Pearce & Miller Engineering Co. v. Brouwer

Conlan, J.

The question presented on this appeal is whether the plaintiff was the Iona fide holder of the note in suit to the extent of the money actually advanced upon it, and for which it was held by him as collateral security.

The transfer of a negotiable promissory note before maturity as collateral security for moneys advanced constitutes the transferee a tona fide holder when the loan or advance was made in good faith. Brookman v. Metcalf, 32 N. Y. 596 ; Belmont Branch Bank v. Hoge, 35 id. 65. If the holder of such paper has paid but a part of the consideration or value, he is entitled to be considered a tona fide holder fro tcmto (Huff v. Wagner, 63 Barb. 215), and may recover his actual payment. Williams v. Smith, 2 Hill (N. Y.), 301.

The evidence of the plaintiff by William H. Stalmaker, its secretary and treasurer, is to the effect that about the 23d or 24th of December, 1892, one Mr. Starr, who was then indebted to the plaintiff for moneys previously advanced in the sum of $385, brought to plaintiff the note in suit, “ dated Dec. 12th, 1892, whereby defendants promised to pay to the order of themselves, three months after date, $1,000.00 value received,” signed “ Brouwer & McGown,” and also indorsed Brouwer & McGown, and wanted a further advance of seventy-five dollars, which plaintiff let him have upon receiving the note as collateral security for the $385 previously owing and for the seventy-five dollars then advanced. The note was not paid at maturity, and the plaintiff, by producing the note on the trial, established a prima facie right to recover the seventy-five dollars actually advanced on the faith of the security.

The defendants introduced evidence to show that the note was made without consideration and delivered to Mr. Starr, the person who pledged same yvith plaintiff, to be procured to be discounted and the avails turned over to the defendants. This evidence tended to show a diversion of the note, and imposed upon the plaintiff the burden of showing good faith; this was a question which properly belonged to the jury, but inasmuch as both plaintiff’s and defendants’ counsel asked for a direction at the close of the case they waived the right to have the questions of fact passed upon by the jury, and as there is evidence to sustain the direction of the court below the judgment must be affirmed, with costs.

Van Wyok and Fitzsimons, JJ., concur.

Judgment affirmed, with costs.