Holme v. Karsper

• Decision Date: 03 April 1813
• Parties: HOLME v. KARSPER.
• Court: Pennsylvania Supreme Court

5 Binn. 469

HOLME v. KARSPER.

Supreme Court of Pennsylvania.

April 3, 1813

IN ERROR.

If the indorser of a promissory note, proves that it was put into circulation by the drawer fraudulently, he may call upon the holder to shew what consideration he gave for it, and how it came into his hands. And the indorser is entitled to give such proof, in order to require such explanation from the holder.

BY a bill of exceptions signed by the Judges of the District Court of the city and county of Philadelphia, it appeared that this action was brought upon a promissory note drawn by one Delabourdine, on the 12th day of December 1809, and payable seventy-five days after date without defalcation, to Holme, the defendant below, who was sued as indorser.

Before the trial, the attorney of Holme gave notice to the plaintiff, that proof would be required from him, of the consideration he gave for the note, and of the circumstances under which it came to his hands. At the trial, it appeared that the plaintiff possessed the note before it became due and had it protested for nonpayment. The defendant's counsel, then, to entitle him to use the previous notice offered to prove that the note was given by the drawer to Holme, the payee, for goods sold and delivered; that it was never put into circulation by the payee, his name having been written upon it, merely for the purpose of collection in bank, where it was deposited by him; that in consequence of an arrangement between the drawer and the payee, the note was taken out of bank by the latter, settled for, and sent to the drawer to be cancelled; and that the payee, having neglected to strike his name off the note, sent immediately to have it done, and was told by the drawer, that the note had been destroyed. The Court, however, refused to admit the evidence, or to permit the defendant to call upon the plaintiff agreeably to the notice.

Biddle and Dallas for the plaintiff in error. It is a proposition universally true, that where a promissory note has been feloniously or fraudulently put into circulation, the holder upon the proof of such fact, is bound to shew that he obtained it bona fide, and for a good consideration. The circumstance that the note was not due when the holder received it, is nothing in this point of view. If due bona fides and consideration would not help him; it would have been his duty to inquire. Tinson v Francis ^[a]. If not due, then they will help him, if he can shew them; but after the note is impeached, it is for him to shew that his good faith, and the consideration paid, prevent the consequences from extending to him. The clause of defalcation is also unimportant. It prevents a set off by the payee against the drawer; or in other words, it applies to notes of hand in this state, the general commercial principle, and makes them negotiable, whereas before they were assignable only. But this does not give immunity to a rogue, a thief, or a finder. It leaves the note as to such a case upon the footing of the general law, by which it is perfectly well settled, that the evidence offered below, was proper. In Grant v. Vaughan ^[b], the case of a lost note, one of the questions left by Lord Mansfield to the jury, was whether the plaintiff came to the possession of the note, fairly and bona fide. The general result of the authorities is stated by Peake, who says, " where a bill has been stolen from the real owner, or given on a bad consideration, it will be incumbent on the holder to prove that he received it bona fide for a valuable consideration." Peake's Ev. 220; and he is supported by Kyd 206, by Duncan v. Scott ^[c], and by Rees v. Marquis of Headfort, ^[d], in point to the present case.

Phillips for the defendant in error. The note having been passed to the plaintiff below, before it became due, it was prima facie a sufficient title to demand payment; and it was incumbent on the indorser to impeach it directly, by shewing fraud or want of consideration on the part of the holder. He was not entitled to call upon the holder for proof of the contrary. In one...