author: By the Court.—Freedman, J.

text:
    JOHN J. PHILBRICK, Plaintiff, v. HENRY DALLETT and Others, Defendants.
    The draft or bill which was''the subject of this action against the ceptors of the same was drawn by the firm of Requebne & Co., a delivered to plaintiff with written directions of said firm to coll the same and hold the proceeds subject to the order of M. 1 quelme. In the absence of proof showing an appropriation M. Requelme of the said proceeds to plaintiffs use, the plaintiff appears in the character, and held the position of, a mere holder possessing authority to collect the draft, and hold the proceeds for the benefit of the true owner, and does not establish that plaintiff was a bona fide holder of commercial paper for value paid on the faith thereof.
    And-in such a case evidence offered by the defendants, the acceptors, as to a failure of consideration between them and the drawers, and as to a fraud being practiced upon them by the drawers, by means of which they were induced to accept the draft, was clearly admissible, and its exclusion by the court below was clearly an error.
    Even upon plaintiff’s theory, claimed and based upon the evidence, that he took the draft before acceptance for the prior debt of M. Requelme, this evidence was admissible. From the evidence, as it stood, when the proposed evidence was offered by defendants, it appeared that plaintiff took the draft before acceptance for an antecedent debt, and. without parting with any value upon the faith of either the draft or its acceptance, and, therefore, evidence offered by defendants to show that their subsequent acceptance was procured wholly by the fraud of the drawers, and was in fact wholly without consideration, should have been received.
    The respective positions and obligations of the drawers, acceptors and bona fide holders of commercial paper, and the cases and adjudications thereupon in the State of New York, fully reviewed.
    The doctrine that when a note has been taken for a pre-existing debt, that it is held bona fide, & c., as held in Swift ®. Tyson (16 Pet. 1), has not been followed in this State. A contrary rule has been firmly maintained, both at law and in equity, by a long and uninterrupted series of adjudications and is beyond question the law of the State (See the opinion of the court for the numerous decisions, post).

    Review of the following decisions, of a comparatively recent date, upon this question: McBride v. Farmers’ Bank, 26 N. Y. 450 ; Commercial Bank of Clyde v. Marine Bank, 6 Abb. Pr. N. S. 33, and 3 Keyes, 337; Bright v. Judson, 47 Barb. 29; Farmers’ & Mechanics’ Bank v. Empire State Stone Dressing Co., 5 Bosw. 289.
    Before Barbour, Ch. J., and Freedman, and Sedgwick, JJ.

      Decided May 4, 1872.
    Case and exceptions to be heard in the first instance at general term.

      The plaintiff, a resident of Key West, Fla., sues upon a draft of ten thousand dollars, drawn by Requelme & Co., of Havana, upon and accepted by the defendants, composing the firm of Dallett & Son, at Philadelphia, Pa., to the order of the plaintiff, and dated February 36, 1869.
    The answer contains a general denial of each and every allegation of the complaint, except such as thereinafter specifically admitted, and then set's forth :
    1. That the drawers obtained the acceptance by fraudulent misrepresentations, upon which defendants relied and of which the plaintiff was cognizant before such acceptance was made.
    3. That there was a failure of consideration between the drawers and defendants, of which also the plaintiff knew before acceptance, and
    3. That the plaintiff never owned the. bill or acceptance at all; that he never parted with any value or consideration for it, and that it had always remained the property of Requelme & Co., so far as any property in it could be said to exist.
    Upon the trial before the court and a jury, plaintiff, as a witness on his own behalf, produced the draft, which was read in evidence, and proved its acceptance by defendants on March 18, 1869, and the interest due thereon.
    The question put to him, ‘ ‘ Are you the owner of tha1 i note ?” the court excluded as unnecessary, as possession of the draft was sufficient.
    The court also declared it unnecessary for the plaintiff to prove the consideration of the draft in question,
    Plaintiff thereupon rested.
    The defendants, to maintain the issue on their part, called the plaintiff as a witness on their side, and iron his testimony it appeared that some time in February 1869, Mr. Requelme came to Key West, and, while there, purchased from plaintiff a sunken steamer callee the Ruby, for which he promised to send plaintiff either a draft or the cash within ninety days ; that no bill of sale was made of the vessel, nor any record concerning her in the custom house or any other office of the United States government; that Mr. Requelme thereupon left for Havana, and thence remitted the draft in question, which had not yet been accepted ; that the draft came accompanied by a letter which read as follows
    “Havana, 26thFebruary,’69.
    • “John Jay Philbbiok, Esq.,
    “Key West.
    “ Bear Sir :

    “ Herewith,
    $10.000 in cy. 60 days, on
    “Dallétt & Son, Phila.,
    which you will please collect and hold at the disposal of-our Señor Don Manl. Requelme.
    “ We are, dr. sir,
    “ Yours, very truly,
    “M. Requelme & Co.”
    That plaintiff kept the draft on hand for about two weeks, and then sent it to a Hew York house for acceptance and collection; that the steamer so sold was never moved, that she remained sunk, and at the time of the commencement of this action was in the same state that she was sold in, and that no storm had occurred to hurt or injure her. Plaintiff insisted, however, that he had delivered her over to M. Requelme at the time of the sale.
    The defendants next called Henry C. Dallétt as a witness, and offered to prove by him the real nature of the transaction between the firm of M. Requelme & Co. and defendants, with a view of showing that the draft was a fraud upon the defendants.
    The court excluded the proposed evidence, and defendants excepted.

      The defendants then offered to prove that there was no consideration between the drawers and acceptors, claiming to have laid the foundation for such proof by showing that the alleged consideration between the plaintiff and the drawers of the draft was prior to the acceptance of the draft by the defendants, and was not on the faith thereof.
    The court excluded the evidence, holding, that it would assume that the proof offered would establish the facts sought to be proven, but that they were not sufficient, as„ the case stood, to defeat a recovery on the draft. Defendants excepted.
    Defendants finally asked permission to go to the jury on the question whether Philbrick, the plaintiff, ever parted with any value for the draft.
    The court denied such request, and defendants excepted.
    The court directed a verdict for the the plaintiff for the full amount of the draft, with interest—eleven thousand seven hundred and eighty-five dollars—to which direction defendants excepted.
    The court ordered defendants’ exceptions to be heard in the first instance at the general term, and the entry of judgment on the verdict to be suspended in the mean time.

      Wm. W. Goodrich, of counsel for plaintiff, argued:
    I. The main question in the case is that raised by the exception, whether the receipt of the draft by the plaintiff for value before its acceptance, and its subsequent acceptance by the defendants, render the plaintiff an innocent holder for value as against the defendants. The only case which I have found that in any degree makes this questionable, is the case of Farmers’ and Mechanics’ Bank v. Empire Stone Dressing Company, 5 Bosw. 275 (1859), but the ■ remarks of the court uuon the subject here involved are obiter dicta, the court having already decided that the acceptances were made by the secretary of the defendants without authority. The court stated that the holders of a bill, who had received it from the drawer before its acceptance and given value for it, after which it was accepted by the drawee, could not recover against the drawee, because he had not parted with value upon the faith of such acceptance. Mo authorities are cited in support of this proposition. In the note it seems that on a second trial it appeared that the draft was received from the drawers and passed through the form of a discount, yet this was done under an agreement that the money should not be and was not paid over till the bill was accepted, and on this ground the holder obtained a judgment.
    II. The case at bar differs in material particulars from this case. The draft was sent to the plaintiff in payment for the steamer, and was taken in the faith that the defendants would accept it. Mow, while it is indeed true that the plaintiff could not have recovered from the defendants upon this faith, if the defendants had not accepted, yet it is equally true that the instant the defendants did accept the draft, it became binding upon them, and they cannot dispute its validity.
    III. This dictum, of the court in 5 Bom., is at variance with the law as laid down before and since that time. Where a person discounts a draft before its acceptance, its subsequent acceptance before maturity binds the acceptor in the same manner as if he had accepted it before the discount (Mechanics’ Bank v. Livingston, 33 Barb. 458, 1861). This case is exactiyin point with the case at bar, and is subsequent to the case in 5 Bosw. The court say: “In case of nonacceptance, the drawers would be immediately liable. But by accepting the draft, the bank is postponed and a forbearance is necessarily grab ted, which is a sufr ficient consideration for the acceptances” (see also Burns v. Rowland, 40 Barb. 368, 374).
    IV. An agreement to forbear for a time, is a valid consideration for a promissory note (1 Pars, on Cont. 366, 367, and note, and numerous cases cited ; 1 Pars, on Bills, 198; Jennison v. Stafford, 1 Cush. 168; Watson v. Randall, 20 Wend. 201; Meade v. Merchants’ Bank, 25 N. Y. 149). So also the waiver of any legal right (1 Pars, on Cont. 369, and cases cited).
    V. The payee is a stranger to the acceptor, and if the acceptance be absolute in its terms, and the bill is received by the payee in good faith and for value, it is no answer to an action by him that the acceptor received no consideration, or that there is a failure of consideration. “And it is immaterial for this purpose whether the bill is accepted while in the hands of the drawer, and at his request, or has passed into the hands of the payee before acceptance and is accepted at his request” (1 Pars. on Notes .and Bills, 180; Robinson v. Reynolds, 2 Q. B. 196). So, if A., for a consideration moving from B. to him, authorizes B. to draw upon C., to a certain amount, and B. draws accordingly, and C. accepts, C. will be as absolutely bound by his acceptance to B., the/drawer, as to any subsequent bona fide holder for value (1 Pars. Notes and Bills, 183 ; Pillans v. Van Meisop, 3 Burr. 1663).
    YI. The plaintiff would have had the right, on the presenting and non-acceptance of the draft, to have taken immediate proceedings against the drawer for ¿ damages for non-acceptance, or to recover on the draft. But the acceptance forms a new contract between the acceptor and the holder, by which all remedies against the drawer were suspended for sixty days. This was a new and sufficient consideration between the acceptor and the holder (Mechanics’ Bank v. Livingston, ante; Burns v. Rowland, ante). This question was not decided in the case in the 5th Bosworth. The court stated that “the defendants are not to be held by the unauthorized act of their secretary, merely because the plaintiff, bat for such act, would have sought earlier redress.”
    VII. The defendants would not be entitled to show a failure of consideration between themselves and Requelme & Co. in any event. They proved that the plaintiff received this draft from Requelme in payment for the Ruby. This was such a, consideration as makes the plaintiff an innocent holder for value. It is difficult to see how this holding can be defeated by the fact that the defendants did not accept till several days afterwards. They did accept; and even if fraud had been shown on the part of Requelme, the plaintiff, in that case, would only have been required to prove that he gave value, and this the defendants’ counsel, himself, proved conclusively. The defendants have nowhere offered evidence that the plaintiff received the' draft in bad faith, or with knowledge of fraud on the part of Requelme, or even of a failure of consideration (see Goodman v. Simonds, 30 How. U. S. 343).
    , VIII. But it should not be forgotten that bills of exchange are commercial instruments in the strictest sense, and are always regarded as favored instruments, as well on account of their negotiable quality as their universal convenience in mercantile affairs (Goodman v. Simonds, 20 How. U. S. 343, 364). The bill in question is a foreign bill. If discounted for the drawer at Havana or Key West, and subsequently accepted by the defendants at Philadelphia, it becomes a negotiable instrument in the hands of the holder for value; other wise the benefit and usefulness of this class of paper in commercial transactions must entirely fail. The acceptance cures all defects, and acknowledges that the acceptor has funds of the drawer in his hands. The acceptor is thereby estopped from denying his liability. In the case of Parsons v. Armor (3 Peters U. S. 428), the court made use of this language: “Every one knows that a bill of exchange is the substitute for the actual transmission of money by sea or land. Power, therefore, to draw upon a house in good credit, and to throw these bills upon the market, is equivalent to a-deposit of cash in the vaults of the agent.” The court here assumes that such bills may be sold before acceptance ; the question of the right to draw is • cured by the subsequent acceptance, and the acceptor can not question the title or the good faith of the holder who has given value in good faith for the bill before its acceptance. This rule is absolutely essential to the' value of foreign bills of exchange where long distances intervene between the drawer and drawee. The almost universal custom is to discount a foreign bill before its acceptance. Take, for instance, the case of circular drafts drawn by numerous houses in New York on their correspondents in London, which drafts are purchased in New York, for the purpose of carrying funds for traveling. Will it be argued, for an instant, that when the drawee accepts such a draft, he can refuse its payment on the ground that the holder did not receive it on the faith of the acceptance by the London house. The possibility of such a defense would totally destroy this method of business transactions.
    IX. An analogous principle is to be found in the case where a person draws and delivers to the payee a check upon a bank—which bank subsequently certifies the check. The payee can recover from the bank upon this certification (Farmers’ & Merchants’ Bank v. Butchers’ & Drovers’ Bank, 16 N. Y. 125; Merchants’ Bank v. State Bank, 10 Wall. 604).
    X. The defendants themselves proved the consideration passing between the plaintiff and Bequelme, and the court properly excluded all evidence relative to a failure of consideration between Bequelme and the defendants. The acceptance, once made, if the bill has been delivered to the holder, is irrevocable (Story on Bills, § 252; Swift v. Tyson, 16 Pet. U. S. 1, 19, 22). (This leading case fully reviews the law upon this subject, and establishes conclusively the doctrine contended for.)
    XI. It may be contended that the draft in question was given for a pre-existing debt, because it was not transmitted to the plaintiff until several days after the sale of the steamer for who.se price it was given. This, however, would not constitute a defense, the law being entirely settled that when a note is given for a preexisting debt, it is held bona fide and without notice (Swift v. Tyson, 16 Pet. 1; Bank of Salina v. Babcock, 21 Wend. 499 ; Youngs v. Lee, 12 N. Y. 555).
    XII. As to the refusal of the court to admit the deposition of the plaintiff taken before trial, the deposition was. properly excluded. 1. The defendant had called the plaintiff as his own witness, both before and at the trial, and he had no right to impeach him by showing that he had made contradictory statements (Pickard v. Collins, 23 Barb. 444). 2. The deposition, was offered for a specific purpose only, viz., to show that there was no consideration between Bequelme & Co., the drawers, and Dallett & Co., the acceptors. For this purpose it was clearly inadmissible, the defendants having already proven by the witness that he was a bona fide holder for value given before maturity.
    XIII. The court properly excluded the question at fol. 38, as to what the plaintiff had testified on such former examination. The only way to prove the former written statement would have been to introduce the deposition itself. A witness cannot be asked to give the contents of a written paper signed by him. He may be asked whether he wrote or signed the paper containing the declaration, but not to state its contents (1 Greenl. Ev. §§ 463, 465). Such a question, moreover, seeks to prove by parol the contents of a written instrument.
    XIV. The court properly refused to allow the defendants to go to the jury on the question whether the plaintiff ever parted with value for the draft. The defendant himself proved that value was given for the drafts, and there was no contradictory evidence on the part of the • plaintiff. Indeed, the court, on this very ground, prevented the plaintiff from going more particularly into the question of consideration. Besides, the acceptance sixty days after sight postponed the plaintiff’s remedies, and was sufficient consideration.

      Joseph J. Marrin, of counsel for defendant, argued:
    —I. To entitle one to recover upon an acceptance (which is otherwise invalid) on the ground that he is a bona fide holder for value, it must appear that he parted with value upon the faith of such acceptance. This principle was laid down by the" general term of this court in the case of Farmers’ and Mechanics’ Bank v. Empire Stone Dressing Company, 5 Bosworth, 290. This authority has never been in any manner overruled or questioned, and when the defendants entered upon the trial of this action, they had a right to rely upon it as established law, which a judge sitting at nisi prius would deem himself bound to follow, and according to which they might, in all safety, shape the introduction of their testimony and the management of their case. They did rely upon it; and, in order to prevent any subsequent attempts to change or alter the facts, they began by proving by the plaintiff himself, that whatever value he claimed to have given for the draft, was given by him before the existence of the draft.or of the acceptance, and, consequently, that he did not part, and could not have parted, with value upon the faith of the acceptance. Having thus established, in a manner which could not beafterwards contradicted, one of the requisites of this branch of their defense, the defendants were proceeding to prove the other, to wit, that by reason of fraud and lack of consideration, the acceptance was invalid, when the court disallowed this testimony, declaring it would assume it to be true, and thereupon directed a verdict against defendants, subject to their exceptions. This was manifest error. In the case above cited, the bona ftdes of the holders was unquestioned. The bank had actually paid out its money in discount of the bills. Still, the rule was applied. In the case at bar, the good faith of the holder was more than doubtful, the value he claimed to have parted with was found, after the expiration of three years, to be still in his possession, and the written testimony showed that he did not receive the draft as owner, but that he was directed to collect the money and hold it for the drawer. The rule above laid down is founded on equity and correct principle, and may be said to be elementary law. It is of daily application'in cases of the more familiar form of negotiable paper, promissory notes; and the mistake that was committed was due, no doubt, to the hurry of the trial at one of the most crowded terms of the court. The acceptor of a bill is the same as the maker of a note ; and the drawer the same as the indorser. Now, if A. induce B. to deliver him merchandise on his promise to give him at a future time C.’s note, and then, by a false and fraudulent representation that he is just then sending to C.’s store goods, which, in fact, he sends and sells elsewhere, induces C. to make his note, and then indorses it to B., it is very evident that B. has trusted nothing but A.’sword, and that C. is not bound, because B. parted with nothing on C.’s promise which was not then in existence, and B. is no worse off than if 0. had declined to give A. his note. Such has always been the law ; and it simply means that Peter shall not be robbed to pay Paul, in cases where Peter has not induced Paul to give credit on his name. The rule of law that there is no obligation without consideration, is essentially the same respecting notes or bills as any other form of promise. And, if, in the case of a bona fide holder, in the course of trade, for value given on the faith of E.’s note or acceptance, the law, to protect such holder from B.’s contradicting the words “value received,” written above his promise, .assumes a consideration to exist, it is for the reason that such holder has been induced to give value on the faith of B.’s written promise as maker or acceptor, which the holder had before him when he gave such value. If Philbrick ever parted with any value, he did not part with it on the faith of the acceptance ; and no case could come more clearly within the authority cited and the principle therein confirmed, that the present one.
    II. The court erred in refusing to submit the case to the jury. The answer distinctly put in issue plaintiff’s title to the draft; and whether he ever parted with value for it or owned it, was a question purely of fact and belonged to the jury to determine. The very letter which conveyed the. draft showed that Philbrick did not own the draft, but was merely an agent to collect the proceeds and hold them for the benefit of another. This evidence overthrew the naked presumption arising from possession, since it defined the possession to be for the benefit of another than Philbrick. This letter was the only unbiassed testimony on the question of ownership. It was, moreover, the only direct testimony upon this point; for defendant’s counsel, guided in his examination of the plaintiff by the light of a former trial of the case, distinctly avoided asking the plaintiff whether he ever gam any consideration, and confined his inquiry to the time at which the plaintiff claimed that the consideration passed, if it passed at all. If it be admitted, for the sake of argument, that any greater force than this can be given to the plaintiff’s testimony, the question of his paying value, of his being any more than the mere agent of a man who had no claim, on account of his fraud and total lack of consideration, was a question for the jury. Ko such letter as Bequelme’s was ever heard of in a transaction such as Philbrick claims ; and this letter would have been conclusive with a jury of business men, accustomed to deal with facts and with the ordinary and natural course of commercial occurrences. The force of this letter was increased by Philbrick’s refusal to state whether he demanded or got any explanation of it; by the fact that he never parted with the vessel at all; and by the further fact that, although the draft was payable sixty days after sight, Philbrick held it for two weeks before he forwarded it for acceptance, thus losing the interest on ten thousand dollars for that time, if the draft had been his, and postponing, for that length of time, its maturity.
    III. It was error in the court to reject the testimony proposed to be got from the plaintiff, of his previous sworn declarations, that there never was any real delivery of the vessel or any consideration given by him. The objection that the plaintiff was defendant’s witness is an erroneous assumption of fact and of law. The rules of evidence preventing the contradiction of one’s own witness, were framed when parties were not allowed to testify, and can have no application to an adverse party called as a witness. The reasons of the rule are, that it is not fair to a third person, who has no personal interest in a controversy, to call him as a witness on the presumption that he is in your favor, and then seek to contradict him ; and, further, that it might lead to the corruption of testimony, by allowing one to introduce another to testify in his favor and, if the latter afterwards testified according to his oath, to contradict him by his previous statements of what he would swear to. Cessante ratione legis, eessat ipsa lex. A party is, of necessity, Ms own witness, and never can be anytMng else, and never can be presumed, either on or off the stand, to make any statement against his own interest, unless true. The general sense both of the bench and bar is, that an adverse party on the stand is always to be treated as an adverse witness, because he is, of necessity, the most adverse of all witnesses, and the rules of cross-examination apply.
    IV. It was error in the court to exclude the sworn declarations of plaintiff, previously made, by which defendants sought to prove that the vessel in question was never delivered by the plaintiff to Requelme, the drawer, and no consideration passed between them. The court had previously ruled, when refusing to al-' low defendants to prove these declarations by the plaintiff himself, that it would allow proof of these declarations afterwards, but refused when they were offered.
    V. It was error on the part of the court to prevent the introduction of the testimony showing fraud against the defendants, saying that it would assume it. The testimony being admissible, the defendants had a right to it; because, from the peculiarity of the facts in this case, it had a very important bearing on the question of Philbrick’s ownership of the draft.
   By the Court.—Freedman, J.

In excluding defendants’ proposed evidence as to fraud by the drawers upon them, by means of which they were induced to accept the draft, and as to a failure of consideration between them and the drawers, the learned judge who presided at the trial clearly erred. He probably assumed that plaintiff had sufficiently shown himself to be a bona fide holder of commercial paper for value paid on the faith thereof. But such was not the fact. The sale of the steamer Ruby being a transaction between the plaintiff and M. Requelme individually, the plaintiff, under the direction of the firm of M. Bequelme & Co., contained in the letter accompanying the draft, to collect the samé and hold the proceeds subject to the order of M. Bequelme, and in the absence of proof showing an appropriation by M. Bequelme of the said proceeds to plaintiff’s use, appeared, so far as the evidence went, in the character of a mere naked holder possessing authority to collect for the benefit of the true owner; especially as the court had, at an early stage of the trial, excluded as unnecessary the proof offered by plaintiff to establish actual ownership, and had ruled proof of possession to be sufficient.

Even upon plaintiff’s theory, however, that he took the draft before acceptance, for the debt of M. Bequelme, the evidence was admissible. In such case, and as the evidence then stood, plaintiff took the unaccepted draft on account of an antecedent debt without parting with any value upon the faith of either the [draft or its acceptance, and defendants were not precluded from showing that their subsequent acceptance was procured wholly by the fraud of the drawers, and [was, in point of fact, wholly without consideration. Ghat wa.s one of the very issues raised by the answer, land, if established, as we must assume it would have been but for such erroneous exclusion, would have last the burden of proof upon the plaintiff to establish that he was an innocent actual owner and holder óf the ilraft for value paid on the faith of its acceptance.

I As against the holder of a draft, the acceptor, as a general rule, stands in the same position as the maker Bf a promissory note, and the drawer the same as the Endorser. By his acceptance the acceptor admits that Be has funds of the drawer in his hands to pay it. He B, in such case, regarded as the principal, and the ■rawer as his surety, and the accepted draft imports I debt due from the acceptor to the drawer, which is assigned to the payee. The instrument, being one of those which, on account of their negotiable quality and universal convenience in mercantile affairs, are specially favored by the law, if A., in the course of trade, parts with value on the faith of B.’s acceptance, the law, to protect A. as an innocent holder for a valuable consideration, against B.’s contradicting the words “value.received,” written above his promise, presumes a consideration to exist, and B. will not be permitted to overthrow such presumption by actual proof to the contrary.

But this rule applies only to a bona fide holder for a valuable consideration, and the doctrine as to what constitutes a person, such bona fide holder for value again varies in cases presenting a wide and marked distinction.

Thus, in Cole v. Saulpaugh (48 Barb. 104), anc Schepp v. Carpenter (49 Id. 542), the holder of an ac commodation note, which had been given by the make: without restriction as to the manner in which it shouh be used by the payee, was held to be a bona fide holde: for value as against the maker, notwithstanding it ap peáred that he took it for an antecedent debt and wit' notice of its character as accommodation paper. Thes decisions are based upon the fact that the ■ payee, nc being limited or restricted as to the manner of its use had a right to apply it to the payment or security < an antecedent debt, or to sustain his credit with ic i any other way.

So, in the absence of fraud, an acceptance has bee held to involve a consideration, inasmuch as it delai the holder’s resort to the drawer, which he might hai immediately in case of non-acceptance; and for ti same reason a subsequent acceptance before maturi and for the accommodation of the drawer has be< held to enure to the benefit of the holder who d counted the draft before acceptance, in the expectatio justified by a previous course of dealing, that it would be so accepted (Mechanics’ Bank v. Livingston, 33 Barb. 458.)

But where the acceptance is not only without consideration in fact, but, in addition, has been procured by means of a fraud practiced upon the acceptor, an entirely different rule prevails. Here, the mere taking ] of the draft on account of an antecedent debt, without giving up or surrendering something of value on the faith of its acceptance, is not enough to constitute the holder a bona fide holder for value as against the 1 acceptor. The doctrine of Swift v. Tyson, 16 Peters, has not been followed in this State. On the contrary, our courts held at quite an early day that I the receipt of commercial paper, fraudulently put in [circulation or diverted from the purpose for which it I was originally issued, merely as payment or security ¡for a precedent debt, no new credit or other thing of Ilegal value being given on the faith thereof, and no ¡security being relinquished or discharged, nor any new [responsibility incurred on the credit thereof, is not [parting with value, such as to enable the holder to [enforce such commercial paper against an aecommo[dation party, or to hold it against the true owner, or to íold it free of equities existing upon it against the transferrer at the time of the transfer.

This rule has been firmly maintained, both at law and in equity, by a long and uninterrupted series of adjudications, and is beyond question the settled law of (this State (Coddington v. Bay, 20 Johns. 637 ; affirming S. C., 5 Johns. Ch. 54; Stalker v. McDonald, 6 Hill, 93 ; Wardell v. Howell, 9 Wend. 170; Rosa v. Brotherson, 10 Id. 86; Hart v. Palmer, 12 Id. 523; Ontario Bank v. Worthington, 12 Id. 593 ; Payne v. Cutler, 13 Id. 605; Morton v. Rogers, 14 Id. 576; Commercial Bank v. Horton, 1 Hill, 501; Manhattan Co. v. Reynolds, 2 Id. 140; Scott v. Betts, Hill & D. Supp. 363 ; Elliott v. Dudley, 19 Barb. 326 ; Francia v. Joseph, 3 Edw. Ch. 183 ; Clark v. Ely, 2 Sandf. Ch. 166 ; Furniss v. Gilchrist, 1 Sandf. 53; Stewart v. Small, 2 Barb. 559 ; Mickles v. Colvin, 4 Id. 304; Spear v. Myers, 6 Id. 445 ; Clark v. Gallagher, 20 How. 308; Farrington v. Frankfort Bank, 31 Barb. 183 ; Prentiss v. Graves, 33 Id. 621 ; Cardwell v. Hicks, 37 Id. 458 ; West v. American Exchange Bank, 44 Ib. 175; Crandall v. Vickery, 45 Id. 156; McBride v. .Farmers’ Bank, 26 N. Y. 450 ; Lawrence v. Clark, 36 N. Y. 128).

It is only where a creditor receives a negotiable paper fraudulently put in circulation or diverted from its purpose in good faith, and in actual satisfaction and discharge of a prior indebtedness, so that, unless sucl paper is available in his hands, he loses the demand that this is considered as parting with value. In sucl case the actual discharge of the personal .responsibility of the debtor is equivalent to parting with securities o: to paying money. The extinction of a legal demam . in its original form is, however, to be proved affirms tively ; and the question whether the party is a holde for value, so as to displace in his favor any right o, equity of prior parties, depends upon the fact bein established of an intended and actual extinguishmei (N. Y. Exchange Co. v. De Wolf, 3 Bosw. 86, and at thorities there cited).

Time and space do not permit me to make a moi extended reference to the authorities cited than I hat done, and I- will conclude, therefore, by calling attei tion yet to the following decisions of a comparative! recent date, which deserve to be carefully noted :

In McBride n. Farmer’s Bank, 26 N. Y. 450, an Commercial Bank of Clyde v. Marine Bank, 6 Abb. P N. S. 33 ; S. C., 3 Keyes, 337, it was held that a ban does not become a purchaser for value of demands r .mitted to it for collection, by reason of its having balance against the remitting bank, for which it h refrained from drawing, and of its having discounted notes for the latter upon its indorsement, in reliance upon a course of dealings between the banks to collect notes for each other, each keeping an open account of said collections, treating all the paper sent for collection as the property of the other, and drawing for balances at pleasure.

In Bright v. Judson, 47 Barb. 29, it was expressly decided that fraudulent representations by which one "s induced to accept a bill, are a bar to a recovery hereon by a holder who took the bill in payment of an ntecedent debt without surrendering something of alue upon the faith of such acceptance.

And in the Farmers’ and Mechanics’ Bank v. mpire Stone Dressing Company, 5 Bosw. 289, the ecision was that to entitle one to enforce an acceptance, hich is otherwise invalid (whether for want of power n the agent who wrote the acceptance to bind his rincipal, as in that case, or for fraud practiced by the rawer upon the acceptor, as in the case at bar, makes o difference), on the ground that he is a bona fide older for value, it must appear that he parted with alue upon the faith of such acceptance. He may be bona fide holder of the bill for value paid therefor, nd be entitled to enforce it against every other party ereto, and yet have no right to recover on such cceptance.

In view of the authorities referred to it is entirely ear that defendants had an unquestionable right to "ove the facts embrececl in the two offers made, and at the exclusion of their proposed evidence constited error.

Defendants’ exceptions to such exclusion of their "dence, and to the direction of a verdict against them ust, therefore, be sustained, and the verdict must be t aside and a new trial ordered, with costs to defend-ts to abide the event.


source: Caselaw Access Project

author: By the Court.—Sedgwick, J.

license: Public Domain

text:
    THOMAS A. YOUNG, Plaintiff and Respondent, v. THE WESTERN UNION TELEGRAPH COMPANY, Defendant and Appellant.
    Teleobaph Companies.
    1. Printed Conditions.

      a. Where there is contained on the blank on which the message is written, and above the message, a printed clause that all mesages are taken subject to the terms thereon printed, and also a printed request to send the message subject to such terms, stating the same to be agreed to, the terms so printed became a part of the contract betwen the sender and the company, and are valid and binding on the sender.

      b. Clame providing that the company will not be liable where the claim is not presented in writing within a certain time.

    1. The words “ presented in writng ” mean that the claim shall be delivered to and left with a proper authorized official.
    Before Barbour, Ch. J., Freedman and Sedgwick, JJ.

      Decided May 4, 1872.
    This action was brought to recover damages sus tained by the plaintiff through the erroneous trans mission of a telegram sent by him over the defendant,’ telegraphic line.
    The message was written by the plaintiff on one o the blanks of the defendant, which had printed upoi it above the message the following clauses, amongs others:
    “The Western Union Telegraph Company.
    “ All messages taken by this company subject t the following terms:

      “The company will not be liable for damages in any case where the claim is not presented in writing within sixty days after sending the message.
    “O. H. Palmer, J. H. Wade,
    “Secretary. President.
    “ Send following message subject to the above terms, which are agreed to.”
    The plaintiff, to show that he had complied with the above stipulation as to the presentment of his claim, proved that his attorney within the sixty days made out in writing a statement showing the loss the plaintiff had sustained; that the attorney took this statement to the office of the defendant; that he stated his business and exhibited this paper to a person in that office, whom he supposed to be an operator, that this person “took the paper, looked at it, handed it back, and told him he bad nothing to do with it, and knew nothing about it and referred him up stairs to some of the officers ;” that the attorney went up stairs and asked for the treasurer, who was absent, and further asked for Mr. Wade, who on the paper that contained the despatch was named as president of the defendant, and was told that he was out of town ; that the attorney then left the office, taking with him the written statement ; that the attorney, after the sixty days had ended, made in writing another statement of the claim, which he left with the company.

      Lowrey & Soren, attorneys, and George H. Soren, of counsel for appellant, argued:
    I. The judgment should be reversed, for the erroneous rulings and instructions in regard to the presentment of the claim for damages. If the plaintiffs’ claim was not presented to the defendant in writing, within sixty days after sending the message, the plaintiffs could not maintain their action.
    (1.) The requirement of such a presentation, that is to say, in writing, and within a specific limit of time, was a reasonable one, which the defendant was entitled to make. Such a requirement is very familiar in policies of insurance, and has always been held valid and binding on the insured. “We are not aware that any doubt has been entertained of the validity of a stipulation in a policy of insurance that notice shall be given of a- loss within a limited time ; such a provision is a condition precedent”" (Patrick v. Insurance Co., 43 N. H. 622; Repley v. Ætna Insurance Co., 30 N. Y. 136, and cases cited; Cray v. Hartford Insurance Co., 1 Blatchf. 280 ; Amesbury v. Bowditch Insurance Co., 6 Gray, 603; Roach v. New York and Erie Insurance Co., 30 N. Y. 548 ; Inland Insurance Co. v. Stauffer, 9 Casey, 397; and see Bumstead v. Dividend Insurance Co., 2 Kern. 91).
    (2.) In this case, the requirement was expressly agreed to by the plaintiffs, when they signed and delivered their message, written on the company’s blank, containing the condition (Wolf v. W. Union Insurance Co., 62 Penn. 87; Lewis v. Gr. Western Railroad Co., 5 H. & N. 67). These cases, and especially the first of them, expressly hold, that in just such a case as this, the condition is binding on the plaintiff, and performance of it is a condition precedent to his recovery.
    (3.) The reasons upon which such a provision is upheld in insurance cases, apply with even greater force in telegraph cases. “The clause contemplates a loss about which a controversy may arise between the insured and the company, and in respect to which the right to- indemnity may be denied. The object was not to foreclose it and prevent, a resort to. the proper tribunal, but to compel a-speedy resort, and a termination of the controversy, while the facts were fresh in the recollection of the parties and witnesses, and the proofs accessible” (per Nelson, J., Cray v. Hartford Insurance Co., 1 Blatchf. 280). There was no performanee of this condition by the plaintiffs. Senders, by writing their messages on blanks of the telegraph companies under their printed headings, assent to the rules and conditions contained in them, and the senders and the telegraph company thereby contract together, on those terms and conditions (Breese v. U. S. Tel. Co., 45 Barb. 274; lately affirmed in commission of appeals. Lewis v. Great W. Ins. Co., 5 H. &-N. 867; Bryant v. Tel. Co. 1 Daly, 578; Wolf v. W. Un. Tel. Co., 62 Penn. 87 ; Sweatland v. Ill. and Miss. Tel. Co., 27 Iowa, 447; Wann v. Tel. Co., 37 Mo. 472 ; Ellis v. Am. Tel. Co., 13 Allen, 226 ; W. Un. Tel. Co. v. Carew, 15 Mich. 525 ; Gildersleeve v. U. S. Tel., Co., 29 Md. 232: Camp v. Tel. Co., 1 Metc. (Ky.) 164; Leonard v. N. Y. Tel. Co., 44 N. Y. 544). Notice to the corporation in such a matter as this, could no more be given through an operator, than through a message boy. “ Proof of the mere existence of a relation of agency to a corporation, establishes an agency no farther than is necessary for the discharge of the duties ordinarily belonging to it (2 Greenl. Ev. §64 a). “ The knowledge of a mere agent, unauthorized to represent the company beyond the specific powers committed to him, cannot be the ground of an estoppel in a matter unconnected with the exercise of his powers. This can only take place when the knowledge . . comes home to those officers who exercise the corporate powers of the company, or to an agent whose powers relate to the very subject out of which the estoppel arises” (Mitchell v. Lycoming Insurance Co , 51 Penn. 411). In that case, it was held that the agent of an insurance company, whose duty it was to make surveys, receive applications for insurance, approve assessments and receive assessments, was not authorized to accejpt notice of over insurance. “We know that ordinarily, notice to a director . of an incorporated company is not notice to the company, and for the best reason, that directors are usually but consulting managers, not executive agents ” (Inland Insurance Co. v. Stauffer, 33 Penn. 403). Even in respect to the power of the president of an insurance company to make insurances, “ it is incumbent on the complainants to offer competent and sufficient evidence of his authority to bind the company” (Commercial Ins. Co. v. Union Ins. Co., 19 How. U. S. 322).

      M. K. W. Jones, attorney, and of counsel for respondent, argued :
    I. That the printed heading under which the telegram was written, did not, in the absence of proof that it was seen and assented to by plaintiffs, constitute part of the contract between them and the defendant; and in holding that it did, the judge at the trial term erred against the plaintiffs (Hollister v. Nowlen, 19 Wend. 234; Judson v. Western Railroad Co., 6 Allen [Mass.], 486 ; Judson v. Western Railroad Co., 11 Cush. [Mass.] 97). The objection that defendant was not notified in writing of plaintiff’s claim, within sixty days after the sending of the message, may be met with several answers.
    (1.) The printed statement on the blank that the company would not be liable for damages in any case where the claim was not presented in writing within sixty days,” &c., is not shown to ham been seen or assented to by plaintiff s, and the-court erred in ruling that the same constituted part of their contract with the defendant (Hollister v. Nowlen, 19 Wend. 234 ; Judson v. Western Railroad Corporation, 6 Allen [Mass.] 486, 11 Cush. [Mass.] 97.
    (2.) Defendant could not limit its liability by specifying in a mere notice, printed in its blanks, that it would not be liable for any loss unless the claim therefor should be presented in a given time (Southern Express Co. v. Caperton, 44 Ala. 101).
    (3.) To permit such a limitation of liability for acts of negligence, would not only be against public policy, but would be to authorize telegraph companies to adopt their own statutes of limitation, and thus usurp legislative powers.
    (4.) Such a limitation would be unreasonable. In many cases it could not be ascertained, within sixty days after the sending of a message, what or whether any damage had resulted from an error in its transmission.
    (5.) The printed notification at the head of the blank cannot be claimed as binding, on the ground that is a recital of the company’s “rules and regulations.” Had the company the power to adopt such ‘ ‘ rules and regulations,” as are there set forth ; there is no proof that any such ever were adopted by the defendant.
    (6.) If the judge was right in holding that the contract between the parties required written notice of the plaintiff’s claim, within sixty days, the requirement was substantially complied with.
    (7.) The witness who gave the written notice within sixty days inquired at defendant’s office for Mr. J. H, Wade, whose name appeared on the printed heading to defendant’s blanks as president of the company, and on whom it was sought to serve the notice. It appears, by testimony offered on behalf of defendant, that J. H. Wade was not, in point of fact, president of the company at that time, and was absent in Ohio.
   By the Court.—Sedgwick, J.

The case of Breese v. The United States Telegraph Company, decided in the supreme court (45 Barb. 274) and in the commission of appeals settles the law to be, that the matter printed on the blank above the message which the plaintiffs required the company to send, and which was signed by one of the plaintiffs, forms a part of a contract between the parties. The opinion delivered in the commission of appeals in Breese v. The United States Telegraph Company, is not in the reports, but a printed copy of it was handed to the court in this case by the appellant’s counsel.

By that contract it was agreed that the company will not be liable for damages in any case where the claim is not presented in writing within sixty days after sending the message. Bumstead v. Dividend Ins. Co., 12 N. Y. 91; Ames v. N. Y. Union Ins: Co., 14 Id. 265 ; Ripley v. The Ætna Ins. Co., 30 Id. 163 ; Roach v. The N. Y.. & Erie Ins. Co., 30 Id. 548; sustain the validity of such a stipulation.

The plaintiff, to show that he had complied with the stipulation, proved that his attorney within the sixty days made out in writing a statement showing the loss the plaintiffs had sustained; that the attorney took this statement to the office of the defendant; that' he stated his business and exhibited this paper to a person in that office, whom he supposed to be an operator, that the person “ took the paper, looked at it, handed it back, and told him he had nothing to do with it, and knew nothing about it, and referred him up stairs to some of the officials that the attorney went up stairs and asked for the treasurer, who was absent, and further asked for Mr. Wade, who, on the paper that contained the despatch, was named as president of the defendant, and was told that he was out of town ; that the attorney then left the office, taking with him the written statement; that the attorney, after the sixty days had ended, made in writing another statement of the claim which he left with the company.

The clause in question is not full in its expressions ; Yet there can be no doubt of its meaning. To present, has, among others, two meanings—the one, to exhibit, &c., and the other, to give. This latter is intended in this case. To perform his obligation the plaintiff had to deliver over to and put under the dominion of the company the claim in writing within sixty days. This was never done. The attorney never absolutely lost, even for a short space of time., his control of the statement. He stated his business and exhibited the paper to a man in the office, he supposed to be an operator. Evidently this was a preliminary to his parting with it finally. In response, the man, taking the paper in his hand, not to receive it, but examine it, said he had nothing to do with it and knew nothing about it, and the attorney took the paper back. This sufficiently shows that the plaintiffs on this occasion did not do what had to be done on their part to put the company in possession of the written claim. There was no delivery.

But if they had in the first instance, the taking of it back would .be sufficient to show that there was no presentation of the claim in the meaning of the contract. It would prevent the company attaining that final possession of it which is an essential part of a presentation under the contract.

It cannot be said that if the company once having it, chose to return it, the plaintiffs might receive it. If the so-called operator was an agent of the company to receive such a statement for the purpose of being sent to the right officer or department, he certainly was not, and to the knowledge of the plaintiff, its agent to return it.

And generally the object of the clause was that the company should have in its possession a written statement of claim. If the plaintiffs so act in regard to the written statement, that the defendant can have none of the benefits of its possession, they do not fulfill the contract.

The court • charged that if the jury believed the facts that have been stated here to have actually ocr corred, then the plaintiffs had given the statement of the claim under the clause in question.

An exception was taken to this, and on this ground the judgment must be reversed.

In light of this conclusion it is not of practical importance to examine the other exceptions taken in the case.

Judgment reversed, new trial ordered, with costs ’ to appellant to abide event.


text:
    MARY C. PORTER, Executrix of the last will of Giles R. Porter, Deceased, Plaintiff and Respondent, v. ELIZA PARMLY, Defendant and Appellant.
    Chattel Mobtgage—Refiling of.

      Omission to reflle, when it will not impair the rights of the mortgagee.

    1.' When, after default by the mortgagor, an actual change of possession of the property has taken place, or the rights of the parties have been changed by some new act or contract in relation to the property, which would render a refiling an idle ceremony.

      Application of above principle.

    Where the property mortgaged consisted of hotel furniture situate at the time in a hotel, and the mortgagor and A. B., as partners, carry on the hotel business in that hotel, using, in the conduct of the business, the mortgaged property as part of the hotel equipments, and, after default by the mortgagor, the mortgagee declared he would not trust the mortgagor with the property, and thereupon he, with the consent of the mortgagor, placed the property in the possession of A. B. for him, but did not remove it from the hotel, and it remained in the hotel from the date of the mortgage until its sale under the mortgage, the partners during the whole time carrying on in the hotel the hotel business, using in the business the property as part of the hotel equipments, and no notice was posted about the hotel, nor any variation in the mode of the conduct of the business which indicated a change of ownership, or of possession,—

      Held, that as against a creditor of the mortgagor, whose demand did not ripen into a judgment until after the expiration of one year from the filing of the mortgage, the rights of the mortgagee were not prejudiced by the non-refiling of the mortgage.
    2. Change of possession, and delivery.

    Held, that there was a sufficient delivery and change of possession to prima facie satisfy the statutes concerning fraudulent conveyances.
    3. Fraud.

    Although the omission to refile does not, under the above circumstances, prejudice the mortgagee’s right, yet the mortgage and the whole transaction may be attacked for fraud on the ground that it was entered into or carried out with intent to hinder, delay, or defraud the mortgagor’s creditors.
    4. Question of fact.

    This, however, is a question of fact, and where, in addition to the above matters, it appears that the mortgage was given on a sale by the mortgagee to the mortgagor of the property for a part of the purchase money, and the referee does not find as matter of fact that the transaction was entered into or carried out with a fraudulent intent, and was for that reason fraudulent against creditors, he is not justified upon the above facts in adjudging as matter of law that the arrangement entered into between the parties upon default was fraudulent and void against one who was not misled thereby.
    Before Monell, Freedman and Curtis, JJ.

      Decided May 4, 1873.
    Appeal from judgment entered upon the report of a referee.
    The action was brought by Giles W. Porter against the defendant for the wrongful seizure and sale of personal property, the alleged property of said Porter.
    The defendant interposed a general denial.
    During the pendency of the action, Giles W. Porter died, and the action was continued by and in the name of Mary C. Porter, acting executrix of the last will and testament of said Giles W. Porter, as plaintiff.

      The issues were referred, by consent of parties, to a referee to hear and determine the same, who found the following facts and conclusions of law:
    PACTS.

      First. That for sometime prior to June 1,1850, the defendant in this action was the ownerfof certain furniture then being in a certain hotel, situated in the city of blew York, known as Rathbun’s Hotel; such furniture then being in the possession of one Benjamin Rathbun and John F. Porter, who were then conducting the business of keeping said hotel as partners, and such furniture being part of the equipment of said hotel and used in conducting said business.

      Second. That at some time prior to the first day of June, 1850, an agreement was made between the defendant and the said John F. Porter, by which the said defendant sold to said Porter, and the said Porter purchased of said defendant the said furniture above mentioned for the sum of eight thousand seven hundred and fifty-seven dollars and four cents, the said sum to be secured to and to be paid to said defendant by the said Porter, by executing and delivering to said defendant the bond of said Portér conditioned for the payment of said sum on demand, and also by a mortgage on said furniture, to be executed by said Porter to the defendant.

      Third. That said agreement was carried out on or about June 1, 1850, by the execution and delivery by said John F. Porter of his bond conditioned for the payment of eight thousand seven hundred and fifty' seven dollars and five cents to the defendant on demand, with interest from May 1, 1850, and by the execution and delivery to the defendant of a mortgage on said furniture, which expressed that it was on condition that the same should be void if said Porter should pay the amount secured by said bond on demand with interest as aforesaid, and also the sum of fifty-five hundred dollars on demand, with interest, which mortgage contained a power of sale in case of default in payment, and a provision that, until default, said Porter was to remain in possession of the property therein described ; which said bond and mortgage were respectively dated on June 1, 1850, and which mortgage. was duly filed on June 15, 1850, in the office of the register of the city and county of New York.

      Fourth. That on the same day of the execution of said bond and mortgage, and also some time in the month of April, 1851, the amount mentioned in and secured by said bond was demanded of the said Porter | and payment thereof required, and possession of the property described in said mortgage was also demanded, but on neither of said occasions was the amount ¡paid. That on one of said occasions it was agreed ¡between the said defendant and said Porter that the ¡said Rathbun should be and remain in possession of Isaid property for the defendant—he, the defendant, Istating on that occasion that he would not trust said >orter with the property.

      Fifth. That said Benjamin Rathbun and John F. orter continued to be« partners engaged in carrying on ¡the business of keeping said hotel from the time of the Execution of said mortgage up to the time of the sale inder said mortgage hereinafter mentioned, and that laid property so mortgaged, continued to remain in laid hotel as the equipment and furniture thereof, and lo be used in the carrying on such partnership business [Luring the same period.

      Sixth. That the said mortgage was not refiled in the Iffice of the register aforesaid, within thirty days next preceding the expiration of one year from the first filig thereof, but was so refiled on July 3,1851-v

      Seventh. That on July 3, 1851, the said John F. Porter, by Ms statement, made, signed and verified by Mm, confessed a judgment in favor of Giles W. Porter, assignee of Porter & Ballard, for the sum of thirteen thousand and sixty dollars and eighty-two cents, which statement was filed in the office of the clerk of the city and county of New York, and a judgment was entered thereon in the supreme court for said amount on the last mentioned day.

      Eighth. That on July 3, 1851, an execution against property was issued on said judgment, and delivered to the sheriff of the city and county of New York. By virtue of which execution the said sheriff levied upon, and afterwards and on July 21, 1851, sold at public vendue to the said Giles W. Porter all the right, title and interest which the said John F. Porter had on July 2, 1851, or at any time afterwards, of, in and to all the furniture, goods and chattels on the premises known as Eathbun’s Hotel in Broadway, in the city of New York, and all interest in such property, which the said sheriff was authorized to sell, and executed and delivered to said Giles W. Porter a bill of sale therefor ; that the price at which the same was sold was the sum of six thousand dollars, but that no money was paid on account thereof—said amount, less sheriff ¡ fees, being credited on the execution. That on saic sale said right, title and interest, was put up and sole as one lot, and not in detached parcels, and that sai< sale took place in or upon some portion of said hotc where the property was situated, the same being dig tributed throughout various rooms in said hotel in th customary places for use.

      Ninth. That before said confession of judgmen said Giles W. Porter knew of the existence of tl mortgage hereinbefore mentioned.

      Tenth. That the said defendant did, by an instn ment in writing indorsed on said mortgage, and bearii date July 1, 1851, make, constitute and appoint Abr ham T. Hillyer his true and lawful attorney for him, and in his name to take possession of the goods and chattels and property mortgaged and described in said mortgage, and in the inventory thereunto annexed, and to sell the same by virtue of the power of sale therein contained, and to take all proper ways and means to foreclose said mortgage and collect the moneys due thereon, and confirming all he might lawfully do by virtue thereof; and thereupon said mortgage, with said instrument indorsed thereon, was delivered to said Hillyer. That the said Hillyer at that time was one of the deputies of the sheriff of the city and county of Hew York, and the same who made the sale on execution hereinbefore mentioned.

      Eleventh. That no possession was taken by said Hillyer under the power indorsed on said mortgage until after July 2, 1851; but that on some day subsequent thereto he did take possession under said mortgage of all the property mentioned in said mortgage then in said hotel, and also did, without authority, direction or consent from the defendant, take possession of other property in said hotel not covered by or included in said mortgage, and on August 6, 1851, he caused all of said property so taken possession of by him to be exposed for sale at public auction, and the said public sale of said property was commenced on that day, and was continued for some days thereafter, until the whole of the said property was sold. That after said sale said property was removed by the purchasers, and the proceeds were received by said Abraham T. Hillyer. That the defendant did not in any manner authorize, direct or ratify the sale by said Hill-yer of any property other than such as was covered by said mortgage.
    . Twelfth. That the value of the property mentioned in said mortgage and so sold by the said Hillyer was the sum of eleven thousand and eighty-five dollars and forty-five cents, and that the interest on said sum, from August 15, 1851, to the date of this, my report, is the sum of fifteen thousand three. hundred and forty-one dollars and fifty-two cents.

      Thirteenth. That said Giles W. Porter departed this life some time in the year 1859, leaving a last will and testament, which was duly admitted to probate by the surrogate of the proper county, and letters testamentary issued thereon to the plaintiff, the only executor named in said will who qualified.
    And from the said facts so found .by me, I have arrived at and do hereby report the following as my
    COXCLTTSIOXS OF LAW.

      First. That as at the time the said agreement between the defendant and John F. Porter and Benjamin Rathbun, in the fourth conclusion of fact mentioned was entered into, the said John F. Porter 'and Benjamin Rathbun were partners, and as the mortgaged property at that time was used in carrying on such partnership business, and as such partnership and such use of said mortgaged property continued after such agreement was made, there was not, in judgment of law, an actual change of possession of the mortgaged property.

      Second. That although payment of the amount secured by said mortgage was demanded and refused, yet as there was no change of possession of said' mortgaged property, the title to the same .was not absolute at law in the defendant after the expiration of one year from the filing thereof as against the creditors of John F. Porter.

      Third.. That the mortgage executed by the said John F. Porter to the defendant, not having been refiled within the thirty days next, preceding the expiration of one year from the time of the original filing, the same ceased to be valid as against the creditors of John F. Porter, and, was, on July 2, 1851, void, and of no effect as against Giles W. Porter, assignee of Porter & Ballard, a creditor in whose favor judgment was, on that day, entered against John F. Porter, and execution issued thereon.

      Fourth. That although at the time of the sale to Giles W. Porter, upon the execution on said judgment, the said mortgage was valid and subsisting as between the defendant and John F. Porter, and although said sale was expressly made of the right, title and interest of John F. Porter in the property, yet the said Giles W. Porter was not, by reason of his purchase on said sale, estopped from setting up the invalidity of such mortgage as against him.

      Fifth. That as the mortgage held by the defendant had ceased to be valid at the time of sale as against Giles W. Porter, he did, by the sale to him of the right, title and interest of John F. Porter in the property, acquire the title to and become the absolute owner of the mortgaged property itself, free and clear, and discharged of any lien of the defendants’ mortgage.

      Sixth. That the sheriff, in making such sale, complied with all the requirements of law in relation to sales of personal property on execution, and that the sale of the right, title and interest, was properly made in one parcel.

      Seventh. That the defendant has no right to object to the manner in which said sale was made, or as to any of the proceedings connected therewith.

      Eighth. That the defendant became liable to Giles W. Porter in damages for the acts of Abraham T. Hilllyer, in taking possession of, selling and disposing of [the property mentioned in said mortgage, but he did mot become liable for his acts in taking possession, selling or disposing of any property not mentioned in said Inortgage.

      Ninth. That the measure of damages to be recovered in this action is the value of the property described in said mortgage so sold and disposed of by said Hill-yer, with interest thereon from the time of sale.
    • Tenth. That after the death of Giles W. Porter, and the issuing of letters testamentary on the will, tlm right of action possessed by Giles W. Porter, in his lifetime, became vested in the present plaintiff, and this action was properly continued in her name.

      Eleventh. That the plaintiff in this action is entitled to judgment against the defendant for the sum of eleven thousand and and eighty-five dollars and forty-five cents, with interest thereon from August 15, 1851, to the date of this report—being the sum of fifteen thousand three hundred and forty-one dollars and fifty-two cents, making in the whole the sum of twenty-six thousand four hundred and twenty-seven dollars and twenty-two cents, besides the costs of this action.
    Judgment was entered upon said report in favor of the plaintiff against the defendant, for twenty-eight thousand three • hundred and twenty-two dollars and twenty-three cents damages and costs, and the defendant appealed from such judgment.

      Marsh & Wallis, counsel for appellant.

      A. R. Dyett, counsel for respondent.
   By the Court.—Freedman, J.

Although the evidence in this case is amply sufficient to sustain the findings of fact made by the learned referee who tried the cause, I cannot see how, upon the facts as found, his conclusions of law, with the exception of the sixth, seventh, and tenth, and the judgment founded thereon, can be upheld.

In Stoddard v. Denison, 2 Sweeny, 54, we held that a mortgage of personal chattels is a sale on condition. Under it the legal title to the chattel is vested in the mortgagee, subject to the right of the mortgagor to perform the condition. Until default there is no doubt of the mortgagor’s right to perform, and, upon performance, to re-invest himself with the legal title.

Upon breach of the condition of a chattel mortgage, valid in its inception, the legal title becomes absolute in the mortgagee, leaving a mere equity in the mortgagor. The mortgagee may thereupon take possession of the property, and, so far as the legal rights of the parties are concerned, he may thenceforth treat it as his own, and squander, destroy it, or give it away. By pursuing this course he waives his claim for any deficiency that might otherwise arise.

But, whenever, in addition to his legal rights, the mortgagee desires to extinguish the equity remaining in the mortgagor after forfeiture, then, and not until then, must he make a fair and bona fide sale under the power contained in the mortgage or have recourse to actual foreclosure of the equity by judicial proceedings.

All legal claim of the mortgagor being gone, after forfeiture, he cannot sue for the property, nor sell it, > or give another valid mortgage or lien upon it. Nor, after forfeiture, is the mortgagee bound, at law, to receive the amount of the mortgage debt, and restore the property to the mortgagor (Charter v. Stevens, 3 Denio, 33; Hulsen v. Walter, 34 How. 385).

While the mortgagor retains possession, before default, he may sell and deliver the property, and the purchaser takes all the interest the mortgagor had thereto, and holds it subject to the mortgage. Such purchaser may again, before default, sell and deliver to another with the like effect, and in such case the remedy of the mortgagee, upon maturity of the mortgage debt, is to follow the property and recover it from the possession of the last purchaser (Hathaway v. Brayman, 42 N. Y. [3 Hand] 322).

If, after default, the mortgagor is allowed to remain in possession, he may transfer such possession, together with his equity of redemption. That is all the interest he has in the property, and all he can transfer, even to a tona fide purchaser for full value. But the mortgagee may, at any time take the property out of the possession of such tona fide purchaser. In case of sale by the mortgagee, to foreclose the equity of redemption, if there be a surplus after paying the mortgage debt, that would belong to the mortgagor or his vendee or assignee. But, after default,, and until such sale or redemption, the title is in the mortgagee (Farmers’ Bank of Washington Co. v. Cowan, 2 Keyes, 218).

Until a chattel mortgage becomes an absolute bill of sale by the non-performance of the condition contained therein, the mortgagor usually retains not only the possession, but has such a. possessory right for a definite period in the chattels mortgaged, against the ' mortgagee, coupled with the right of redemption, as is liable to levy and sale on execution. In such case the purchaser, at the sale on execution, takes the property subject to the mortgage, and acquires, with it a right to redeem it by payment of the amount due on the mortgage (Hull v. Carnley, 1 Kern. 501; Hull v. Carnley, Executrix, 17 N. Y. 202 ; Goulet v. Asseler, 22 N. Y. 225 ; Manning v. Monaghan, 23 N. Y. 539).

But, after the mortgagee has acquired an absolute title to the property, by reason of the mortgagor’s default, there is not left such a possessory right or 4 interest in the mortgagor as is liable to be sold under an execution against him (Baltes v. Ripp, 3 Keyes, 210); and the rule is the same though the mortgagor is allowed to remain in possession after the default. In such case his. possession is merely by the sufferance, and as the bailee, of the mortgagee (Champlin v. Grant, 39 Bart. 606 ; Stewart v. Slater, 6 Duer, 99).

These rights of the mortgagee; as defined and laid down, are affected, however, and may become impaired and, in some instances, even wholly lost as against creditors, by reason of the mortgagee’s failure to comply with certain statutory requirements enacted for the. protection of the creditors of the mortgagor against fraudulent conveyances and mortgages.

Under the act concerning fraudulent conveyances and contracts (2 Rev. Stat. 136; 3 Id. 5 ed. 222), every sale made by a vendor, of goods .and chattels in his possession or under ‘his .control, and every assignment of goods and chattels by way of mortgage or security, or upon any condition whatever, is to be presumed fraudulent and void as against the creditors of the vendor, or the creditors of the person making such assignment, or subsequent purchasers in good faith, unless the same be accompanied by an immediate delivery, and be followed by an actual and continued change of possession of the things sold, mortgaged or assigned; and shall be conclusive evidence of fraud, unless it shall be made to appear on the part of the persons claiming under such sale or assignment, that the same was made in good faith and without any intent to defraud such creditors or purchasers.

The act of 1833 introduced an additional feature into the law, by providing that every mortgage or conveyance intended to operate as a mortgage of goods and chattels hereafter made, which shall not be accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things mortgaged, should be absolutely void as against the creditors of the mortgagor, and as against subsequent purchasers and mortgagees in good faith, unless the mortgage, or a true copy thereof, be filed as required by said act—such • filing in the city of Hew York to be in the office of the register. The act further provides that every mortgage filed in pursuance thereof shall cease to be valid as against the creditors of the person making the same, or against subsequent purchasers or mortgagees in good faith, after the expiration of one year from the filing thereof, unless within thirty days next preceding the expiration of the said term of one year a true copy of such mortgage, together with a statement exhibiting the interest of the mortgagee in the property thereby claimed by him by virtue thereof, shall be again filed in the office of the clerk or register aforesaid, of the town or city where the mortgagor shall then reside (Laws of 1833, ch. 379, §§ 1, 2, 3).

I agree with the learned referee that the act last mentioned does not repeal the statute as to fraudulent conveyances above referred to, but imposes on the mortgagee, who is willing that the mortgaged property should remain in the possession of the mortgagor, the duty of giving notice of the existence and continuance of his mortgage, by having the same filed and refiled, as provided for in the act. The object of this act was to create an additional guard against fraud or collusion between the mortgagor and mortgagee; and the presumption of fraud created by the statute, as against a mortgagee of chattels, where its execution was not followed by an immediate delivery and an actual and continued change of possession, was not in any way affected by the act of 1833.

The filing of a mortgage does not of itself excuse the want of possession of the property mortgaged, but by its means the. mortgagee is placed in a position which entitles him to .show, as against creditors and subsequent mortgagees and purchasers, that the mortgage was given in good faith, without intent to hinder or defraud creditors.

Such filing is made essential in all cases where there is not an immediate delivery and- actual change of possession, and in such cases every mortgage not so filed is declared by the act to be absolutely void against creditors, whose rights, in such case, date from the delivery of the execution to the sheriff, and against subsequent mortgagees or purchasers in good faith (Hale v. Sweet, 40 N. Y. [1 Hand] 97).

Now, in the present case it is fully conceded that the chattel mortgage was a valid one in its inception, that it was duly filed before the rights of any creditor attached, and that payment of the amount secured by it, and possession of the furniture have been duly demanded within the first year. But the referee holds that it ceased to be valid as against the plaintiff, representing a creditor of the mortgagor, because not refiled within thirty days next preceding the expiration of one year from the first filing.

Tiiat this would be so, in case no default had occurred in the performance of the condition, is too clear for argument. But it seems to me, that it may well be doubted, whether that provision applies after default. As above shown, the title of the mortgagee becomes absolute at law, upon default, not only against the mortgagor but also his creditors, and the mortgage, which has fulfilled its object, is thereupon turned into an absolute bill of sale. The claim, therefore, that such absolute title, once acquired, can be made to cease, by operation of law and without actual fraud, to have any value whatever after the expiration of one year against the creditors of the mortgagor then existing, appears not only illogical but unreasonable. Before it can be allowed, the language of the statute must be found to be so clear and imperative as to leave no choice. In Newell v. Warren, 44 N. Y. (5 Hand) 344, the commission of appeals held that, under the statute referred to, it was unnecessary to require more than the legislature did, and that consequently a mortgage once refiled at the end of the first year continues valid with- ' out further refiling in subsequent years. And in Hulsen v. Walter, 34 How. Pr., 385, Van Vobst J., intimated that a refiling, after default, may, in some instances, even be improper. He says: A person ignorant that a forfeiture had occurred, and who had acted upon such refiling as an acknowledgment, on the part of the mortgagee, that his title had not .become absolute, might make a claim on that ground.

How, from the language of the statute it is by no means clear that the requirement as to a refiling is intended to apply to a chattel mortgage after forfeiture. The cases of Ely v. Carnley, 19 N. Y. 496, and Levin v. Russell, 42 N. Y. (3 Hand) 251, do- not go to the full 'extent of deciding authoritatively that it does so apply. In the first case, the mortgage was payable on demand, and no demand had been made at the time of delivery by the creditor of the execution to the sheriff. Consequently a refiling was absolutely necessary. The additional remark, made by the learned justice who delivered the opinion of the court, that .when the title to the property has absolutely vested in the mortgagee, by the mortgagor’s failure to perform the condition, a refiling is necessary to preserve the title of the mortgagee, when there has been no change of-possession, is merely the expression of a judicial opinion, although entitled, as such, to great respect. And even that is followed up by the further qualification : Once a mortgage, it so continues for the purpose of filing, until the rights of the parties have been changed by some new act or contract in relation to the property.

In the second case, more -than a year had expired after the filing of plaintiff’s mortgage, before he took possession, and no statement exhibiting the interest claimed by him had been filed at the expiration of the first year ; but plaintiff took possession before the lien of any creditor attached. Upon these facts it was held by the court (the same learned judge who had delivered the opinion in the case of Ely v. Carnley, supra, delivering the opinion .in this case), that the omission of the plaintiff to file a statement of his interest in the property, the mortgage, as required by statute, to preserve his lien against the creditors of the mortgagor, was obviated by the proof showing that the plaintiff took possession of the property by virtue of his mortgage in the lifetime of the mortgagor and before the lien of any creditor had attached, and that he retained such possession until the property was taken from him by the defendant.

If this last decision is to be strictly followed, as an authority, in all cases which come within the language of it, the following question still remains unanswered, viz : How can a mortgagee, who has omitted to refile, take possession after the expiration of one year from the original filing, and maintain such possession against the creditors of the mortgagor, who levy upon it the day after he has. taken possession, if his mortgage, by reason of non-compliance with the statute, had already cea,sed, by force of the statute, to have any validity whatever against such creditors %

In Dillingham v. Bolt, 37 N. Y. 198, to which I have been referred, there is no evidence of any default, and the decision made is an authority only upon the point that the removal of the mortgagor from the State within the year makes compliance with that provision-of the statute which requires the refiling to be made in the office of the clerk* of the town where the mortgagor then resides, impossible, and that, upon such contingency, the mortgagee must-, as against the creditors and purchasers named in the section, take advantage of his mortgage within the year, or lose the benefit of it as against them.

But as I do not find it necessary to the decision of this ca^e to go to the extent of holding that such refiling is wholly unnecessary, after default, I shall refrain from placing my decision upon that ground. There is an abundance of authority to sustain the proposition that such refiling is unnecessary for the preservation of the mortgagee’s rights acquired upon the mortgagor’s default, whenever an actual change of possession of the property has taken place or the rights of the parties have been changed by some new act or contract in relation to the property, which would render a refiling an idle ceremony. That such a change has taken place in this case, appears not only in evidence, but is established by the findings of the referee. The testimony shows, and the referee substantially found, as matters of fact, that after the executio'n of the mortgage a demand was made on Porter, the mortgagor, for payment of the amount secured by it, and possession of the furniture demanded; that the amount was not paid ; and that thereupon, as the mortgagee would not trust Porter with the property, Benjamin Rathbun was placed in possession of the property for the mortgagee, with the mortgagor’s consent, and that he continued in such possession until the mortgage sale. This worked all the delivery and change of possession of which the property was capable, and was prima facie a compliance with the statute concerning fraudulent conveyances. The mortgagee was not bound to remove it, for, having the absolute title, he had a right to hire it out with or without compensation. ¡Nor was he bound to make the change more conspicuous by affixing a written or printed notice of his right of ownership to each article of furniture. If the mortgage was valid in its inception, and the original condition, whereby the mortgagor was allowed to remain in possession until default, not fraudulent against the mortgagor’s creditors, the new arrangement made between the parties upon the occurrence of the default cannot, as matter of law, be deemed fraudulent against a creditor of the mortgagor, whose demand did not become merged into judgment until after the expiration of one year from the filing of the mortgage.

The whole transaction between mortgagor and mortgagee may, in such case, be attacked by such creditor, as seems to have been done in the case of the Farmers’ Bank of Washington County v. Cowan, 2 Keyes, 217, 219, upon the ground that it was entered into or carried out with intent to hinder, delay, or defraud the mortgagor’s creditors, which is a question of fact.

But as the referee in this case has recognized the good faith of the parties to the original transaction and failed to find, as matter of fact, that such transaction was entered into or carried out with a fraudulent intent, and was for that reason fraudulent against creditors, be was not justified to adjudge, as matter of law, that the arrangement entered into between the parties upon default was fraudulent and void against the original plaintiff in this action, who, it appears, was not misled thereby, and at the time of the recovery of his judgment had full notice of said mortgage. The mere fact that Bathbun and Porter were copartners cannot be made to work such a result. It is only one of the many circumstances that may be looked at and considered on the determination of the question of actual fraud.

Upon the proof, and the facts as found, John F. Porter, at the time of the confession of judgment and of the sale on execution, had no interest in the property subject to levy and sale ; the title to the property was absolutely vested in the defendant, Parmly; and the sheriff’s sale of the right, title, and interest of John F. Porter in said property conveyed nothing to the purchaser.

The judgment must be reversed, the order of reference vacated, and a new trial ordered, with costs to the appellant to abide the event.

Moeell and Curtis, JJ., concurred.