
    George Orr and William Orr, Respondents, v. The South Amboy Terra Cotta Co. of South Amboy, New Jersey, Appellant.
    (Supreme Court, Appellate Term,
    November, 1904.)
    Promissory note — Proof that the plaintiff is the holder of a note sued upon for value and in good faith, when required.
    Where the maker of a promissory note, when sued thereon'by an indorsee from the payee, gives proof tending to establish the illegality of the note it thereupon becomes the affirmative duty of the plaintiff to satisfy the jury that he is a holder of the note for value and in good faith, and it is improper for the court to charge that the defendant is obliged to prove the illegality of the note by a preponderance of evidence.
    Appeal by defendant from a judgment of the City Court of the city of Hew York, in favor of the plaintiffs in an action on a promissory note, and from an order denying defendant’s motion for a new trial.
    Emmet & Robinson, for appellant.
    Seth B. Robinson, for respondents.
   Fitzgerald, J.

The note in question was given by Poerschke, the payee, properly indorsed and before maturity to plaintiffs. It does not satisfactorily appear whether it was taken in payment of an antecedent debt, or not, and if not, plaintiffs, upon the evidence in this case, cannot claim to be a holder for value. A specific request to charge was made by defendant “that if the debt of $1,000. still exists between Mr. Orr and Mr. Poerschke that Mr. Orr was not a holder for value of this note;”

The learned court below did not charge this proposition but said “ that is a matter which the jury may take into consideration.” Exception was noted to the refusal to charge as requested. The instruction as given was indefinite and liable to misinterpretation particularly for the reason that the testimony of Mr. Orr upon this very material point was contradictory, and it was important that the rule of law governing the matter should have heen stated in clear and unequivocal terms. Poerschke it appears was a director of defendant corporation, and it was claimed that plaintiffs had knowledge of that fact at the time of the transaction. This is not a case where the name of the same person appears in two places in the one instrument, as officer of maker, and as payee of obligation, and the note itself cannot be held to bear upon its face sufficient notice of incapacity (Hanover Bank v. American Dock & T. Co., 148 N. Y. 612; Wilson v. Metropolitan El. R. Co., 120 id. 145) ; but there is some evidence in this record that plaintiffs had personal knowledge of the fact. ¡Neither is this a case where the corporate obligation was originally issued to an uninterested third person, and in that respect it is distinguishable from Cheever v. Pittsburg S. & L. E. R. Co., 150 N. Y. 59. Whether plaintiff had any knowledge of the payee’s relationship to the maker, and if he had, whether it was or was not sufficient to put him upon inquiry were questions which should have heen submitted to the jury. The testimony of Adrian as to the manner in which the note was issued, was not contradicted and certainly tended to establish illegality, hut notwithstanding this, the jury were charged in the following words: This is an affirmative defense — a defense which must be proven by a fair preponderance of the evidence,” and a request to charge that whenever the defendant produces proof that there were any infirmities attached to the making of the note that it then became the affirmative duty of the plaintiff to satisfy the jury that he took the note for value and in good faith,” was refused. The exceptions to the instructions and to the refusal were well taken, the proper rule under such circumstances is clearly expressed in Canajoharie National Bank v. Diefendorf, 123 N. Y. 191. “ Such a party makes out his title by presumption until it is impeached by evidence showing the paper had a fraudulent inception and when this is done the plaintiff can no longer rest upon the presumption but must show affirmatively his good faith.” Some evidence was presented by the plaintiffs in rebuttal which might have satisfied the jury of the bona fides of the transaction, but the instruction that the defense must be established by a preponderance of evidence was error.

Judgment and order reversed, and new trial ordered, with costs to appellant to abide the event.

Freedman, P. J., and Bischoff, J., concur.

Judgment and order reversed, and new trial ordered, with costs to appellant to abide event.  