
    Micklethwaite and others v. Thebaud and others.
    Promissory notes, taken by R. as consignee and factor, in payment for goods of his principals sold by him, were delivered by the former to 0., to enable him to get them discounted for R. A bill being filed by the principals against R., for an account of the goods sold by him, and praying for an injunction and a receiver, and against 0., to reach the notes so delivered to him by R., or their proceeds, alleging that he received the same without paying any consideration therefor, and with knowledge that they belonged to the plaintiffs; held, that a possession unaccompanied by ownership being first shown in 0., in order to protect himself as a bona fide purchaser, he was bound to prove that he paid Value for the notes. And that a mere allegation by his administrator, upon information and belief, that C. subsequently discounted them himself, was not sufficient.
    One receiving negotiable notes or bills, before maturity, from a factor, as his -agent- or bailee, cannot, as against the factor's principal, rely upon his possession of the securities alone .as evidence that he is a bona fide holder for valué.
    (Before Doer, Mason, and Campbell, J. J.)
    June 5;
    June 22, 1850.
    Prior to 1816, Joseph Rhodes, of New York, was the consignee and factor of the plaintiffs, who were manufacturers in England, under the name of Thomas Harriot & Sons. In October of that year, they filed their bill in chancery against him; stating, in substance, that he had sold a large part of the merchandise consigned, and had not paid over all the proceeds; and that he. concealed a large quantity.of- the merchandise and. notes and bills received by bim on sales; that he had repeatedly promised to pay over, and account and deliver the remaining goods, but filially neglected to do so ; and the plaintiffs prayed an account, and receiver, and an injunction against his disposing of the goods, and bills and notes received for goods on hand. The injunction and receiver were ordered, and the plaintiffs, having discovered that Yictor Crassous had received from Rhodes, before their maturity, certain notes and bills, which had been given to him as their factor and for their goods sold by him, filed a supplemental bill, in which they alleged that when he received the notes he did not pay any consideration for them, and, also, that he knew they were the plaintiffs, &c., and asking that the receivership be extended over them. This was ultimately done.
    Before the subpoena was served, upon this bill, Crassous died, and Eugene S. Thebaud, his administrator, was made a party, by another supplemental bill. Thebaud put in answers to both supplemental bills, in which he admitted that he did not know, though he was a partner of Crassous in the produce commission business, that he paid any thing for the notes; tha-t they kept books in that business, but none as to such money transactions; that since Crassous’ death, no entry or papers could be found in regard to these notes, and that he knew of no entry or evidence that he did pay any thing; but that he was present bn one occasion, when Rhodes asked him, and he agreed, to discount some notes, (though he does not say positively what notes they were;) and that he was not present when any discount was consum-. mated, though he was when they commenced calculating it; but that he was informed and believed Crassous paid Rhodes for the notes.
    The cause was put at issue as to all the defendants, including Rhodes’ executor, and referred to Murray Hoffman, Esq., who made a report in favor of a decree that Crassous was a bona fide holder of the notes, and directing the receiver to assign them and their proceeds to Thebaud, as his administrator. He also reported that Rhodes was indebted to the plaintiffs in the sum of $>15,822.67, over and above a considerable amount which the receiver had secured. A decree was entered accordingly at the special term of the supreme court.
    The plaintiffs sought to reverse the decree entered upon this report, so far as it related to Crassous.
    The cause was transferred to and argued in this court. Some of the facts are set forth in the opinion delivered.
    
      W. G. Noyés, for the plaintiffs.
    
      H. Wharton Griffith, for the defendant Thebaud.
   By the Court.

Campbell, J.

There, is no doubt that the promissory notes were taken by Rhodes in payment for the goods of the plaintiff’s, and that the latter are entitled to the proceeds, unless Victor Crassous in his lifetime became a bona fide holder of them for val he. We may concede the law to be, as laid down by the referee, that possession of negotiable paper is prima facie evidence of honesty in obtaining it. But the difficulty on the part of the defendant Thebaud is this. The notes are shown by his own admissions to have been placed yn the hands of Victor Crassous, for the purpose of enabling Crassous !to get them discounted for Rhodes. A possession, unaccompanied by ownership, is first shown. Thebaud adds, that Crassous agreed subsequently to discount them, and he has been informed and believes that Crassous afterwards discounted them. He was present when the notes were delivered to Crassous for him to get them discounted, but only knows from information that Crassous afterwards discounted’ them himself. From whom the information was derived, and when, does not appear. As then Crassous came into possession merely as a bailee, and as there is no evidence of the payment of any consideration, except the statement of Thebaud, derived from information, we might, perhaps, consider the question as disposed of.

But did Victor Crassous, in point of fact, discount those notes and pay the proceeds over to Rhodes? We are free to say that we think he did not. This transaction is alleged to have taken place at Crassous & Thebaud’s place of business, on the 19th of September, 1846. On tbe 2d of December, Crassous died in-: testate, and on the 9th of January, 1847, letters of administration-on his goods and chattels were granted to the defendant Thebaud, who was his-partner and brother-in-law.

Under the provisions of the statute, (2 E. S. 77, § 42,) Thebaud was examined on oath touching the value of the personal prop-'erty of which Crassous died possessed; and after stating that the intestate was his brother-in-law, -.he says, “ that said deceased died a natural death, and died possessed of certain personal property in the State of New York, the value whereof does not exceed the sum of about three hundred dollars, as I have been informed and believeThe explanation which Thebaud makes, that he was mistaken in the law, and supposed he must give an account only of the property which would remain after the payment of the debts, is not satisfactory. Ée was not only examined on oath, but gave a bond in the penalty of six hundred dollars, with two sureties. Whether any other person was examined as to the value of the property does not appear. But the proceedings were regular and formal, and we must presume that the surrogate took the bond according to law, in a penalty double the. amount of personal property of which the intestate died possessed. It is true, that in November, 1847, some ten months, afterwards, and when, perhaps, the importance of this matter was seen, another bond was filed, in the penalty of three thousand dollars, and which the clerk from the surrogate’s office spoke of on his examination before the referee as purporting “ to be an administration bond in the penal sum of $8000 by the said, Eugene S. Thebaud and Joseph Bouchaud, with the name of one surety, Edmund Thebaud, but that he had not signed or-justified.” As remarked, the defendant Thebaud was the bro-; ther-in-law and partner of Yictor Crassous, and Crassous kept, the banking account of the firm, as well as his own, in his indi-; vidual name. The alleged discount took place on the 19th of September; on the 16th November, Crassous was seized with the fatal illness of which he died. When the notes were placed; in his hands, he reported that he could not get them discounted, and. yet, according to Thebaud’s information, Crassous, whose' estate according to his own construction of his affidavit, on the 9th of January following, amounted to only $800, after a little persuasion discounted the notes at simple interest, though he had been un,able to sell' them in Wall-street, ands he must therefore have paid over to Rhodes* between three and four .thousand dollars. It seems to us that if this had been so, The-baud could have .given better evidence of. it than is contained in his answer that he is informed and believes that Crassous discounted the notes. In answer then, to the question, when was .Thebaud informed that Crassous discounted the notes, we are •constrained to say, that in our judgment, it must have been after Crassous’ death. By whom' he was informed would only be matter of. conjecture. Rhodes died without having answered .the bill. At the time of this transaction one of the plaintiffs was in New York, where he had- arrived from England, and was pressing Rhodes for a settlement and payment of the large balance due them. What could have been the real object of Rhodes, in leaving these notes in the possession of his friend Crassous, w.e have no means of ascertaining, and are not called upon to determine. Even if the notes did not- come into possession of Crassous as bailee, we think, under the circumstances of this case, Thebaud should have proved that Crassous paid value for them. There is no proof, we think, that he ever paid •for them, and we think, as a matter of fact, that he did not pay for them.

The order or decree entered on the referee’s report must be so far modified, as to require the receiver to pay over the pro- ■ ceeds of the notes to the plaintiffs instead of the defendant Thebaud.  