
    CHARLES BUSH vs. HENRY L. PECKARD.
    ■Vhere a negotiable note is taken in the usual course of trade, before maturity, by an I innocent party, bona tide, and for a valuable consideration, without notice; neither I fraud nor want of consideration as .between the original parties, can be set up as a de-I fence against the indorsee.
    ■\he payment of an antecedent debt is a good consideration for the assignment.
    
      wk. note payable “to A. B., trustee or order,” is negotiable.
    Before judges Booth and Layton.
    Assumpsit. Pleas, non-as-Brmpsit, &c. Replications and issues.
    I This was an action of assumpsit on a promissory note made by ■lenry L. Peckard “to Robert A. Parrish, trustee in order;” by him ■idorsed to Bonny & Bush; and by them indorsed to plaintiff. The fcte was given to Parrish as a trustee for the American Silk Com-■my, for the patent right of a silk machine, to be conveyed in wri-ig to the defendant and others. The defence was, that the con-leration had failed; that the patent right had not Leen conveyed,
    
      The principal question was, whether this defence could be set up as against the present holder, who is the survivor of Bonny & Bush to whom the note was indorsed in payment of- an antecedent debt due from the American Silk Company.
    The defendant offered in evidence the declarations of the payee, Robert A. Parrish, which were objected to, and ruled out.
    
      Court. — We understand that the question hereafter to be raised, and on which the case will probably turn, is, whether the want of consideration as between the maker and payee of this note, can be setup as a defence to an action at the suit of an indorsee. But the question now started is, supposing that this want of consideration can be set up in the present case, can the declarations of the origina payee be given in evidence in a suit by the indorsee, to prove the want of consideration? We think not. Upon principle such decía rations are inadmissible, because they are secondary evidence, and Parrish ought to be called as a witness to prove the facts.
    
      Mr. Bayard, for plaintiff.
    The case depends more upon questions of law than on any disputed fact. The defendant executed this note, made it negotiable; put it in the power of the original payee to assign it unconditionally to another, though there was, as he alledges a verba] understanding that it should not be assigned by the payee until he conveyed a certain patent right. Admitting this to be so, i is his own negligence and folly, and he ought not, on principles o| justice as well as of law, to set this up as a defence against the inf 'dorsee. The note, negotiable on its face; without condition; ha found its way into the hands of an innocent third person, on a suffil cient consideration, and without, notice of the want or failure of con] sideration as between the original parties. If a note be taken, on consideration, and in the course of trade, it is good in the hands the indorsee, unless the defendant show that the indorsee had notic| of a want of consideration. (3 Kent Com. 51-2; 3 Com. Law Re; 62; 13 Johns. Rep. 52; 2 ib. 50; 5 ib. 240; 10 Com. Law Rep. 345. Though taken in payment of an existing debt it makes no difference for this is a sufficient consideration. (5 Johns. Rep. 240; SeZw;?/| JV. P.)
    
    
      Rogers, contra.
    The putting this note in circulation, without pe formance of the condition upon which only it was to be a valid notl was a fraud, and the defendant has a right to go into this matter an action by the indorsee. {Chit. Bills. 79-80.) Especially whe: the note is assigned in payment of an antecedent debt. {Chit. Bi 
      268; 3 Kent Com. 51-2; 10 Wend. 85; 20 Johns. Rep. 636; 2 Harr. Rep. 256, Corhit vs. The Bank of Smyrna.), 2d. The note was to Parrish as “trustee,” and this was sufficient to put the indorsee on his guard to inquire as to the authority and title. (Ch. Bills 222; Mpp. 798; 10 Com. Law Rep. 154; 3 Kent Com. 81.) 3d. The fact that the payee was a trustee, and had but'a limited authority to impart to his indorsee, restrains this indorsement; so that this is not legally a negociable instrument. (Ch. Bills 220.) In case of notes over due, these principles unquestionably apply; and the distinction, if any exist, is a mere technical one; that the taker is presumed to know all the objections which attached to the note. Why should he not be equally bound to know them before the note is due?
   The chief justice charged:—

Booth,. Chief Justice.

Two questions ai*e presented for consideration. 1st. Is this note negotiable? A promissory note is a written promise by one person to another, for the payment of money absolutely nd at all events. To render it negotiable, it must be made payable to ;he payee and to his order, assigns, or to bearer. It must have-negotiable words on its face, showing it to be the intention of the parties o give it a transferable quality.

Where a note is made payable to A. B. as trustee, agent, presi-lent, cashier, manager, &c., it is a mere description of the person. The legal title is in him; he is the only person who can receive the imount, and the only person who can transfer it.

It is a general principle applicable to all negotiable securities, that person shall not dispute the power of another to indorse such an nstrument, where he asserts by the instrument which he issues to he world, that the other has such power. (2 Barn & Cress. 293; Com. Law. Rep. 94.) 2d. Has the maker of this note, under the acts proved in this case, a right to go into the question of fraud, ant of consideration, or failure of consideration, between the origial parties, as against the indorsee, who took the note in payment of n antecedent or pre-existing debt?

There are cases where the question of fraud or want of considera-on may be examined into, in an action by indorsee vs. maker. [Vhere a bill or note has been lost, or fraudulently obtained, or sto-n, the holder who sues, must prove that he came by the instrument on a good consideration.

A want or failure of consideration may be setup, not only between e original parties, but also against the holder, who takes the note- or bill after it has become due, or with knowledge or notice of fraud or other equitable circumstances entitling the maker to avail himself of the defence. And if the circumstances of the transfer are such as to put him on his guard, he purchases at his peril. (Chitty App. 798.)

Possession is prima facie evidence of property in negotiable paper payable to bearer or indorsed in blank; and such bona fide holder can recover though it came to him from a person who had stolen it from the true owner, provided he took it innocently in the course of trade, for a valuable consideration, and under circumstances of due caution; and he need not account for it unless suspicion be raised. For it must first be shown that the instrument had got into circulation by force or fraud, before the burden of proof is cast upon the holder, of showing the consideration he gave for it.

Between the original parties, the consideration may always be gone into. The rule equally applies when the indorsee took the paper with knowledge or notice of the illegal consideration, or the want or failure of consideration, or any circumstances which would have avoided the note in the hands of the indorser; or when not taken in the course of trade, or after it was due, or under circumstances which ought to have led to an inquiiy. (Chitty App. 798.)

Negotiable paper can be assigned or transferred by an agent, or any other person fraudulently, so as to bind the true owner as agains the holder, if taken in the usual course of trade, and for a fair anc valuable consideration, without notice of the fraud. (Bay vs. Coddington, 5 Johns. Ch. Rep. 56; 3 Kent's Com. 81.) The defendant’, counsel insists, that as this note was taken by the plaintiff in pay merit of a pre-existing debt, it was not taken in the usual course o trade; and therefore that the consideration may be inquired into, pre cisely as if this were an action by Parrish against Peckard. Thi doctrine, he contends, is sustained by numerous decisions in Nev York, and the cases of Coddington vs. Bay, 20 Johns. Rep. 636, an Rosa vs. Brotherson, 10 Wend. Rep. 85, are cited in the argumen The case of Coddington vs. Bay, we think does not support the docB trine, nor does the opinion of chancellor Kent; for he seems to admiB that if negotiable paper is transferred before itbecomesdue, in paymerB of an antecedent debt, without notice of fraud, it forms á sufficierB consideration for the transfer, and that the holder cannot be affectel by the fraud or want of consideration between the original partiel (See 5 Johns. Ch. Rep. 57; Ch’r. Kent's opinion, 3 Kent's Com. 81 We are unable to perceive any real or substantial difference betweeH taking negotiable paper in payment of an antecedent or pre-existing debt and a debt arising at the time of the transfer, or receiving and immediately applying the proceeds in payment of such pre-existing debt. It is better for the interests of trade and commerce, and it is the policy of the law, that the circulation of negotiable paper should be free from embarrassment, and that the innocent holder for a valua-re consideration, without notice of fraud or want of consideration, lould not be affected by any equities between the original parties. We, thei’efore, instruct the jury, if it is proved to the'ir satisfac-an that this note was indorsed to the plaintiff before it became due, payment of a pre-existing debt; if he took it innocently and in good ith, without knowledge or notice of fraud or want of consideration Jtween the original parties; and there were no circumstances at-nding the transfer to create suspicion, or put him on his guard; it as taken by the plaintiff for a valuable consideration, and in the sual course of trade; and he is; therefore, .entitled to recover in this ;tion: and that fraud, want or failure of consideration between the riginal parties, cannot be set up as a defence by the maker.

J. A. Bayard, for plaintiff

W. Ii. Rogers, for defendant.

Verdict for plaintiff for $555 75.  