Citation Numbers: 29 How. Pr. 113
Judges: Daniels, Grover, Marvin
Filed Date: 9/15/1864
Status: Precedential
Modified Date: 1/12/2023
The only questions in this case arise upon the exceptions to the charge of the judge, and to his refusals to charge as requested. These exceptions present the question whether payment of a note, which has been lost or stolen from the owner, by the maker to the finder or thief, without fraud ; in other words, under the belief that he was the true owner, but under circumstances showing that the maker was grossly negligent in not learning the facts, and which would have excited suspicion in an ordinary person, is available as a defence against the real owner.
The judge upon the trial held, and so instructed the jury, that such payment constituted a defence against the owner. Such I understand to be the fair construction of the charge. The plaintiff insists as one ground why such payment is not good, that it was made after the note became due. .It is well- settled that a party purchasing a note or bill after the same becomes due, takes it subject to all defences the maker or other parties would have against the party from whom he purchases. But this doctrine, I think, has no application to payment made to a party in possession, by the party liable. The rule as to a purchaser is founded upo.n-.a presumption that valid notes or bills áre
At one time it was the rule in England that payment made to a purchaser or a party in possession, under circumstances calculated to excite the suspicions of a prudent man as to liis ownership, was not good as against the real owner who had lost the paper, or from whom it had been stolen (Gill agt. Cubitt, 3 Barn, Cress. 466). Quite a number of cases were decided'in the same way upon the authority of that case, applying the same rule. In late cases the English judges modify the rule by holding that circumstances calculated to excite suspicion of a prudent man by a purchaser of a bill or note before due, was not sufficient to destroy the title of the purchaser, but to have that effect such purchaser must have been grossly negligent (Crooks agt. Jadis, 5 Barn. § Adolp. 909). Finally, in still later cases, the rule was still further modified by holding that such purchaser must purchase in bad faith, and that gross negligence was not sufficient to destroy his title. (Goodman agt. Harvey, 4 Adolp. & Ellis, 870; TJther agt. Rich, 10 Adolp. & Ellis, 748.) These cases relate to the title of a purchaser before due, of a lost or stolen paper. I think the rule should be the same in case of payment by the party liable, though made after due, as in the case of a purchaser before due.
We have seen that notes are not paid until or after-due usually, and there is surely as much reason that the party liable should be unembarrassed in making payment, and
The doctrine of the charge is fully sustained by Story on Motes, section 382; and Id. on Bills, section 438 ; and by Edwards on Bills, 538. The same doctrine is recognized in Hall agt. Wilson (16 Barb. 548), and in Magee agt. Badger (30 Barb. 247). The weight of authority is decidedly in favor of the doctrine held by the judge in. his charge. Upon principle, I think that doctrine correct. There would be no safety in paying paper to anybody but the payee, if in determining the validity of such payment an inquiry must be gone into whether the party making it has been negligent, or whether the circumstances would have excited the suspicions of a prudent man. If such Avas the law, parties liable on commercial paper Avould often be greatly embarrassed. But adopting the text of the charge, that the payment should be held valid unless the party making it did so fraudulently; in other words, made it in bad faith, or presuming that the person to whom it Avas made Avas not the owner, Ave have a fixed determinate rule that can never leave the party liable to pay in doubt as to Avhat course to adopt. He will not be compelled to run the hazard of an uncertain Iuav suit. Indeed, I think that if the court should adopt the rule that a party should not tie protected in paying his paper to the possessor, when the circumstances Avere such as to excite suspicion as to his OAvnersliip, or put him on inquiry, they ought to hold that .such facts constitute a defence to an action .brought by such possessor, although the real owner, until a reasonable
The plaintiff’s motion for a new trial must be denied.
Note.—This is a very important and interesting question, and this decision is probably the only reported case of the kind.—Rep.