
    PHILIP H. STEVENS, Appellant, v. THE CORN EXCHANGE BANK, Respondent.
    
      Decision of referee—when not affected by reason assigned for — Bona fide holder for mhie— Oe/rtijication of check—what is necessary to constitute—effect of.
    
    
      js. correct decision will not be reversed because the reason upon which it is placed proves to be untenable.
    The plaintiff received from one L. R. Jerome, a check drawn by him to the order of his wife, and indorsed by her; and, in consideration thereof, agreed to pay over to the said Jerome the one six-hundredth part of any profits which might be realized from a patent then owned by him. Held, that he was not a bona fide holder for value of the check, and that the same was subject, in his hands, to all legal and equitable defenses existing against it while in the hands of his indorser.
    To entitle a person to the protection accorded to a bona fide holder for value of commercial paper, he must have parted with something of value as the consideration for which it was received; and where partial value only appears to have been parted with, his right of recovery is limited to the amount of such value.
    (Per Daniels, J.)
    
      IPark Bemk v. Watson (43 N. Y., 490) questioned.
    Heroine, for more than twenty years, acted as attorney in fact for his wife, trans-I acting business in her name, or as her agent. In 1863 a check for $3,500, drawn I by him to the order of his wife, was certified by the defendant. Subsequently I the check was indorsed by the wife, handed to Jerome, and by him mislaid and I forgotten until 1869, prior to which time he had, with the consent and knowlI edge of his wife, withdrawn from the defendant all the money deposited by I him with it. Held, that the wife could not recover the amount of the check I from the bank.
    
      Appeal from a judgment in favor of the defendant, entered upon the report of a referee.
    
      Ely & Smith, for the appellant.
    
      James W. Gerard, for the respondent.
   Daniels, J.:

This action was brought to recover the amount due .upon a check, drawn by Lawrence R. Jerome on the defendant, for the sum of $2,500, payable to the order of Catherine H. Jerome, and indorsed by her. The check was dated on the 5th day of May, 1862, and certified as good, at that time, by the teller of the defendant. It was not charged to the account of the drawer, who then had more funds on deposit in the bank than were required for its payment, but a memorandum of its amount was made in figures on the margin of his account in one of the defendant’s ledgers. The check was delivered by the drawer to the payee, his wife, and she indorsed and returned it to him. He placed it in box of unimportant papers, where it remained and was forgotten until about the 18th or 19th of January, 1869, when it was casually discovered, and the next day delivered to the plaintiff. The drawer, Lawrence R. Jerome, testified that he had been the attorney in fact of his wife, the payee, for twenty years, and that he did business in her name or as agent, which meant her, in 1862 and transferred the check to the plaintiff, for which he was to have an interest in an oxygen gas company, of $2,500. This was hi; statement as a witness, but the plaintiff, by observing greater prel cisión in the terms used to describe the arrangement in which h procured the check, did not state it quite as favorably to the validit; of the transfer. And, as he was the person affected by the evidene there can be no impropriety in adopting his own statement as tt truth. Before the transfer of the check to him, the drawer, La* rence R. Jerome, drew from the bank all the money he had in on deposit, except fifty-three cents.

At the close of the plaintiff’s case, the defendant moved for nonsuit, for the reason that the action had not been commenc within six years after the right to maintain it had accrued. T motion was denied, but the referee finally reported in the defendant’s favor. And that appears to have been done upon the ground that the drawer’s account had been reduced to the small balance already mentioned, with the assent of the payee, and probably for her benefit, and the great lapse of time intervening between the certifying and transfer of the check. It is not necessary to determine whether the referee rightly denied the motion for a nonsuit, nor whether he was correct in treating the check as dishonored when the plaintiff received it For, if he was not a bona fide holder, under the evidence given and the facts found, the conclusion of the referee cannot be disturbed because the reason assigned in support of it, may, upon further examination, prove to be unsound. A correct decision is not to be reversed because the reason upon which it may have been placed, may prove to be untenable

That the plaintiff did receive the check, subject to all legal and equitable defenses against it in the hands of Catherine H. Jerome, as it was found he did by the referee, is quite apparent from the evidence given by.himself as a witness upon the trial. His evidence was, that he sold Lawrence R. Jerome one six-hundredth interest in the profits resulting from a patent for “ exploiting oxygen gas.” No interest in the patent was transferred, and it was not represented by any stock. But, as the plaintiff in terms described it, it was merely “ his ” personal engagement to account to him for one six-hundredth part of the profits, if any, and whether there ever might be any profits whatever, arising out of the invention, remained in a state of uncertainty. For he stated that the patent had not been tested in this country, but it had in Europe, and what the result was of the test made of it there, was not made to appear. The only consideration, under this state of the evidence, which Lawrence R. Jerome received for the check, was the executory agreement of the plaintiff to pay over this small share of the profits of the patent, in case any should ever be realized from it. This was not the advancement of anything on the faith of the check, but simply a contingent agreement to make an advance at some future, uncertain period of time. And it was not shown that it ever had been followed by the payment of even a single cent upon it. The plaintiff parted with nothing whatever for the check ; and if he fails to collect it from the defendant, he will be no worse off, in consequence of having received it. Such a failure will deprive the promise he made of the consideration which existed for making it, and, as a necessary consequence, terminate his liability upon it. He can lose nothing, therefore, even if the check should prove uncollectible in his hands; and as long as that appears to be the case, he cannot be protected as a bona fide holder of it for value. To entitle him to that protection, the evidence should show him to have parted with something of value, as the consideration for which the check was received; while that which was given on the trial, simply showed that he had contingently agreed to pay value for it, but never had actually done that. In the case of Fulton Bank v. Phoenix Bank, it was held, that receiving negotiable paper by a bank, and simply placing it to the credit of the person from whom it was taken, was not parting with value for it so as to enable the bank to hold it against the rights of the real owner. The same thing was also maintained in the cases of Clark v. Ely, and Clarke National Bank v. Bank of Albion. And for the reason upon which this rule has been established, where, partial value only appears to have been parted with upon the faith and transfer of commercial paper, the right of the holder to recover upon it has been restricted to the amount of such value, when the person transferring it could maintain no action upon it. This application of the principle, as well as the authorities supporting it, seem to have been overlooked in the case of Park Bank v. Watson; || but in view of the more recent support accorded to it by the same court, in the. preceding case cited, that may safely be regarded as substantially overruled. Still, as this case requires no such conclusion to support the position that the plaintiff was not shown to be a holder of the check in controversy, for value, it is not necessary to definitively decide that point in the present instance. As the plaintiff parted with nothing under the arrangement through which he received the check and for that reason is not entitled to protection as a holder of it for value, the question is presented, whether Catharine H. Jerome could have recovered the amount of it from the defendant, if she had endeavored to do so, at the time when it was delivered to him. For, if she could not, then the plaintiff himself must fail, because he stands in the same situation, as long as he received it without paying anything of value for it. By certifying the check, the defendant obligated itself to hold so much of the drawer’s credit or funds, as might be required for that purpose, for its payment when it should be presented.* While she held and owned the check, she possessed the right to have that credit and those funds applied to its payment whenever she elected to require that to be done. And, without her consent and authority, the defendant could not divert or apply them to any other purpose. But, if she consented that a different application or disposition should be made of them, and it was accordingly done, after that she could not consistently claim payment of the check; for that would secure to her the full benefit of all that might otherwise be required upon the check, but in a different manner. She was entitled to $2,500 out of her husband’s account, by means of the check and its acceptance, and to nothing more than that. And if that has been secured to her in an indirect manner, the effect will be the same as though it had been done by means of the immediate instrumentality of the check itself. That it was so secured was found as a fact by the referee, and may readily be inferred from the evidence, for the money was all drawn out by her husband while he was her general agent and acting in her behalf. That it was designed to be under his complete control, is apparent from the circumstances that,he was her agent; that when he carried on business, it was in her name; that the check was returned to him soon after its delivery to her, and remained among their joint papers, without • any attention to it on the part of either of them, until it had been forgotten and the money due upon it had been received and used by him through other instrumentalities. These facts warranted the conclusion, deduced from them by the referee, that Catherine H. Jerome had assented to her husband’s drawing out of the bank and using the money he there had on deposit, for her benefit, to pay the check. It was a diversion of it, for his or their joint benefit, with her implied consent and authority. And, after that, it would be, morally as well as legally, unjust to allow her to enforce payment of the same amount again, because the check itself had been inadvertently left outstanding. The judgment against the plaintiff was, for these reasons, entirely right, and it should therefore be afiirmed, with costs.

Davis, P. J., concurred.

Judgment affirmed, with costs. 
      
       Munroe v. Potter, 22 How, Pr., 49; Holtsinger v. Corn Exchange B’k, 37 id., 203,206; McGregor v. Buell, 1 Keyes, 153,155-156.
     
      
       1 Hall, 868.
     
      
       2 Sandf. Ch., 166.
     
      
      
         52 Barb., 592.
     
      
       Williams v. Smith, 2 Hill, 301; Cardwell v. Hicks, 37 Barb., 458, and cited approvingly in Lawrence v. Clark, 36 N. Y., 128,130; Stalker v. M’Donald, 6 Hill, 93, 96; Parsons on Bills and Notes, vol. 1,191, and cases cited in note e; Huff v. Wagner, 63 Barb., 215; Wintle v. Crowther, 1 Crompt. & Jervis, 316; Weaver v. Barden, 49 N. Y., 286.
     
      
       Farmers and Mechanics’Bank v. Butchers and Drovers’ Bank, 14 N. Y., 623; 16 id., 125; 28 id., 425; Meads v. Merchants’ Bank of Albany, 25 id., 143; Merchants’ Bank v. State Bank, 10 Wallace, 604.
     