The Mechanics and Traders' National Bank of the City of New York, Respondent, v. Ellis N. Crow et al., Appellants

The Mechanics and Traders’ National Bank of the City of New York, Respondent, v. Ellis N. Crow et al., Appellants. (Argued January 27, 1875; decided February 9, 1875.) Proof of a want or failure of consideration between a maker and payee of a promissory note does not change the presumption that one to whom, the latter has indorsed and delivered the note is a bona fide holder for value, but the burden of proof is upon the maker. Where a bank discounts a note before maturity, paying part of the proceeds in money and applying the residue in payment of a past due note of the payee which is surrendered, the bank is a holder for value. Appeal from judgment of the General Term of the Court of Common Pleas of the city of New York, affirming a judgment in favor of plaintiff entered upon a verdict. This was an action upon a promissory note for $2,500, made by defendant Crow, payable to defendants Dusenbury & Nelson, and indorsed by them and by defendants Riceman & Bradbury. The defendants Crow and Riceman defended and gave evidence tending to show that Crow made the note at the request of Nelson and upon his promise to give, in exchange therefor, his own note indorsed by his father, and also to procure the same to be discounted and to pay to Crow the sum of $1,800 on a debt owing by Nelson to Crow, neither of which promises were performed. Defendants called plaintiff’s president as a witness, and it appeared from his testimony that the note was discounted by plaintiff at the request of Nelson; a portion of the proceeds paid to him in money, the balance applied upon a past due note of Nelson’s held by plaintiff, which note was then surrendered to Nelson. The court directed a verdict for plaintiff, which was rendered accordingly. William A. Coursen for the appellant. No recovery could be had upon the note in suit, except by a bona fide holder for value, before maturity. (Weaver v. Barden, 49 N. Y., 292, 293 ; Butler v. Harrison, Cowp., 565, 568 ; Cary v. White, 52 N. Y., 138; Ocean Nat. Bk. v. Carll, 55 id., 440.) Thomas Allison for the respondent. The note was not an- accommodation note. (McSpedon v. Troy City Bk., 3 Abb. Ct. Apps. Dec., 133 ; S. C., 33 Barb., 81.) Only an accommodation indorsement was proved against Riceman. Purchase v. Mattison, 2 Robt., 76; Powell v. Waters, 17 J. R., 179 ; Mohawk Bk. v. Corey, 1 Hill, 513; Montrose v. Clark, 2 Sandf., [m. p.] 119.) Plaintiff was a bona fide holder for value and entitled to recover, even if the note was made and indorsed without consideration and diverted. (Clothier v. Adriance, 51 N. Y., 326; Day v. Saunders, 1 Abb. Ct. Apps. Dec., 495; Brown v. Leavitt, 31 N. Y., 113; Park Bk. v. Watson. 42 id., 490; Chrysler v. Renois, 43 id., 209.) [MAJORITY — Andrews, J.] Andrews, J. The plaintiff, on production of the note and Droving the indorsement of the payees, was prima facie entitled to recover. The defendant gave evidence tending to show that he signed the note at the request of Nelson, one of the payees, upon his promise to give the defendant in exchange his note indorsed by his father for the same amount, and upon the further engagement to procure the note to be discounted, and to pay the defendant from the proceeds $1,800, on a debt owing by him to the defendant. The defendant testified that neither the note or money had been given him. The jury would have been authorized from this proof to find, that there was a failure of con•sideration for the note. But this was not alone sufficient to defeat a recovery. The bank was presumed to be a holder for value, without notice of any defence to the instrument, and proof of a want or failure of consideration between the original parties did not change the presumption, or put the bank to the proof of the consideration upon which it received the paper. (Byles on Bills, 115; 2 Greenl. Ev., § 172.) But the question as to the burden of proof was immaterial in view of the further evidence. It was shown, on the cross-examination of a witness for the defendant, that the plaintiff discounted the note before maturity, on the application of Nelson, and paid him a part of the proceeds in money, and applied the balance in payment of his note held by the bank, which was past due, and which the bank surrendered at the time of the payment. This constituted the bank a holder for value, within the cases in this State. (Brown v. Leavitt, 31 N. Y., 113; Pratt v. Coman, 37 id., 440; Chrysler v. Renois, 43 id., 209; Weaver v. Barden, 49 id., 286.) The verdict was properly directed, and the judgment should be affirmed. All concur. Judgment affirmed.