Opinion
Submitted December 19, 1879
Decided January 13, 1880
Sidney S. Harris, for appellants. John L. Lindsay, for respondent.
On the 24th day of April, 1876, John Combes made a note, of which the following is a copy:
"Ninety days after date I promise to pay to the order of myself seven thousand dollars, at Irving National Bank, value received.
JOHN COMBES."
The note was indorsed by the defendants for the accommodation of Combs, and was discounted for him by the plaintiff without his indorsement. He became insolvent before the note fell due, and the defendants applied to the plaintiff for the renewal of the note, upon payment by them of $1,000 thereon. Thereupon they paid the plaintiff one thousand dollars and gave the note in suit for the balance. They now claim, in defense of this action, that at the time they gave this note, they did not know that Combes had not indorsed the prior note, and that they were not, therefore, liable thereon, and that they gave this note under mistake in that respect.
It might be sufficient to say here that there is no finding by the referee, nor request to find that the defendants did not know that Combes had not indorsed the prior note, or that they were under any mistake of fact when they gave this note; and that there is no allegation in the answer that the defendants did not know, when they indorsed the prior note, that it was payable to the order of the maker.
But the plaintiff obtained a perfect title to the prior note, without the indorsement of Combes. It is provided in the Revised Statutes (1 R.S., 768) that "notes made payable to the order of the maker thereof, or to the order of a fictitious person, shall, if negotiated by the maker, have the same effect, and be of the same validity, as against the maker and all persons having knowledge of the facts, as if payable to bearer."
It is admitted by defendant's counsel that the prior note must be treated as a note payable to bearer, if they had "knowledge of the facts" within the meaning of the statute; and to that effect are the decisions: ( Plets v. Johnson, 3 Hill, 112; Cen. Bank of Brooklyn v. Lang, 1 Bosw., 205.) Under this statute, of what facts must a party have knowledge, to make him liable as upon a note payable to bearer, after the note has been negotiated? Simply that the note is payable to the order of the maker or of a fictitious person. If so payable, the name of the payee need not be indorsed thereon before negotiation. It must then be treated, without such indorsement, as a note payable to bearer. In this case, as before stated, there is no allegation in the answer that the defendants did not know, when they indorsed that note, that it was payable to the order of the maker; and notwithstanding the imperfect denial of the defendant, Alley, as a witness, the referee might well have found that he did have such knowledge, and we may, therefore, assume that he did so find.
But, under the circumstances of this case, the defendants would not be permitted to deny such knowledge for the purpose of defeating the note. That it was payable to the order of the maker, was plainly written, and there could be no mistake about it. Any person reading it would see that it was so written. There was no fraud or deception practiced upon the defendants. Under such circumstances they can not be permitted to say, against a bona fide holder of the note, that they did not read or know the contents of the instrument signed by them.
The judgment should be affirmed, with costs.
All concur.
Judgment affirmed.