
    The German American Bank, Appellant, v. Emma Slade et al., Respondents.
    (Superior Court of Buffalo—General Term,
    December, 1895.)
    1. Negotiable paper — Evidence — Transactions avith deceased TRANSFEREE. •
    In an action by a dona fide holder of a promissory note against the maker, where the defense is that the note was accommodation paper ■ and payment, evidence of a conversation between one of the defendants and an. intermediate transferee, who has since died, in pursuance of which a conveyance of property was made in payment of the note, is inadmissible under section 829 of the Code.
    2. Same.
    Declarations of a former holder of negotiable paper are not admissible to affect the title and rights of a subsequent holder and owner thereof.
    
      Appeal from a. judgment in favor of defendants entered, upon the verdict of a jury and from an order denying a motion for a new trial.
    
      Norton Brothers, for plaintiff.
    
      O. O. Cottle, for defendants.
   Hatch, J.

The action is one brought upon a promissory note. Defendants answered jointly, pleading nondelivery of the note to plaintiff for value, denying its ownership of interest therein, and alleging payment prior to the commencement of the action. By the- terms of the note Emma Slade, for value received, promised to pay William H. .Slade $2,100, recites that she was a married woman and executed- the note - with a.design, and upon, the express understanding, that the consideration -for which it was given was for the benefit of her separate estate, and made the same a charge upon her real ■ and personal property.

It appeared upon the trial that the note was delivered to William H. Slade, .who .indorsed the same and delivered it to One Hale, who transferred it to Isaac H. Badford for value; the latter for value indorsed and delivered it to Norton Brothers, who indorsed and delivered it to plaintiff, and it credited Norton Brothers with its amount, less the discount, in their account. The note and the amount due thereon having been proved, plaintiff rested. The defendants, to establish their defense, called as a witness William H. Slade, who testified, under objection, that the note was made, exe- ■ cuted, indorsed and delivered to Hale without consideration, and that the same was, in fact, made for his' accommodation ; that some time after Hale informed Slade that Badford held the note, and would take in payment for the same a certain . house and lot, to which Slade agreed, and executed the deed to Frederick W. Badford as grantee, and delivered the same to Hale.

So far as the testimony relating to the consideration of the note is concerned, the objection was general, and no exception was taken to the ruling of the court, in consequence of which no question is presented.

The other question arose in this wise : “ What transpired in respect to that note after that; he paid you nothing, nor anybody else ? A. No, sir. A few days after the delivery of this note to Col. Hale, Hale came to me and stated that Rad-ford would take a deed of a certain house and lot on Milton street. By Mr. Cothran: We object to this. This man Hale is dead, and this witness cannot testify what he stated to him. By the Court: He can show.the arrangement under which this note was made. I will take it and give you an exception. [Mr. Cothran duly excepted.] A. In payment of the note, of " this note in question, and I accepted the proposition. By Mr. Cothran : We object to this. Mr. Radford was not present at all. By the Court: This is simply describing how this note got into circulation. He has a right to tell what the purpose of the issuing of this note was. [Mr. Cothran duly excepted.] ” -

This was followed by testimony to' the effect that Hale informed .Slade that he would give him the name of the grantee, and within a day or two thereafter requested that it be made to Frederick W. Radford, which was done. Defendants also showed that Frederick W. Radford had, prior to this time, executed a power of attorney to Isaac H. Radford, the holder of the note, empowering him to transact for Frederick his general business, including the conveyance of real estate, and that the premises were thereafter conveyed by Isaac, acting under the power of attorney, to one Lucas, who thereafter executed a mortgage upon the premises to Ernest- W. Clement for $1,100. Of this sum Isaac Radford received $1,200. This was all the testimony tendered by defendants to show payment, and upon it the court ■ submitted to the jury the question whether this transaction was had, and whether Rad-ford took ,the deed as payment of the note, and if so, as to him, it was paid, and the subsequent transfer was a wrongful . negotiation of the note by Radford, and that the burden of was shifted to the it fide holder of the noté for valué. and without notice of this . infirmity. Exception was taken' to this'part of the. .charge, and the Court was requested to charge that- there was'no evidence that Isaac H. Radford was privy to the. agreement, between Hale and Slade that the conveyance was in payment of the note; also,-t.o charge that, it was immaterial what the agreement was between Hale and Slade, unless they fottnd that Radford was privy to the agreement that the conveyance of the property was to be regarded as payment of the! note. Both requests were refused. :and exception was taken. Hale was dead before the trial was 'had.. '

I-am unable to see how these rulings can be. sustained. "According to. the record the court admitted evidence. of the • agreement between Hale and Slade for th.e. purpose of! show-" ■ ''' ing how. the note gol into circulation. But it had no such effect, was not offered for such purpose, and, as we have seen, was thereafter treated by the court as tending to establish pay- ■ ment-of the' note in Radford’s hands., - As' to how the note got into circulation there was no dispute; it was delivered by . Slade to Hale, to be used by him without restriction ;■ and! at the ' time when it is testified that this agreement was made, the n ote was held, by Radford for - moneys .advanced to Hale, andSlade knew that fact. The evidence, was inadmissible under ' section 829 of the Code of Civil Procedure. The object of this rule is stated in one well-considered case, viz.: Where death.has closed the lips of one party to a personal transaction , or ' Communication between him and another, which the deceased could obviously contradict or explain were he living,' . the other shall not be a witness to prove such transaction or . communication in an action against the representatives :of the deceased.” Price v. Price, 33 Hun, 69; Van Vechten v. ■Van Vechten, ¥1 N. T. St: Repr. 511; PLeyne v. Poerfler, 124 N. Y. 505 ; McMillan v. Stern, 8 Misc. Rep. 82.

" It is clear that if Hale were alive he. might contradict or explain the transaction-, and it'is quite .'possible that lie might , agrée jyith Radford, who testifies that the conveyance was for another and entirely different purpose .than the payment of this note. Hale was the person through whom plaintiff and intervening parties made title to the note, and, consequently, falls within the express provisions .of the section. The fact that Radford testified upon the subject-matter to which Slade . referred does not change the rule (Church v. Howard, 79 N. Y. 415; Lyon v. Richer, 141 id. 232), nor waive the objection. Worrall v. Parmelee, 1 N. Y. 519.

It is sought to sustain this ruling by invoking the familiar’ rule that communications made by an agent are admissible • even though the agent is dead. The difficulty with this position is, that the proof fails to establish agency. . There was not a syllable of proof that Hale was agent for Radford when the evidence' was received. Hale’s declaration could not be used to establish agency, and no inference can arise that he was such agent from the fact that the deed was to Frederick Radford, and that Isaac held a power of attorney from him, in the face of a denial from Isaac that Hale did not represent him, and that the transaction was of an entirely different character from the representations which Hále made to Slade, assuming they were made. Aside from this, the court expressly refused to charge that it' was essential or necessary that there should have been any privity between Radford and Hale in order to uphold the agreement, thus excluding the • idea that the transaction was made to depend upon the agency of Hale.

It may be true that so far as the execution of the deed was concerned it related to a transaction with Frederick W. Rad-ford ; the deed upon its face established that. But the execution of the deed was not the question which the objection was pointed at; that related to the consideration for the deed, and therein the statements of Hale affected the right, title and interest of the holder of the note, who was a different person from the grantee in the deed, but was a person who made title to the note through Hale, and in consequence was protected by the statute. If, however, "we could reconcile this testimony with the statute, the evidence was inadmissible for another reason. In Benjamin v. Rogers,126 N. Y. 71, it is said: “.The rule is unquestioned that the mere declarations of a prior holder of' a chose m action cannot be given ini evi-' dence to affect the title pr the rights, of a subsequent holder •and owner.” And this is.the uniform rule. Brisbane v. Pratt, 4 Den. 64; Stark v. Boswell, 6 Hill, 405 ; City Bank of Brooklyn v. McChesney, 20 N. Y. 240; Washburn , v. Ramsdell, 17 Vt. 299; Dodge v. Freedman's Trust Co., 93 U. S. 379.

. Hale’s' statement as to what Radford would take and surrender up the note was a mere declaration and hearsay, and until it was shown by competent testimony that Hale was ■ authorized to speak for Radford it could not be received to establish payment of 'the note or affect -its validity in' any form. . With this evidence rejected there remained no defense to the note as against the plaintiff. Giving frill force to Slade’s statement, and holding the .evidence competent that . the note was delivered to Hale as accommodation papér, no defense was established. The note was in fact delivéred to Hale without restriction as to use. Radford parted with value and becaihe 'a bona fide holder. The same is true of Norton Brothers. The latter testifies that he transferred the note to the .bank and thereafter drew from his_account $1,000 ' upon the strength of the. discount, and in payment of a part consideration, by virtue of which he received it. The. bank took possession, entered it upon its books, gave plaintiff credit in his account for its amount, less the discount, and.produces the same upon the trial. In view of these facts I do not think the evidence of Slade, that the plaintiff’s president and cashier said they held the note for collection, can avail to defeat the action. The statement is denied by both persons, and Norton Brothers are. estopped from denying that-plaiintiff is not the owner of the note;' they had the right to transfer' the note to the'bank" and vest it with legal title for value or not, • as they chose, and defendants, could not complain. ' The parting With value by the bank was only essential to constitute it a bona fide holder, and thus shut out a' considera•tion of- the equities existing -in defendants’ favor. .But when., as we have seen, no such equities existed, and no defense to , the note was established, it left the plaintiff with right to enforce it. Sallade v. Gerlach, 26 N. Y. St. Repr. 594; 132 N. Y. 548; Benedict v. Driggs, 34 Hun, 94.

The judgment should be reversed and new trial ordered, costs to abide the event.

Titus,. Oh. J., concurs.

Judgment reversed and new trial ordered, costs to abide event. . '  