
    The Atlantic National Bank of New York, Respondent, v. Joseph F. Franklin, Appellant.
    (Argued December 3, 1873;
    decided December 16, 1873.)
    In an action upon certain promissoiy notes, brought by plaintiff, as indorsee, against the maker, the answer set up a defence, as between the original parties, and that plaintiff was not a bona fide holder for value. Upon the trial, after plaintiff’s president had been examined as a witness as to the circumstances under which the note was received by it, a stipulation was entered into, in substance, that the decision should turn exclusively upon the question whether, upon the evidence already in, plaintiff was a bona fide owner for value. No evidence had been given touching the defence set up in the answer; held,, that the stipulation must be deemed to have been made with reference to said defence, and required plaintiff to prove, in order to recover, that it was a bona fide holder for value in the sense that would preclude defendant from setting up, as against it, any defence he might have as against the payees.
    The payees were indebted to plaintiff upon a call loan. Upon being called upon to pay they proposed to give additional security if plaintiff would allow the loan to remain a little longer; they thereupon brought the notes in suit to plaintiff, which were placed with other collaterals. Held, that as no definite extension was agreed upon there was no valid agreement for forbearance, and that plaintiff was not a bona fide holder forvalue.
    Appeal from order of General Term of the Supreme Court in the first judicial department, reversing a judgment in favor of plaintiff entered upon the report of a referee and ordering a new trial.
    This action was brought upon three promissory notes made by defendant, payable to the order of Van Saun & Co., and indorsed to plaintiff.
    The nature of the defence and the facts appear sufficiently in the opinion.
    
      Roger A. Pryor for the appellant.
    The stipulation is conclusive on the parties, and determines the decision of the cause. (Howell v. The Knickerbocker Life Ins. Co., 44 N. Y., 277.) Plaintiff was not a holder for value. (Commercial Bank v. Marine Bank, 3 Keyes, 337; McBride v. Farmers’ 
      Bank, 26 N. Y., 450 ; Dickerson v. Wason, 47 id., 439 ; Taft v. Chapman, 50 id., 445; Bay v. Coddington, 5 Johns. Ch. R., 54; Coddington v. Bay, 20 Johns. 637; Bank of New York v. Vanderhorst, 32 N. Y., 557 ; Park Bank v. Watson, 42 id., 493 ; Paddon v. Taylor, 44 id., 371; Lawrence v. Clark, 36 id., 129; Farrington y. Frankfort Bank, 31 Barb., 188, per Allen, J.; Youngs v. Lee, 12 N. Y., 555 ; Stalker v. McDonald, 6 Hill, 93; Rosa v. Brotherston, 10 Wend., 86; N. Y. Exchange Co. v. De Wolfe, 31 N. Y., 273; Brown v. Leavitt, 31 id., 113 ; Bank of St. Albans v. Gilliland, 23 Wend., 311; Bank of Sandusky v. Scoville, 24 id., 115 ; Ontario Bank v. Worthington, 12 id., 593.) Mere forbearance, without a binding agreement to forbear, is of no legal effect. (Bank of Utica v. Ives, 17 Wend., 501; McDonald v. Stalker, supra ; Brown v. Curtiss, 2 N. Y., 225; Reynolds v. Ward, 5 Wend., 501; Vilas v. Jones, 1 N. Y., 274; Schroeppele v. Shaw, 3 id., 452; Bangs v. Strong, 4 id., 319, 325; Lowman v. Yates, 37 id., 601; Dickerson v. Wason, 47 id., 439 : McBride v. Farmers' Bank, supra ; Commercial Bank v. Marine Bank, supra.) A naked promise to forbear enforcing payment of a debt has no legal efficacy, and works no change in the antecedent relations of the parties. (2 Am. L. Cases, 341.) If there was any promise here to forbear it was ineffectual, by reason that no definite period of forbearance was agreed on or stated. (Bank of Utica v. Ives, 17 Wend., 501; McDonald v. Stalker, supra ; Draper v. Romeyn, 18 Barb., 166; Perkins v. Proud, 62 id., 420; 1 Rol. Abr., 23, pl. 26; 1 id., pl. 25; Miller v. Stem, 2 Barr., 286; Board v. Covington, 26 Miss., 473; Blackstone Bank v. Hill, 10 Pick., 133; Parnell v. Price, 3 Richardson, 121; Phipot v. Briant, 4 Bing., 717; Pierce v. Goldsberry, 31 Ind., 55 ; Place v. McIlvain, 38 N. Y., 96.) The receipt of collateral security does not affect the antecedent rights and liabilities of the parties. (1 Smith’s Leading Cases, 451, Am. note, edition 1855 ; 2 Am. L. Cases, 241; Taylor v. Allen, 36 Barb., 297; Fox v. Parker, 44 id., 541; Dorlon v. Christie, 39 id., 613; Taggard v. Curtenius, 15 Wend., 157; 
      Pring v. Clarkson, 1 Barn. & Cress., 14; Twopenny v. Young, 3 id., 208; Gahn v. Niemcewiez, 11 Wend., 321; Elwood v. Diefendorf, 5 Barb., 409; Wagaman v. Hoag, 14 Barb., 239.)
    AL. -5. Capwell for the respondent.
    Possession of the notes by plaintiff was prima facie evidence that it was owner for a good consideration. (Seeley v. Engell, 17 Barb., 536; James v. Chalmers, 2 Seld., 211; Case v. Mech. Banking Ass., 4 Comst., 166; First Nat. Bk. v. Greene, 43 N. Y., 298.) Plaintiff succeeded to the rights of Van Saun & Co., although no new consideration was advanced. (McSpeddon v. Troy City Bk., 2 Keyes, 35; Pars, on Bills, 226; Cole v. Saulpaugh, 48 Barb., 104; Schepp v. Carpenter, 51 N. Y., 602; Boyd v. Cummings, 17 id., 101; Rutland Bk. v. Buck, 5 Wend., 66; Grandin v. Le Roy, 2 Paige, 509; Lathrop v. Morris, 5 Sandf., 7; Mohawk Bk. v. Corey, 1 Hill, 513; Dezeng v. Phyfe, 1 Bosw., 335; Lord v. Ocean Bk., 20 Penn. St., 384.) The acceptance by the bank of the notes made it a bona fide owner for value. (Place v. McIlvaine, 38 N. Y., 99 ; Boyd v. Cummings, 17 id., 103.)
   Rapallo, J.

On the trial of this action, and after the president of the plaintiff, who was the only witness produced, had been examined with reference to the circumstances under which the plaintiff had received the note in suit, the following stipulation was entered into between the counsel for the respective parties:

“ It is stipulated between the parties to this action that the decision in this case turn exclusively upon the question whether, on the evidence already in, the plaintiff is a bona fide owner for value of the notes in controversy.”

Thereupon the testimony was closed. No evidence had been given touching the origin of the notes, or the defence to them, existing between the original parties, which had been set up in the answer. This defence was, that the notes had been deposited by the maker (defendant) with Van Saun & Co., the payees, as collateral security upon certain contracts between them and the maker, and that when the notes became due Van Saun & Co. were indebted to the maker in a larger amount than the notes, and that Van Saun & Co. had charged the notes against such indebtedness, and released the maker from all claim on account of the notes.

The stipulation must have been made with reference to the character of this defence, and must be construed as requiring the plaintiff to establish that it was a bona fide holder for value, in the sense that would preclude the maker from setting up as against it any defence which he might have as between himself and the payees.

The referee found that the notes had been transferred by Van Saun & Co. to the plaintiff as additional security for an antecedent debt, and without consideration. This finding is sustained by evidence. The only consideration claimed by the plaintiff to have been shown is the forbearance of a call loan previously existing. But there was no valid agreement for such forbearance. No engagement was entered into by the plaintiff, upon the receipt of these notes, which would have precluded it from demanding payment of the loan the moment after the receipt of the notes in question. Van Saun & Co., having been called upon by the plaintiff to pay the $30,000 call loan said they did not want to pay it just then, but would give the plaintiff additional security if it would allow the loan to remain a little longer. They then brought the notes in suit to the bank, and the president took them and put them with the other collaterals. No definite extension was agreed upon. This was not a valid agreement for forbearance. (Bank of Utica v. Ives, 17 Wend., 501.) Mere indulgence, without a valid agreement for forbearance, does not constitute a valuable consideration. (Stalker v. McDonald, 6 Hill, 93, 114.)

The first position assumed in the opinion at General Term, viz., that this transaction amounted to a new loan upon the old and new collaterals, is not tenable. The request of Van Saun & Co. was, that the existing loan should remain a little longer. It was not changed.

The second position there taken is, in our judgment, equally indefensible. That is, that the plaintiff may be regarded as a bona fide holder, though it took the notes as security for an antecedent debt; because, if the notes were accommodation notes, it was competent for Van Saun & Co. to pledge them for an antecedent debt, and the holder thus receiving them would be a bona fide holder for value sufficient to enable him to recover.

Mo such case can be regarded as in the contemplation of the parties in entering into the stipulation. There was no pretence that these were accommodation notes, but the defence to them was of an entirely different character, and the stipulation must be deemed to have been entered into with reference to a defence which would be available to the maker against all but a bona fide holder, who had parted with value on the faith of them. In the case of notes given to the payee for his accommodation, generally the maker agrees to become surety for him, and the payee has an implied authority to pledge them as security for his existing debts. It is upon this ground, and not that the creditor becomes a bona fide holder for value, in the ordinary sense of the term, that the maker is, in such cases, precluded from setting up the defence of want of consideration. The consideration of the transfer in such a case, though valid, is not a valuable consideration in the legal sense of the term, as applied to notes and bills. (Stalker v. McDonald, supra.)

The order of the General Term should be reversed, and the judgment entered upon the report of the referee should be affirmed with costs.

All concur.

Order reversed and judgment accordingly.  