Summary
In First National Bank v. Green (43 N.Y. 298) it was held that a party suing upon a negotiable note purchased before maturity is presumed, in the first instance, to be a bona fide holder, but when the maker has shown that the note was obtained from him under duress, or that he was defrauded of it, the plaintiff would then be required to show under what circumstances and for what value he became the holder.
Summary of this case from Grant v. WalshOpinion
Argued December 16, 1870
Decided January 24, 1871
Ballard Warren ( Amasa J. Parker with them), for the appellant.
Shankland Shankland, for the respondent.
The evidence offered by the defendant to sustain the defence, that the note in suit was obtained by duress, was erroneously excluded, unless, upon the evidence as it stood when the ruling was made, it was established, by clear and uncontroverted proof, that the plaintiff was a bona fide holder of the note for value.
The ground taken at General Term, that the burden of proof was on the defendant, not only to show the defence of duress, but also to impeach the title of the plaintiff as a bona fide holder for value, cannot be sustained.
If the defendant had been permitted to prove, and had proved, the defence of duress, the burden would have been thereby thrown upon the plaintiff to prove that it gave value for the note, and the circumstances under which it was received.
A plaintiff, suing upon a negotiable note or bill, purchased before maturity, is presumed, in the first instance, to be a bona fide holder. But, when the maker has shown that the note was obtained from him under duress, or that he was defrauded of it, the plaintiff will then be required to show under what circumstances and for what value he became the holder. (2 Greenl. Ev., § 172; McClintock v. Cummins, 2 McLean, 98; Munroe v. Cooper, 5 Pick., 412; Holme v. Karsper, 5 Binn., 469; Valett v. Parker, 6 Wend., 615; 1 Camp., 100; 2 id., 574; 4 Comst., 166.) The reason for this rule, given in the later English cases, is, that, "where there is fraud, the presumption is that he who is guilty will part with the note for the purpose of enabling some third party to recover upon it, and such presumption operates against the holder, and it devolves upon him to show that he gave value for it." ( Bailey v. Bidwell, 13 Mees. Wes., 73, approved in Smith v. Braine, 3 Eng. L. Eq., 379, and in Harvey v. Towers, 4 id., 531.)
The only question, therefore, is that which arises upon the evidence in this case in relation to the plaintiff's title to the note. If the evidence on this point was wholly uncontroverted, and so clearly established the plaintiff's title to the note as a bona fide holder for value, that, even if the defendant had proved the defence of duress, there would be nothing to submit to the jury, then the proof of duress was properly ruled out. But, if otherwise, it should have been received.
We have carefully examined the evidence on this point, and think that it was not so clear and satisfactory as to justify the ruling out of the defendant's defence. The only evidence on the part of the plaintiff was the testimony of its president. Evidence was given on the part of the defendant, tending to show that that witness had made statements inconsistent with his testimony on the trial. It is true that the contradiction was not so direct and positive as to render it impossible, by making allowances for imperfect recollection of dates and misunderstanding on the part of the defendant's witness, to reconcile the testimony of both witnesses; but, taking the testimony as it stands, in connection with the admission of the plaintiff's witness, as to his knowledge, that Judge Shankland did not want to draw the money for the note, and the fact that it was not drawn out of the bank, and the agreement of the 5th of April, when the note was delivered to Judge Shankland, we think that the proof of duress should have been admitted, and, if established, the question whether the plaintiff was a bona fide holder of the note for value should have been submitted to the jury.
The point, that the order of the General Term, denying a new trial, contains no direction to enter judgment, is not available for the purpose of discussing this appeal, for there is an appeal from the order denying a new trial, as well as from the judgment; and it does not appear that the appeal from that order was not taken within due time after service of notice of entry thereof.
The order denying a new trial should be reversed, and a new trial ordered, with costs to abide the event.
CHURCH, Ch. J., and ALLEN, J., concurred; FOLGER, J., was for reversal, but did not concur in the latter part of RAPALLO'S opinion; GROVER and PECKHAM, JJ., for affirmance.
Order reversed, and new trial ordered.