Doe v. Burnham

Eastman, J.

It has been settled by repeated decisions in this State, that the consideration agreed to be paid for spirituous liquors sold without license and contrary to the statute, cannot be recovered. The sale being prohibited by statute, and the vendor being liable to a criminal prosecution for the selling, the traffic is made illegal and the price cannot be recovered. And it makes no difference whether the action be brought on the original contract or account, or upon á promissory note given for the amount. Caldwell v. Wentworth, 14 N. H. Rep. 431 ; Pray v. Burbank, 10 N. H. Rep. 337 ; Lewis v. Welch, 14 N. H. Rep. 294 ; Adams v. Hackett, 7 Foster’s Rep. 289; Roby v. West, 4 N. H. Rep. 287 ; Coburn v. Odell, 10 Foster’s Rep. 540.

*430 But is the note in the present case liable to this condemnation? Was it given for spirituous liquors sold without license ? A promissory note imports a consideration, and that presumption is to stand until the contrary is shown. Horn v. Fuller, 6 N. H. Rep. 511 ; Schoonmaker v. Roosa, 17 Johns. 301 ; Middlebury v. Case, 6 Vt. Rep. 165 ; Mandeville v. Welch , 5 Wheat, 277; Adams v. Hackett, 7 Foster’s Rep. 293; Coburn v. Odell, before cited. But the counsel for the defendants takes the ground that, it appearing that the consideration of the note was in part for liquors sold, the court must presume that they weré sold without license. Such presumption, however, would be contrary to the general rule, by which the law presumes every man to be innocent until proved to be guilty, and his conduct and acts to be in accordance with the laws of the land until they are shown to be otherwise. It is true that upon an indictment for selling wine and spirituous liquors without license, the government are not required to prove the negative averment that the sale was without license; and upon the ground that where the subject matter of a negative averment lies peculiarly within the knowledge of the defendant, the averment is taken as true, unless disproved by him. Rex v. Turner, 5 M. & S. 206; Sheldon v. Clarke, 1 Johns. 513 ; United States v. Hayward, 2 Gall. 485 ; Gening v. The State, 1 M’Cord 573; Smith v. Jeffries, 9 Price, 257; 1 Greenl. on Ev. § 79. But this exception to the general rule is met by the other rule and presumption already stated, that the consideration of a promissory note is presumed to be good until the contrary is shown. Where a promissory note is given, expressed to be for value received, and the maker would defeat its payment on the ground of want of consideration, he should be required to show that his defence is true, and that the note is false. It is not enough that suspicions only be raised in regard to the consideration ; or ordinary presumptions only; but the illegality of the consideration should be made manifest, before the note is held tó *431 be void. If the contract to pay the money grew out of matters that may or may not have been legal, the presumption would be, on a note being given for value received, that they were legal; and that presumption should be overcome by something more than the ordinary rule in the burden of proof which we have stated ,• something more than alleged illegality. The sale of spirituous liquors may be legal or illegal, and where a note is given for the price, the presum p? tion must be that the sale was legal, and that presumption must stand till the contrary appears. The party alleging the illegality should prove it. Were this suit, then, between the payee and maker of the note, we think that sufficient is not shown by the case to sustain the defence. To overcome the presumption of good consideration in the note, it should be made to appear, not only that the note was given for liquors, but for liquors sold without license.

But there is another answer' to this defence which is perfect. This note was given on time ; and before its maturity it was duly indorsed to the plaintiff, for a valuable consideration, and without notice or knowledge of any illegality in the consideration for which it was given. These facts place the plaintiff upon impregnable ground. There is some difference in the authorities upon the question of the universal application of this rule; some holding that, where a note is indorsed before it is due, in consideration of the discharge of a precedent debt, it is subject to the same equities in the hands of the indorsee that it would be in the hands of the payee. Rosa v. Brotherson, 10 Wend. 85 . But all the authorities agree that where it is indorsed in the usual and ordinary course of commercial business, this exception does not prevail; and they sustain the broad rule that a bona fide holder for a valuable consideration, who becomes such before the dishonor of the note, takes it free from all defences between prior parties. Collins v. Martin, 1 Bos. & Pul. 651; Cone v. Baldwin, 12 Pick. 545 ; Wheeler v. Guild, 20 Pick. 545 ; Thurston v. McKowen, 6 Mass. Rep. 428 ; Perkins v. *432 Challis, 1 N. H. Rep. 254 ; Williams v. Little, 11 N. H. Rep. 66 ; Bullock v. Wilcox, 7 Watts 328 ; Sims v. Syles, 1 Hill’s S. C. Rep. 39.

In Collins v. Martin, Eyre, C. J., says, “ No want of consideration, or other ground, to impeach the apparent value received, was ever admitted in a case between an acceptor or drawer, and a third person holding the bill for value ; and the rule is so strict that it will be presumed that he does hold for value till the contrary appears; the onus probandi lies on the defendant.” Again, “ for the purpose of rendering bills of exchange negotiable, the right of property in them passes with the bills. Every holder, with the bills, takes the property, and his title is stamped upon the bills themselves. The property and the possession are insepara» ble. This was necessary to make them negotiable, and in this respect they differ essentially from goods, in which, the property and possession may be in different persons.”

In Wheeler v. Guild, Shaw, C. J., after reviewing the authorities, states the rule thus: “ Where a party takes a bill transferable by delivery, not overdue nor otherwise apparently dishonored, for a valuable consideration, in the usual course of business, and without notice, actual or constructive, that the holder came by it unlawfully or without title, and has no just right to collect or receive it, the party taking it shall hold it as a valid security, notwithstanding that it has been lost by the true owner, or stolen from him, or taken by the holder as a mere agent to keep, or for other special purpose, without any authority to collect or transfer it.” These observations were made and this principle was laid down where the action was upon a promissory note, payable to order, and indorsed by the payee in blank.

We are not aware that in this State there is any exception to the universality of the rule. In Williams v. Little, 11 N. H. Rep. 66 , the point was distinctly settled that if a negotiable note be indorsed bona fide before due, in payment of a precedent debt, without notice of any defence, the *433 transfer will be as effectual as if it had been received in payment for goods sold, or in the course of any other commercial dealings. As before suggested, this point is held otherwise in some cases, but the rule of Williams v. Little , we think the correct one, and it is well sustained, not only by the sound views of the learned chief justice who delivered the opinion in that case, but by many authorities. Townsley v. Sumrall, 2 Pet. S. C. Rep. 170, 182; Dudley v. Littlefield, 8 Shepl. 418; Lewis v. Hodgdon, 5 Shepl. 267; Hascall v. Whitmore, 1 App. 102 ; Bush v. Peckard, 3 Har. 385 .

Of course, the rule does not apply to a note indorsed and transferred in pledge merely, or as collateral security, the general property remaining in the indorser; for in such ease the indorsee takes it like a chose in action not negotiable. He is merely trustee for the indorser. This cannot be regarded as an exception to the rule, for the payee does not part with his property in the note; but even in such a case, should the pledgee pass the note for a valuable consideration, before due, and without notice of the conditions upon which it was held, the innocent holder would be protected. Wheeler v. Guild, 20 Pick. 545 . But this note is free from even that objection, for it appears to have been indorsed in the ordinary course of business.

But we need not pursue the question further, for we have no doubt that the exceptions should be overruled, and that there should be, Judgment on the verdict.