Smith v. Hogeland

Mr. Justice Gordon

delivered the opinion of the court, March 15th 1875.

The note in suit was drawn by C. F. Robb, to the order of Isaac Hogeland, and by him endorsed to Judge Morrison. About the fact that the consideration was one that was good and valuable, there is no dispute. That the endorser was to have the privilege of taking the property, for the purchase-money of which this note was given in part payment, if Robb, the vendee, failed to comply with'the terms of sale, was of no significance whatever, as affecting the bona fides of the transaction. Neither could the fact, that Smith & Co., to whom the note was passed, were the agents of Morrison in the sale of the land, compromise them as holders of the paper, unless it were also shown that they assented to the subsequent rescission of the contract, whereby Hogeland was deprived of the security to which he was entitled. It is therefore certain that the learned judge of the court below was mistaken when he instructed the jury, “ the plaintiffs stand in the shoes of Judge Morrison; their right to recover is the same as his — no more and no less. Your verdict will depend upon your decision of the question, was there an agreement between Judge Morrison and Mr. Robb to abandon the contract of sale, and release each other from it, before the time fixed for its consummation ? If there was not such an agreement, your verdict should be for the plaintiffs for the amount of the note, with interest from its maturity, and costs of protest. If there was such an agreement, your verdict should be for the defendant.”

In this statement of the law of the case, the position of Smith & Co., as boná, fide holders for value, if such they were, is wholly ignored. Such is not the law governing commercial paper. The original parties thereto cannot thus compromise the rights of a subsequent endorsee or holder such paper.

If this note was passed to the plaintiffs by Morrison for some present consideration, as that they should hold it as security for the endorsement of the $655 note, or for advancements then made, the subsequent action of Morrison and Robb could not affect them, and they would be entitled to recover so much of the note in suit, and no more, as would cover their endorsement or advancement. If, on the other hand, it was passed to them without consideration, or as security for an antecedent debt or endorsement, they would occupy no better position than Morrison ; they would be entitled-to his rights and nothing more: Petrie v. Clark, 11 S. & R. 877. These were questions for the jury, and should have been submitted for their consideration. The other exceptions are not sustained.

Judgment reversed, and anew venire ordered.