St. John v. . Roberts

A note of one Waterbury for $595.60, payable to the order of defendant Roberts, and by him indorsed, and also indorsed by defendant Lay, was deposited in bank by Lay for collection. Not being paid at maturity, it was duly protested, and notice of protest given to the defendants. After protest, Lay, with Roberts' check, took up the note, and then Lay, by Roberts' direction, through an auctioneer, sold the note at public auction, at the Merchants' Exchange, in the city of New York, for or on account of whom it might concern. The names of the defendants or indorsers were not erased, nor the indorsement in any way restricted or qualified, and the notarial protest was attached to the note. The plaintiff became the purchaser, paying therefor the sum of $500. The Superior Court, in the city of New York, rendered judgment for the defendants.

When this note was sold at auction by and for the benefit of Roberts, through the agency of Lay, though overdue and disclaimed, it was still negotiable, and its negotiation worked wrong to no parties — not to the maker, who was confessedly bound to pay it — not to the indorsers, for they both took an active part in the sale. (Havens v. Huntington, 1 Cow., 387.) The sale was not adverse and in hostility to the indorsers, but by them. They gave no notice to the plaintiff, who was the purchaser, nor was notice given to any one at the sale that there were any equities in favor of the indorsers. Nor was it stated for whom the sale was made. For aught that appeared, the seller was the owner and holder of the note, claiming it as well against the indorsers as the maker. Indeed, it appearing from the notorial papers that the note had been protested, and the names of the indorsers not being erased, such would be the presumption. By the protest and notice, the contract of the indorsers, which was previously contingent, had become fixed, and upon the paper, as it appeared, were as much liable to pay as the maker. The indorsements were made before the maturity of the note, and no new protest and notice were necessary. The protest already made and notice given at the time of the maturity of the note, inured to the benefit of the plaintiff as a subsequent holder. (Williams v. Mathews 3 Cow., 252.) It was doubtless an oversight on the part of the defendants that they did not erase their names or restrict their indorsement, so as simply to pass title to the note. But the plaintiff was a purchaser for a large consideration, and in good faith, and I think upon the undisputed facts was entitled to recover, if not the full amount of the note, at least his $500 and interest, which he paid for the note.

The judgment should be reversed, and judgment for plaintiff.

All concur in the opinion that the defendants are estopped from denying their liability as indorsers.

Judgment reversed, and judgment ordered for plaintiff upon the verdict.