Atlas Bank v. Doyle , 9 R.I. 76 ( 1868 )

Of the general right of the pledgee to collect notes and securities pledged to him, there can be no doubt. If he could collect only the amount for which the paper was pledged, this would render two suits necessary to collect the whole amount of the note pledged. The pledgee can collect the whole, and account to the pledged for the surplus over his debt.

But with paper known to be accommodation paper the case is different. If, in this case, the pledgee could collect the whole of the maker, he could be obliged to pay the surplus over his own claim to the pledgor, who would be in his turn liable to repay such surplus to the maker. We think, therefore, that in case of accommodation paper pledged, the pledgee can recover of the maker only the amount of the debt due him from the pledgor. Jones v.Hibbert, 2 Starkie, 304; 3 Eng. Com. Law, 356; Chicopee Bank v. Chapin, 8 Met. 40; Chitty on Bills, 81; Wiffin v.Roberts, 1 Esp. 261.

On the trial of the case, the defendant claimed that the burden of proof (it being a pledge) was on the plaintiffs to show the amount of the defendant's indebtedness; and the plaintiff, at the hearing before us, claimed that the defendant was obliged to prove that the debt for which the note was pledged as collateral, had been paid wholly or in part.

The holder of commercial paper is presumed to be a holder for value, that is, until the contrary be shown. In the present case, it was proved that the defendant's check (payable to bearer) was pledged by Cushing, to whom it was given, to the plaintiffs, for his (Cushing's) indebtedness. This shows a valuable consideration, and makes the plaintiffs holders for value, even if the indebtedness be fluctuating. Byles on Bills, (side page,) 122; Heywood v. Watson, 4 Bing. 496; Chitty on Bills, (side page,) 85; Woodruff v. Hayne, 1 C. P. 600; 1 Starkie, 483.

It is generally sufficient for the holder of such paper to present it; and it is held to be prima facie evidence that he is a holder for value and to the amount expressed. The burden of proof is indeed on the plaintiff to prove a valuable consideration, but by presenting the paper he makes a primafacie case, that is a case sufficient to justify a verdict for him if the defendant does not rebut it. But if the defendant does produce evidence to rebut this presumption, the burden is still on the plaintiff, taking all the testimony together, to show a valuable consideration by a preponderance of evidence on his side. Burnham v. Allen, 1 Gray, 500; Delano v. Bartlett, 6 Cush. 366, (which criticises and explains 1 Cush. 170);Powers v. Russell, 13 Pick. 69, 76.

But if the defendant, not disputing the original consideration, takes some new ground of defence, for example, payment, failure of consideration, and the like, then the burden is on him to prove this matter of avoidance. Delano v. Bartlett, ante; 3 Phillips on Evidence, (side page,) 161.

In the present case therefore, it would be sufficient for the plaintiffs in the first instance to produce their check to the jury, which would entitle them to a verdict for the face of it, unless the defendant produced evidence to show that the amount of the indebtedness was either originally less or had been reduced by payment. If he does so, then, taking all the evidence together, the burden of proof would return on the plaintiffs to show themselves entitled to recover the face of the check. Chitty on Bills, (side page,) 638, note c.

A new trial will be granted, on the defendant's filing an affidavit that he has evidence to show that the amount of Cushing's indebtedness to the plaintiffs was less than the amount of the check.