Moore v. Hershey

.1. The principle that the consideration of a negotiable note cannot be inquired into in the case of a holder for value, does not apply to the case of such paper made by a lunatic. 2. In a suit by the endorser of a promissory note made by a lunatic, the latter or his committee may defend, on the ground that the endorser had knowledge of the maker’s lunacy, or that the note was obtained by fraud or without proper consideration.. 3. Where the endorser of a promissory has been notified that he will be required to prove the consideration paid by him for the note, and he takes the stand to prove that he is a bona fide holder, it is proper on cross-examination, to ask such questions as will tend to discover whether the endorser knew that the note was originally obtained without proper consideration. 4. The defendant lunatic may also prove that he received no consideration for the note; that it was given pending proceedings in lunacy, and that plaintiff admitted that defendant had not received value for the note. 5. Per Paxson, J. — -A Us pendens is undoubtedly constructive notice in questions of title and property, but that it should be so as to a man’s mental condition is much to be doubted.

Error to the Court of Common Pleas of Lancaster county: Of May Term 1879, No. 54. Assumpsit by John M. Hershey against George H. Moore on a promissory note made by Moore in favor of, and endorsed by David L. Witmyer, to plaintiff. The note was dated June 8th 1872, at forty days for $500. The defendant pleaded non-assumpsit: Notice was given by defendant’s counsel to plaintiff, that he would be required to prove the consideration paid by him for the note in suit. The defence was that at the time the said note was given, Moore was a lunatic or non compos mentis, that proceedings had been theretofore instituted for declaring him such; that he was shortly afterwards regularly found by an inquest to be a lunatic without lucid intervals, and to have been so for about three years prior thereto, that the finding of the inquisition had been duly returned to and confirmed by the court, and Michael H. Moore and John II.. Moore appointed his committee, by whom this defence was conducted : and further, that the defendant or his estate was in no way benefited by the said note, and received no value for it whatever ; ■that the sole consideration for it was a worthless patent right, and that the plaintiff knew at the time he bought the note that Moore had received no value for it. At the trial the plaintiff having proved the signature to the note and given it in evidence, was called as a witness in his own behalf. He testified that he gave for the note his order on Solon L. Cheny for $395, and his own note for $82.09. He added that Witmyer told him what the note was given for. “He told me it was given to lift a judgment.” He was then asked by defendant’s counsel, “ Did you not know, at the time you took this note from Witmyer, that the consideration of it was a patent right?” This question was objected to by plaintiff as not being cross-examination, and was disallowed. (First assignment of error.) He was then asked by defendant’s counsel, “ Did you ever tell anybody that you dealt in patent right notes; bought them for half price; you bought one of George Moore’s; you knew he got no value for it, but you got it cheap and you were going to make him pay for it.” Objected to by plaintiff and disallowed by the court, as not cross-examination. (Second assignment of error.) The plaintiff having rested, the defendant gave in evidence the record of proceedings in lunacy in the case of George H. Moore in the Court of Common Pleas of Lancaster county, as follows: . Petition presented June 5th 1872. Same day E. D. North, Esq., appointed commissioner. Inquisition held June 21st and 28th 1872. Inquest find that George H. Moore is a lunatic, and has been so for about three years prior to that date, without lucid intervals. Inquisition confirmed August 19th 1872; and the same day Michael H. Moore and John 11. Moore appointed committee, &c. The defendant then offered to prove that George II. Moore, the defendant, on January 10th 1872, gave a judgment bond to Aaron H. Danner for $3000, payable April 1st 1872, and entered to November term 1871, No. 232, in the Court of Common Pleas of •Lancaster county, and assigned by said Danner to David L. Witmyer, May 21st 1872, and satisfied by said Witmyer, June 12th 1872. That on February 19th 1872, an affidavit and petition were filed-alleging the obtaining of said judgment by fraud, and that there was no consideration for the same, and a rule granted to open the same, which rule was pending at the time of the entry of satisfaction as aforesaid; that said judgment was given by said Moore in pursuance of an arrangement about a worthless patented wash boiler and that said Moore received no consideration for said judgment. That said Witmyer procured from said Moore six notes for $500 each, all like the one in suit, which is one of them, for said.judgment ; that said note was given while proceedings in lunacy against said Moore were pending; that said Witmyer subsequently to the date of said note, had the whole six notes and offered them for discount or sale; that said Hershey attended the inquest June 21st 1872, and once in a conversation with a person, said that he often dealt in patent right notes, that he bought them for half price and made money on them, that he bought one of George Moore’s that he knew Moore had no value for it, but he got it cheap and would make him pay for it. This offer being objected to by plaintiff was disallowed as a whole by the court; and the rejection thereof having been excepted to, was the subject of the third assignment of error. The defendant submitted the following points, to which are appended the answers of the court: 1. It was not competent for the defendant to bind himself by a promissory note given by him while the proceedings in lunacy against him were pending, which resulted in finding him a lunatic for three years back and before the commencement of the proceedings in lunacy. Ans. “ Defendant having made and put in circulation, the negotiable note in suit, three days after proceedings in lunacy were commenced, which resulted in finding him a lunatic, and the payee having endorsed said note to plaintiff, who is an innocent holder for value (having no actual notice of the proceeding in lunacy, or of the lunacy of .Moore, or of any taint whatever concerning said note), would be bound to pay said note, notwithstanding the fact that the inquest finds said Moore to have been a lunatic for three years prior to its date.” (Second assignment.) 2. It is incumbent on the plaintiff to show that the defendant, a lunatic, so found by inquisition, received value for the note in suit, and there being no such proof, the defendant is not bound by said note. Ans. “Refused.” (Fifth assignment.) 3. Under the whole evidence in the case the verdict should be for the defendant. Ans. “Refused.” (Fourth assignment.) . In the general charge the court, Livingston, P. J., inter alia, said: “We prefer to adhere to the rule as stated in Diamond v. Lawrence Co., 1 Wright 853, that the doctrine of constructive notice or notice by lis pendens does not apply to commercial paper not yet due, in the hands of an innocent holder for value, and therefore now say to the jury, that constructive notice, by the mere fact that proceedings in lunacy were commenced three days before the making of the note in question, which is a negotiable note, commercial paper, and which is held by plaintiff as an endorsee for value, who, as the testimony shows, has purchased it from the payee for value, without having actual notice of the proceedings in lunacy, or of the lunacy of George H. Moore (if he was then a lunatic), prior to purchasing it, is not such notice as would prevent his recovery in this action, and that plaintiff is therefore entitled to their verdict for the amount of the note with interest from its maturity.” Verdict for plaintiff. Defendant took this writ, among his assignments of error being those heretofore noticed.