Daniel Strang vs. James Wilson

Daniel Strang vs. James Wilson. Endorser of a note, being payee, is competent as a witness for endorsee to prove-that the note was transferred before.due and for a valuable consideration. This was an action of assumpsit on a promissory note, brought by Wilson,, endorsee, ’against Strang, the maker. Plea gen. issue, and notice that on the trial of the '•ase the defendant will offer evidence tp prove that the note on which suit is instituted was obtained from the defendant by fraudulent representations, and without' a valuable consideration. And also notice that the defendant will require the plaintiff to prove that the note was obtained for a valuable consideration. Judgment for the plaintiff, and exceptions thereto, for that the defendant having introduced testimony to show that said note was given for unimproved lands belonging to the Unitfed States, the plaintiff offered to prove by Smith, the payee and endorser of said note, that the same was endorsed to the plaintiff before maturity and for a good and valuable consideration, to which testimony the defendant objected, and the objection was overruled by the court. Grimes for the plaintiff in error. Browning for the defendant. For the plaintiff it was contended that the contract was illegal and void in its inception, and could not acquire validity by being transferred even before due and for a valuable consideration. , Slat. Cong, in relation to lands, act 1807 p. 157. — Carson vs. Clarh, 2 Breese p. 19. — Blackford's R. 1, 19, Boston vs. Dodge. — Frew vs. Hardenbogh, 5 Johns. R. 272. The contract being illegal in its inception, the note could acquire no validity by transfer. Wiggins vs. Bush 12 Johns. R. 306,— Wilkie vs. Roosevelt 3 Johns. Cas. 66. Any contract founded on the performance of a prohibited act is void ah initio, though the statute contain, no express words to that effect. Wheeler vs. Russell 17 Mass. R. 258, and cases there cited. Wilkie vs. Roosevelt was decided under the usury statute, which at that time contained no saving clause for the benefit of bona fide holders of notes, but merely prohibited usury. The law is changed since 1st Jan. 1830. 2. The endorser was improperly admitted as a witness without a release or without showing that he was not liable as endorser. 6 Cow. R. 471, Baskins vs. Wilson.— Talbot vs. Clark 8 Pick. R. 51. — Barnes vs. Ball 1 Mass. R. 73.— Rice vs. Stearns, 3 Mass. R. 225. — Emerton vs. Andrews, ib. 4, 653. — Mann vs. Swann, 14 Johns. R. 270. — Shave vs. Ehle, 16 Johns. R. 201. — Herrick vs. Whitney, 15 Johns. R. 240. — Owen vs. Mann, 2 Day R. 399. The indorser is directly interested. He is liable to the holder on his implied warranty as indorser, but not to the maker, because he is in pari delictu with the indorsee. Actio non oritur cx turpi causa it a maxim as old as the law itself. Wheeler vs. Russell 17 Mass. R. 258. — Blanchard vs. Preston, 8 T.R. 89.— Russell vs. Degrand, 15 Mass. R. 39. “And where any portion of an illegal contract remains to be executed the court will not assist either party.” Shifner vs. Gordon, 12 East. 304. In Holman vs. Johnson, Cowper 343 — Lord Mansfield said “ no court will lend its aid to a man who founds his cause of action upon an illegal or immoral act.” Browning, for the defendant. The only thing that appears in error is that the court allowed the endorser as a witness to show the consideration, not as to the legality of the consideration. 2. Star. Ev. p. 9. A party to an instrument is a competent witness to prove it void in its inception. Ib. 179 — 10 Johns R. 231 — 11 Johns. R. 128 — 15 Johns. R 270- 17 Johns. R. 176. 188. Grimes, in reply. Smith could not recover of Wilson in any form of action. It is not his character of endorser hut his interest in the note that excludes a witness. 8 Pick. R. 51, Talbot vs. Clark. — 6 Cowen R. 471, 'Baskins vs. Wilson. — 3 Mass. R. 225 Rice vs. Stearns & at. [MAJORITY — Mason, Ch. Jus.] By the Court. Mason, Ch. Jus. The suit in the court below was brought on a promissory note given by Strang to one J. Smith or order, for unimproved lands belonging to the United States, and endorsed to the plaintiff below. The latter having been notified that on the trial he would be required to show that he had paid a valuable consideration for said note, and it having been proved on the trial that there was a total want of legal consideration as between the original parties to the note, the defendant in error was required to show that he obtained the note for a good and valuable consideration before the same, became due. To prove these facts, Smith, the payee of the note, was offered as a witness. He was objected to as incompetent, .but the objection was overruled. To which decision exception was taken at the time, and the case brought up here by writ of error for reversal. The only inquiry is as to Smith’s competency. It has been universally decided that the endorser of a promissory note is a competent witness for some purposes, but incompetent for others. As to what particular facts he is or is not a competent witness, we find some discrepancy in the decisions of different courts. In 1 Mass. R. 73 it was decided that he was incompetent to prove the hand writing of the maker without a release. And in Rice vs. Stearns, 3 Mass. 225, he was declared competent for this purpose if the endorsement had been made “ without recourse ” The New York courts have decided that he is not competent to prove the original contract usurious. In 15 Johnson’s R. 240, and again in 16 Johnson 201, it was decided that he was incompetent to prove the signature even Where the endorsement was “without recourse,” upon the ground that his endorsement in this manner would notprotect him if the original signature had been forged. It has also been decided in the same court, that he was not competent to prove a promise by the maker within six years, for the purpose of avoiding the statute of limitations. 6 Cowen 471, Baskins vs. Wilson. There is some discrepancy in the cases above referred to, but none of them are at variance with the following rule: — that the endorser is not a competent witness to prove or to disprove the legal obligation of the maker to pay the note. This rule has however in New York become very much relaxed in favor of enlarging the competency of the endorser as a witness. In Stafford vs. Rice, 5 Cowen 23, it was decided that the endorser was competent to prove (he note void in its inception for usury. A decision similar in principle was also made in the case of the Utica, Bank vs. Hilliard 5 Cowen 153, and in Jackson vs. Packard 6 Wendell 415. It will be observed that the strictest of these decisions only go to declare the endorser incompetent to establish or disprove the maker’s liability on the note. We have seen' none that go to establish a more rigid rule on this subject. On the other hand Courts have generally been of the opinion that, unless interested in the event of the suit, the endorser was competent to prove facts subsequent to the due execution of the note, and which go to destroy the title of the holder; and his admissbaility would seem to be still more evident if called to sustain that’title. This was the decision in Woodhull vs. Holmes 10 Johns. R. 231 — and in Skilding & others vs. Warren 15 Johns. 270. In the case of Baker vs. Arnold 1 Caines R. 258 (cited in Starkie on Evid, page 179, note A.) at was decided that the endorser was competent to prove that the note was assigned after it became due, and we see no reason which would in that case have prevented him from swearing that the assignment took place previous to the maturity of the note, if such had been the fact. But aside from precedent andauthority what principle of reason would have prevented Smith from testifying in this ease. Admitting (what is stated in the bill of. exceptions) that the note was given for no consideration, if Wilson recovers against Strang the latter will have a legal right to recover the whole amount of the note and interest from Smith — if he fails in a recovery against Strang he himself has his recourse against Smith for the same amount. Should it appear therefore that the note was assigned Before maturity Smith will be liable to Strang, if after that time he is liable to Wilson. His interest is, therefore, as between these parties, equally balanced, and this renders him competent. In reply to this however it has been urged for the plaintiff in error that the note was given as a part of an illegal contract, and consequently'that if Wilson should recover in the present case Strang would be remediless: whereas if Wilson should fail here his remedy would be good against Smith, and that Smith therefore has an interest in the success of the plaintiff below. To this it will be a sufficient answer, so far as we are concerned, to refer to the decision in the case of Hill vs. Smith made at the present term of this Court, where it was. decided that such contracts were not illegal. The judgment below will therefore be affirmed.