Kings County NyArchives Court.....Franc, Charles Vs. Henry Dickinson 1889
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Source: Reports Of Cases - New York
Written: 1889

Second Department, May Term, 1889.

CHARLES  B. FRANC, Respondent, v. HENRY H. DICKINSON, Appellant.

Promissory note — delivered for value with the understanding that it was to be 
paid only upon certain conditions — right of a bona fide purchaser to enforce 
payment thereof.

In an action, brought upon a promissory note signed by the defendant, made 
payable to his own order and indorsed by him, evidence was given upon the trial 
tending to show that the consideration of the note was a purchase of stock by 
the defendant from J. L. Sterner, under an agreement that the seller would hold 
the note until the stock was sold; that the note was to be paid out of the sale 
of the stock, and was not to be paid if the stock was not sold.

Held, that, under this arrangement, the note had a valid and legal inception, 
and as it was delivered thereunder, and the plaintiff was an innocent purchaser 
of this negotiable paper for value, he was entitled to recover.

That the fact that the defendant stated to the plaintiff, before the latter 
purchased the note, that he "supposed it was all right, but that it was 
distinctly understood that the note was not to be negotiated," did not 
constitute any defense thereto.

Appeal by the defendant from a judgment entered, upon the trial of the action at 
the Kings County Circuit, in the office of the clerk of the county of Kings on 
November 7, 1888.

The action was brought by the plaintiff upon a promissory note made by the 
defendant to his own order, and indorsed by him. The errors complained of were 
the exclusion of certain evidence offered upon the trial, and the refusal to 
submit the issues to the jury.

James McKeen, for the appellant.

Lockwood & Hill, for the respondent.

Barnard, P. J.:

The evidence shows no defense to the note, which is the basis of this action. It 
is given to a Mr. Sterner under the following circumstances: "Mr. Sterner said 
it was desirable that the stock should be controlled by a few persons; asked me 
to take fifty thousand shares to control the stock, and asked me to give him 
notes for the amount; he quoted the stock at fifteen and twenty cents a share, 
and said that by a few parties controlling it, it would bring the price up in 
value;" * * * "he assured me that he would hold the notes, keep the notes in his 
possession till such time as the stock was disposed of, * * * that when the 
stock was sold I should have credited to me if there was anything over and above 
this price, it should be credited to my account, and these notes would be paid 
after the sale of the shares of stock, and if the stock was not sold the notes 
were not to be paid."

This transaction is a purchase of stock by the defendant under an agreement that 
the seller could hold the notes until the stock was sold, and then out of the 
sales the notes were to be paid, and not to be paid if the stock was not sold. 
Under this arrangement the note had a valid legal inception and was delivered 
thereunder. Sterner sold the note to Wilde, and Wilde to plaintiff before it 
matured. The case does not rest alone upon the transaction. Wilde before he 
purchased the note went to the defendant and was told by him that "so far as 
giving the note to Sterner was concerned I supposed it was all right, but that 
it was distinctly under stood that the note was not to be negotiated." Wilde 
purchased on the faith of this statement. There was no denial of the note itself 
or its consideration, or of its delivery. It was not to be negotiated by the 
person to whom it was given. This agreement made no defense to the note if it 
was violated; and if there was a deeper meaning in it, the defendant should have 
stated it when he was asked about the note in such a way as to indicate a design 
to purchase it if it was a good note. The plaintiff was an innocent purchaser of 
negotiable paper for value, and was entitled to recover. (Stalker v. McDonald, 6 
Hill, 93; Seneca County Bank v. Neass, 5 Den., 329; Comstock v. Hier, 73 N. Y., 
269.)

The judgment should, therefore, be affirmed, with costs.

Dykman, J, concurred; Pratt, J., not sitting. 

Judgment and order denying new trial affirmed, with costs.

Additional Comments:
Reports of Cases Heard and Determined in the Supreme Court of the State of New 
York. Marcus T. Hun, Reporter. Volume LIX, 1889, HUN 52. Banks & Company, 
Albany, NY. 1901.

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