Cecil Bank v. Heald

Goldsboeough, J.,

delivered the opinion of this Court— Babtol and Cochean, J., dissenting;

The appellant instituted suit in the Superior Court of Baltimore city, to recover from the appellees the sum of $3,438.-85 alleged to be the proceeds of certain promissory notes sent to Josiah Lee & Co., specially endorsed “for collection.’ These notes were payable in Jersey city, New Jersey, and were transmitted by Lee & Co., to J. S. Fox, - Cashier, and endorsed “for collection.” They were collected by Fox, as Cashier of the Mechanics and Traders Bank of J ersey city, who, after deducting from the amount collected a balance due by Lee & Co. to said Bank, remitted the residue by check on the Continental Bank of New York. This residue is the amount claimed by the appellant.

This check was remitted to Josiah Lee & Co., made payable to their order, dated the 29th of October, 1860, and received on the 31st of the same month. Lee & Co. endorsed it in blank and sent it, on the last named day, to the appellees, who applied it in part payment of a debt due by Lee & Co, to the appellees.

*572 Lee & Co. failed on the 30th of October, the day before •they sent the check to the appellees, and on an investigation of their affairs they were found to be utterly insolvent.

At the trial, the plaintiff proved that the defendants, as bankers, were partners under articles of co-partnership by which they were associated for the purpose of conducting “a 'banking, bank note, .exchange, bill broking and stock business.” It also appeared that William Heald, one of the alleged partners, had contributed $80,000 as special partner., .and that he had stated his intention not to draw his share of profits, but to suffer them to accumulate for the benefit of Spurrier, one of the defendants, his son-in-law, and Spurrier’s children, who were his, He.ald’s, grandchildren.

In the progress of the trial, three exceptions were taken by the appellant to the ruling of the Court. The first relates to the .objection to evidence .offered by the appellees that Lee Co. had notice of the terms of agreement for special partnership between the appellees, the appellant insisting that such proof would not affect it; the Court overruled the objection and admitted the evidence.

The second exception was taken by the appellant to the ruling of the Court rejecting its prayer .and granting the two prayers of the appellees.

The third exception was taken because the Court declared the evidence of Gerard Go ver, offered by the appellant, inadmissible, and that it was to be treated as out of the case. The .circumstances attending this exception will be noticed in treating of it.

In disposing of the questions presented by these exceptions we shall reverse the order of them, and first consider the third exception. This exception was not, in fact, taken until the prayers of the respective parties had been submitted. No exception was taken to the opinion of the Court when first announced; the appellant, therefore, must be presumed to have waived its objection. The ruling of the Court was fully *573 justified under such circumstances. See Davis vs. Patton, 19 Md. Rep. 120 , and the eases there cited.

The second exception involves the ruling of the Court in granting the appellees’ second prayer. It is important, in this connection, to recur to the appellant’s cause of action. The suit was brought to recover from the appellees the amount received by them on a check of the Mechanics and Traders Bank of New Jersey, on the Continental Bank of New York, payable to the order of Josiah Lee & Co., by them endorsed in blank, and given to the appellees in part payment of an antecedent debt due by Lee & Co. to the appellees.

This check was, therefore, a negotiable instrument; and though given in part payment of such a debt, if it was received in good faith and without any notice of the right or claim of the appellant to the proceeds of the check, we think the appellees were entitled to the benefit of the payment. The appellant cannot complain of the prayer as granted. It submitted to the j'ury to find the facts deemed essential by the Court to the appellees’ defence.

The general principle of commercial law, that a iona fide holder of a negotiable instrument for a valuable consideration, without notice, will be protected against the antecedent .equities of the original parties, is fully sustained by numerous authorities, and they uphold the doctrine, also, that the holder will be protected when the instrument is applied in payment of an antecedent debt, regarding such antecedent .debt as a valuable consideration. In Swift vs. Tyson, 16 Peters S. C. Rep., 1, the Supreme Court declared : “ We are prepared to say, that receiving it in payment of, or as security for, a pre-existing debt, is according to the known usual course of trade and business; and why, upon principle, should not a pre-existing debt be deemed a valuable consideration ?” Again the Court say: “ The question has been several times ihefore this Court, and it has uniformly been held, that it *574 makes no difference -whatsoever as to the rights of the holders, whether the debt, for which the negotiable instrument is transferred to him, is a pre-existing debt, or is contracted at the time of transfer’. In each case he equally gives credit to the instrument.” In quoting with approbation these extracts, we adopt the law there announced, so far only as it is applicable to the facts of this case. We are not to be understood as expressing any opinion upon the right of a holder of a negotiable instrument received by him “ as seewrity for a pre-existing debt.”

The case of Swift and Tyson was elaborately argued, and the authorities, both in England and in this country, carefully collated and reviewed in the opinion of the Supreme Court.

In the case of Goodman vs. Symonds, 20 How. S. C. Rep., 343, decided in 1857, the case of Swift and Tyson is recognized in the following emphatic language: '“ A well defined and correct exposition of the rights of a tona fide holder of a negotiable instrument was given by this Court in Swift vs. Tyson, ( 16 Peters, 1 ,) as long ago as 1842, and we accept that exposition relative to the point under consideration, on the present occasion, as one accurately defining the nature and character of the title to those instruments which such holder acquires when they are transferred to him for valuable consideration.”

In Goodman vs. Harvey, 4 Adol. & Ellis, 870, Lord Denmar said: “ Where the bill of exchange has passed to the plaintiff without any proof of tad fa/vth in him, there is no ,objection to his title.” We have only to reverse the parties to make this decision applicable to the case at bar. See Ch. on Bills, 12th Ed., 257.

The Superior Court having properly granted the appellees’ second prayer, ruled correctly in refusing to grant the prayer of the appellant. And a majority of this Court having sanctioned the ruling of the Court in granting the appellees’ second *575 prayer, it is unnecessary to pass upon the question of notice contained in the first exception, or the question of partnership embraced in the appellees’ first prayer.

(Decided July 19th, 1866.)

Judgment affirmed,