Argued April 19, 1872
Decided November 12, 1872
John C. Dimmick for the appellants.
J.C. Bergen for the respondent.
The plaintiff claims to recover as a bona fide holder for value of the bill in suit. A bona fide holder of negotiable paper is one who has acquired the title in good faith for a valuable consideration from one capable of transferring it, or from one in possession of the paper with an apparent right to transfer it, and without notice of any defect in his title or right to transfer. One who obtains the transfer of negotiable paper before maturity, and for full value, without notice of any defect in the title of the apparent owner, acquires and has all the rights of a bona fide holder, by title derived from the actual owner. ( Belmont Branch Bank v. Hoge, 35 N.Y., 65.) The possession of a bill or note payable to bearer, or indorsed in blank by one not a party to the instrument, is presumptive evidence of ownership. But a possession of such an instrument by a party to it only authorizes a presumption of such rights and obligations of the several parties as are indicated by the paper itself. The actual relations to each other, of the several parties to the instrument, are presumed to be precisely such as the law declares, in the absence of any special circumstance to take the instrument out of the general rule, and vary the liabilities of the parties as between each other.
An individual negotiating for the purchase of a bill or note from one having it in possession, and whose name appears upon it, must assume that the title of the holder, as well as the liability of all the parties, is precisely that indicated by the instrument; that is, he cannot assume that the person in possession has any other or different rights, or that the liability of the parties is other or different from that which the law would imply from the form and character of the instrument. ( Hoge v. Lansing, 35 N.Y., 136.) The plaintiff acquired the title to the bill from Balch Co., the drawees and acceptors, the persons primarily liable for the payment of the debt. It could only, in the ordinary course of business, and according to mercantile usage, have been in the possession of the transferrer either for acceptance or after it had been paid, and in neither case would they have had the right to transfer it. In the first case they would have had possession of it for a special purpose, and not as owners, and in the latter it would have become functus officio, and not capable of being again put in circulation. There was no apparent ownership in Balch Co., or presumptive right to transfer the bill to the plaintiff.
If the paper had been made for the accommodation of the drawees, and to be used by them, that fact should have been proved.
The law will not presume the paper to have been made except in the ordinary course of business, and according to commercial usage.
The judgment must be reversed and a new trial granted, costs to abide the event.
All concur, except PECKHAM J., dissenting.