in the future, it was understood and intended that authority should continue.

If it had appeared that the plaintiff knew, when he discounted the note, that it was discounted for Caffe & Cutter, and that the money received from him was to be paid over to them, a jury might very properly find, that he did not discount it, relying on the truth of the representations made, as he would, in that case, have had knowledge of facts, which would have been notice that it was not business paper. Having such knowledge, it might have been his duty to inquire further.

If he bought, supposing it was negotiated for, and at the instance of Laverty, and on representations made, or authorized by him, that it was business paper, then he would not be entitled to recover of the executrix, more than the sum paid for it, and interest. (Cram v. Hendricks, 7 Wend. 569.)

But if he bought, believing it was business paper, which had been negotiated by all the parties whose names it bore, relying upon assurances to that effect, which Laverty had authorized to be made, to enable a sale of it to be effected, it is difficult to perceive, on what ground, the executrix of Laverty can claim exemption from liability, if it shall be made to appear that enough was done to fix his liability, as endorser.

These observations sufficiently present the views, which we think should be submitted, as a guide to the jury, in respect to the questions of fact to be determined by them, on such evidence as the case, before us, presents; and the effect they would be authorized, if they credited the testimony of Dore, to give to the declarations of Laverty, made at the interview between the two, in July, 1851. They render it unnecessary to express any opinion upon various exceptions taken to portions of the charge, as a new trial must be granted, as to Youngs, as well as the executrix of Laverty, by reason of the instruction given in reference to the sufficiency of a presentment of the note, at 18 John street.

A new trial must be granted as to Youngs and Catlett.


author: By the Court. Hoffman, J.

text:
    Coe S. Buchanan and others v. Elsworth Cheseborough.
    Upon the dissolution of a partnership between the plaintiffs and defendant, the former executed an instrument, (the latter not being a party,) in which the withdrawal of the latter was recited, and the plaintiffs agreed to pay him certain sums, and give Mm certain notes, as specified. They also stipulated to hold him harmless as to all matters of the concern, except, that as to certain items and notes then remaining unpaid to the firm, if any loss should be sustained, he, the defendant, was to share and pay to the plaintiffs seven-sixteenths thereof.
    Four days afterwards, the defendant executed and delivered a receipt, acknowledging the reception of the cash and notes under the agreement signed by the plaintiffs, dated the 31st of December, 1853, that above stated.

      Held, that the operation of the receipt was a recognition of the instrument signed by the plaintiffs, and made the defendant as much governed by its pro visions, as if he had executed it.
    At the trial, after the documents had been produced and proven, the counsel of the plaintiffs stated that the various items of their account under the stipulation, amounted to between five hundred and six hundred dollars, but offered no evidence. The court then made the direction, taking a verdict for $150, subject to the opinion of the General Term, and in case the General Term sustained the plaintiffs’ right of action, then a reference to ascertain their damages.

      Held, that the course pursued at the trial was irregular. That the cause could not be tried before a jury in part, and a verdict taken, and, partly, by a referee afterwards to be appointed.
    In a proper case, where the propriety of a reference was disclosed on a trial, the cause may probably be withdrawn from the jury, but should be so altogether.
    (Before Bosworth, Hoffmak and Woodruff, J.J.)
    January term, 1856.
    The action was brought to recover $527.45 and interest, being seven-sixteenths of certain losses made by a copartnership, composed of the plaintiffs and defendant, and which, it is alleged, the defendant promised, in writing, to pay, in an instrument, executed upon the dissolution of the firm. The ground of the action was, that the plaintiffs had settled with the defendant, and paid him, upon the basis of certain outstanding assets being available, under his express undertaking to pay his proportion of every eventual loss. Upon the trial, a verdict was taken in favor of the plaintiffs, subject to the opinion of the court; the case to be heard, in the first instance, at G-eneral Term, and a reference to be had, (if the General Term affirmed the right of the plaintiffs to recover,) to ascertain the amount of their damages.
    The facts are fully stated in the opinion of the court.
    Sheppard, for the plaintiffs.
    Brown, for defendant.
   By the Court. Hoffman, J.

The plaintiffs and the defendant were partners in trade, under the name of Buchanan, Cheseborough & Co., until the 31st of December, 1853. By the sixth item of the articles, the profits were to be shared as follows:—to Blsworth Cheseborough, the defendant, seven-sixteenths; to Buchanan and Kilmer, jointly, seven-sixteenths; and to William H. Parsons, two-sixteenths; and the responsibilities of such firm were to be shared and borne in the same proportions.

The defendant, on the 31st of December, 1853, retired from the firm, and on that day, an instrument was executed by Buchanan, Kilmer, and Parsons, some clauses of which will be hereafter stated, as upon them the case chiefly depends.

On the 4th of January, 1851, the defendant executed a receipt, in which he acknowledges the réeeption of certain notes of Buchanan, Parsons, and Company, and $1,500 in cash, “ the notes and cash being received under an agreement, signed by Buchanan, Kilmer, and Parsons, dated December 31, 1853, and are received by me in full discharge of so much of said agreement as relates to the giving of notes and paying of moneys.”

We are clearly of opinion, that this instrument, executed by the defendant, is a recognition of the instrument of the 31st of December, and makes all his' rights and all his liabilities as entirely dependent upon, and controlled by it, as if he had actually signed it.

In that instrument, the withdrawal of Cheseborough is recited, and the amount of capital he had put in, which amount, ($965.04,) the other parties agree to pay to him for withdrawing from the firm. The instrument then proceeds:—“ It is further agreed by the undersigned, that they will, on the 2d day of January next, form and advertise a copartnership, under the firm and style of Buchanan, Parsons, and Company, and the said firm shall liquidate all the outstanding liabilities of the present firm of Buchanan, Cheseborough & Co., and shall hold the said E. Cheseborough harmless in all matters thereto pertaining; except'in such items and matters of accounts, or the notes taken in settlement therefor, for goods sold before the- 1st of July last, and at this date remaining unpaid and standing upon the books of the present firm as good accounts, notes, &c. On these matters, should any loss be sustained, that the said Cheseborough is to share, and pay to the undersigned, seven-sixteenths of whatever sum said loss may amount to.”

It is alleged in the complaint, and not denied, that all the notes and cash given upon this settlement to the defendant, have been fully paid.

There was here no new substantive agreement, by which Cheseborough bound himself as surety, guarantor or otherwise, of the sufficiency of outstanding claims. There was simply this case. The plaintiffs settled with him as a retiring partner, upon the basis of all the notes and demands due the firm, being good. His liability to bear seven-sixteenths of what might turn out bad, was a part of his liability as partner. That liability, which, but for the clause in question, might be considered as resigned, this clause retains, and upon making out the case provided for in the clause, not a doubt can exist, of the right of the plaintiffs to call upon him for his proportion.

The next question, therefore, is, whether the case of a liability within this clause has been established upon the pleadings and proof. The complaint, after stating the effect of the provisions in the instrument of December, 1853, avers, “ that upon the books of the said copartnership, and as good accounts of the date of the said instrument, and then unpaid, and for goods sold before the said 1st of July, 1853, by the said copartnership, were divers accounts, amounting in the whole, to $1,726.65 and upwards, which have not been paid, and in consequence of which non-payment, a loss has been sustained by the plaintiffs, amounting to $1,205.60 and upwards, the seven-sixteenths of which the defendant is, and remains, liable to pay to the plaintiffs.”

The defendant, in his answer as to the matter, says:—“That there were upon the books of the copartnership, on the said 31st of December, 1853, divers accounts for goods sold before the 1st of July, 1853, which were, on the said 31st of December, unpaid, and then standing on such books as good accounts, but he avers, that most of such accounts have since been paid, and as to those that have not been paid, the plaintiffs have not used proper diligence to collect the same, and any loss which has been suffered from the non-payment of such accounts, has resulted from such laches and want of diligence.”

On the trial, after the instruments were produced, and evidence was given as to the rights of the parties before stated, one witness proved that he often saw the parties together. There were various conversations respecting the accounts. Some of them were presented to the defendant, and on one occasion, he, the witness, went over the accounts with him.

The counsel of the plaintiffs then stated the various items of their accounts against the defendant, amounting to between five and six hundred dollars, and then rested.

The court directed a verdict for the plaintiffs, for $750, subject to the opinion of the court, to be taken in the first instance at General Term, and a reference to ascertain the amount of damages, if the General Term should affirm the plaintiffs’ right of recovery.

At a first examination of the Code, we might be led to suppose that this course was warranted by it. The 253d section provides, that an issue of fact in an action for the recovery of money only must be tried by a jury, unless such trial is waived as provided in section 266, or a reference be ordered, as provided in section 270 and 271. Section 271 provides, that where the parties do not consent, the court may, on the application of either, or its own motion, except where the investigation will require the decision of difficult questions of law, direct a reference in the cases there following.

The second subdivision is, where the taking of an account shall be necessary for the information of the court before judgment, or for carrying a judgment or order into effect.

But we do not think this, or any other section of the Code, warrants a proceeding by which a part only of the action is tried by a jury, who find a verdict, which is, after all, not merely indecisive of the case, but may turn out, upon further investigation by another body, to be wholly unauthorized. If a trial by jury is had, it must comprise every matter in issue, on the record, or none. Such a course was, we presume, unknown under the former system.

A reference could be ordered at the circuit, upon hearing both parties, (19 Wend. 85,) and it may well be, that under the former and present system, a cause might be commenced, and then be found so plainly one for a reference, that the court might direct it. But in such a case, the cause would be taken from the jury entirely.

When the cause is tried before the court, under the 254th section, no such difficulty exists, the court still trying the cause, whether an issue is directed, or a reference, as to any portion of the case, or a particular fact in it. It comes back to the court for ultimate decision.

We consider that the verdict should be set aside, with liberty to the plaintiff's to apply for a reference to hear and determine the whole issues in the case, and also to amend their complaint, if so advised, so as to make the ground of action an agreement and contract between them and the defendant, not simply upon the deed of December, which makes him proceed upon a covenant.

The costs of the appeal are to abide the event of the cause.