Hyman v. American Electric Forge Co. , 41 N.Y.S. 655 ( 1896 )

Schuchman, J.

This is an appeal from a judgment entered in favor of the defendant pursuant to the direction of the court on the trial.

The action was brought on a promissory note of $1,000, dated New York, September 30, 1895, payable to the order of George D. Burton, four months after the date thereof, and was made by the defendant, a corporation organized under the laws of the state of New Jersey.

The defense alleges a diversion of said note, averring that it was given to the said George D. Burton, who was the president of the defendant, for the purpose of having it discounted;

The evidence shows, that the payee, George D. Burton, delivered and indorsed over the said note to one David Pfifer, and that David Pfifer advanced to him $200 and $250, making a total of $450, before maturity of said note and without any knowledge or notice of the real purpose for which said note was issued and delivered to said Burton.

The evidence further shows that said David Pfifer delivered and indorsed over said note to the plaintiff in this action for an antecedent debt.

The evidence thus clearly shows that said David Pfifer, without. knowledge or notice of the purpose for which said note was made and issued, parted with value,*to wit, $450, upon said note; that, therefore, to that extent, he was a tona fide holder for value, and in case of an action against the maker of that note, he had a clear right to recover that sum.

Pfifer. could transfer to the plaintiff the same right, title and. interest that he had in and to this note, and no" more, and the plaintiff in this action succeeded to his title and could take no less cf a title to it.

It is true that the plaintiff in this action is not, technically speaking, a bona fide holder for value,, but taking said note to the extent cf $450 from said Pfifer, in extinguishment of the indebtedness which he' owed to said Pfifer, was a good consideration for the transfer of that note to him, and entitled him to recover from the maker of that note the same amount which said Pfifer could have recovered.

The true rule of law is.“ That a party will be protected as holder cf negotiable paper, although fraudulently transferred, when he has received it before maturity, without notice of the fraud, and in good faith, and parted with something of value for it at the time of its transfer.” Coddington v. Bay, 20 Johns. 637; Park Bank v. Watson, 42 N. Y. 490; Farmers’, etc., Bank v. Noxon, 45 id. 762; Moore v. Ryder, 65 id. 438.

We think that the plaintiff was entitled to recover- from the defendant company the sum of $450, and that, therefore, the direction of the court, to the jury to find a verdict for the defendant was erroneous, and the judgment should, therefore, be reversed, with costs to the appellant to abide the event of the action.

Van Wyck, Oh. J., and Eitzsimons, J., concur.

Judgment reversed, with costs to appellant to abide event.