Lombard v. Central National Bank

Learned, P. J.,

(after stating the facts as above.) It is suggested that this is nota case where the party to a negotiable instrument claims to assert some defense which would be valid against the original holder, and where the question is whether such defense is valid against the present holder; but that the present case presents a question of title to the bond, and not one of defense thereto. In the cases decided on this subject, we do not find that any distinction is made. Most of the cases have been of the former kind, a few of the latter. Still, so far as we can see, both in the text-books and in the cases, the same course of argument has been applied in each.

The point on which most discussion has been had, and some disagreement has existed, is as to what constitutes a sufficient consideration to protect the bona fide purchaser, and that is the question in this case. We must assume all which the jury could have found in defendant’s favor, as a verdict was directed against it.. The jury then might have found that in consideration of the pledge of this bond the defendant agreed to renew the notes of Justin Kellogg and of Giles B. Kellogg, and that in pursuance of that agreement they did make such renewals. The bank shows in its possession notes of a date later than the day of the alleged agreement, and these are stated to be renewals. In Insurance Co. v. Church, 81 N. Y. 218, at page 225, after a review of numerous cases, it is said that the surrender by a creditor of the past-due notes of a debtor constitutes the creditor a holder for value, and that it is immaterial whether or not by renewing the note the creditor parted with his entire right of action. In Oates v. Bank, 100 U. S. 239, it was decided that an extension of time in consideration of the indorsement to the creditor of a negotiable note made the creditor a holder for value, so that his rights were not affected by equities between antecedent parties. This point has been so thoroughly considered in those and other cases that we do not think it profitable to cite the many cases in which the subject has been treated. There may not be perfect consistency in them. When a note is renewed, the old note is surrendered. True, the debt exists under another form, but the creditor cannot bring suit upon it until the new note has become payable. If tile creditor surrenders an old note and takes a new one in its place, in consideration of a negotiable security put into his hands, he parts with value. If the negotiable security is put into his hands to induce him to promise to renew the old note, and subsequently he does so renew, before notice of the defect of title to the security, the situation is the same. The creditor deprives himself of the valuable right of suing the debtor at once; accepts a new liability instead of the old; and does this in consideration of a negotiable security delivered to him for the purpose of inducing this delay. We think, therefore, that a verdict should not have been directed for the plaintiff, but that the case should have gone to the jury. Judgment reversed; new trial granted; costs to abide event.

Landon, J., concurs.