McSpedon v. Troy City Bank.

made for consideration in the hands of Samuel & Co., I think the case is without merit.

The court below held that the transaction was, in substance, an exchange of the notes of the plaintiffs for the agreement of Samuel & Co. to pay them the weekly sum of four hundred dollars, each being the consideration for the other. If this be correct, the notes given were not accommodation but business paper, made for consideration; and Samuel & Co., on receiving them, were purchasers and holders for value, and at liberty to deal with the paper, in all respects, as if given for the price of goods sold, or money actually advanced. Indeed, it is not denied that this would be the character of the paper if the transaction is to be regarded as an exchange of the notes for the agreement of Samuel & Co. to pay the plaintiffs the weekly sum of four hundred dollars. Dowe v. Schutt, 2 Den. 621; Cameron v. Chappell, 24 Wend. 94; Davis v. McCready, 17 N. Y. 230.

I am of the opinion that that was in substance and legal effect the nature of the arrangement. The plaintiffs executed and delivered to Samuel & Co., the payees, six notes, for different sums, and payable respectively at from two to seven months, the payees agreeing, in writing, to give the makers four hundred dollars per week in payment of them; the makers to take up the notes as they matured. The agreement of Samuel & Co, to pay the plaintiffs four hundred dollars per week was unquestionably a good and valid consideration for the execution and delivery of the six notes provided for; and, if Samuel & Co. had performed their agreement, the plaintiffs could not have contested their liability upon the notes. The weekly payment of four hundred dollars provided for, if made, would qual the aggregate sum of all the notes; the plaintiffs having the advantage of the earlier payments. In effect, the transaction was just the same as if Samuel & Co. had given to the plaintiffs their notes for four hundred dollars, payable weekly during seven months, for those given by the plaintiffs in pursuance of the agreement.

This being the nature of the arrangement, Samuel & Co. on receiving the notes were purchasers and holders for value; the notes were business paper in their hands, to be dealt with as

McSpedon v. Troy City Bank.

they pleased; and any subsequent holder acquiring their title would not be subject to any defense growing out of their default happening afterward.

A further point to be noticed is, were the defendants bona fide holders of the note in suit upon a good consideration in law. I think they were. On June 22, 1857, Samuel & Co transferred the note to them as collateral security for an anteceden t indebtedness, which is still unpaid and exceeds the amount of the note. At the time of the transfer there was no

default by Samuel & Co., in the performance of their contract with the plaintiffs, no four hundred dollars had become due, and that which first matured was paid by them. When, then, the note was transferred there was no infirmity in the title of Samuel & Co., and no equities existing which could have been set up against them by the plaintiffs, if the notes had then been due. In this condition the defendants succeeded to the right and title of Samuel & Co., and their right is not subject to, and cannot be affected by, any equities which subsequently arose between the makers and payees. Their title could only, in any event, be affected by equities existing between the original parties at the time of the transfer. Furniss v. Gilchrist, 1 Sand 53. If at the time of the transfer of the note to the defendants it had been due, Samuel & Co., the payees, could have maintained an action upon it against the plaintiffs. By such transfer upon a good consideration, as between Samuel & Co. and the defendants, the defendants succeeded to their rights, although they advanced no new consideration; and no equities subsequently arising between the original parties could impair the rights of the defendants.

These views render unnecessary the discussion of the question whether the money was so paid to the defendants as to enable the plaintiffs to recover it back.

The judgment should be affirmed.

CAMPBELL, J. [after stating the facts].-Were the notes issued under the arrangement merely accommodation notes, or did they constitute what is called in commercial language business paper? It seems to me there is hardly room for doubt, either upon principle or authority. The makers of the notes were

McSpedon v. Troy City Bank.

to take them up at maturity. They were to pay them, at all events, in coin, if the holders at maturity should require it. The parties receiving the notes agreed to pay therefor in a specific article, namely, Troy City Bank bills. These bills might or might not pass current as money when the notes should mature. They might be an article of purchase and sale by the brokers in the city of New York, where the contract was made. A specified amount of these bills was to be given in payment of the notes. There was no provision to indemnify the makers of the notes beyond the contract to furnish the bank bills in payment-no provision to indemnify in all events; and that is the very essence of the contract, where a note is made by one person for the sole benefit of another. The principal element of an accommodation note was thus wanting. The point is in effect decided in Cameron v. Chappell, 24 Wend. 94; Dowe v. Schutt, 2 Den. 621, and in Davis v. McCready, 17 N. Y. 230, 232. If the note in controversy was in legal effect business paper, as I think clearly it was, then it was good and valid in the hands of Samuel & Co., and they could transfer it to the defendant in payment of indebtedness, or as collateral security for the payment of such indebtedness. In point of fact there had been no breach of the contract on the part of Samuel & Co. when they transferred the note. But if the note was valid business paper in their hands, I do not see that this made any difference in legal effect. If the note had remained with Samuel & Co. and matured in their hands, doubtless the plaintiffs would have had their set-off or counter-claim. If the foregoing views are correct, then the defendant might have enforced the collection of the note against the plaintiffs; and the question whether the bank, where the note was made payable, paid it by mistake out of the funds of plaintiffs, is of no moment.

I think the case has been correctly disposed of in the court below, and the judgment should be affirmed.

All the judges concurred.

Judgment affirmed, with costs.

Mallory v. Tioga R. R. Co.

MALLORY v. THE TIOGA RAILROAD CO.

March, 1867.

A foreign corporation cannot avail themselves of the statute of limitations as a defense to an action in the courts of this State.

A letter from A. to B. & Co., and an indorsement thereon by B., relating in direct terms to the letter, bearing the same date, and purporting to be a material and substantial portion of it,-Held, to constitute together a contract (the indorsement being carried into the evidence by the intro duction of the letter), and that the terms of it could not be contradicted or varied by parol proof.

If, where there is evidence tending to prove a fact, the judge assume in his charge that the fact was proved, a party objecting to such assump tion must request to have the question submitted to the jury; if he do not, he will be deemed to have acquiesced in it.

Without such request, an exception to the ruling of the court only brings up the question of law based on such assumption of fact.

William M. Mallory sued the defendants to recover compensation for the transportation of certain property, appertaining to the construction of the defendants' road, in the year 1852, and it was alleged that these services were performed for and at the request of the defendants. Issue having been joined, the case came on for trial before the Steuben circuit in February, 1860, and judgment was rendered for the plaintiff. Upon the trial the following features were disclosed:

From 1846 to 1852, the plaintiff was in possession of and operating a railroad between Blossburg, in Pennsylvania, and Corning, New York. The services for which a recovery was sought, and which consisted of the transportation of iron rails, chairs, spikes, and cross ties, to be used in rebuilding the road of the defendant, were alleged to have been performed in the summer of 1852. It was not denied that such services had been performed by the plaintiff; but it was claimed on the part of the defense that they had been rendered for certain contractors, and the defendants were not liable therefor. ruled on the trial that the plaintiff was entitled to recover only for the transportation and distribution of the ties, and the questions relating to this were submitted to the jury.

It was

Mallory v. Tioga R. R. Co.

The evidence whether the ties were carried for the defendants or other parties was conflicting; the testimony of the plaintiff showing that the service was done at the request of Ryerss, Colket and Guernsey, who were president, director and general agent respectively of the defendants' road, and the latter testifying that they had made no arrangement with the plaintiff for performing the work in question.

It also appeared that the plaintiff, prior to April 7, 1852, had operated the defendants' road under written contracts, which were on that day terminated. On that day a new arrangement was entered into, by the terms of which one Bostwick was at liberty to run the defendants' road until notice given to surrender the same, for the sum of twenty-five dollars per day. It was also stipulated that, when the defendants should terminate the lease by notice, the road should be used thereafter for transporting their railroad iron, chairs and spikes; the defendants to pay for, or load and unload the supplies at their own expense, and that the plaintiff, by way of compensation for such transportation, should have the use of the road, without cost, while it was so being used in carrying and distributing the iron.

From the evidence it appeared that the plaintiff did, during the summer of 1852, perform service in transporting the ties, &c., over the road of the defendants, and the agreement of April 7, 1852, was terminated June 14, 1852, by a notice to Bostwick and Mallory to deliver possession of the road to the defendants.

The questions relative to the amount of service performed by the plaintiff in the transportation of ties, which he had not been paid for, and whether such service was performed for the defendant or other parties, were submitted to the jury, who found for the plaintiff.

The supreme court, at general term, affirmed this judgment, whereupon defendants appealed to this court.

John H. Reynolds, for defendants, appellants;-Cited, 2 R. S. 296, § 23; Code, § 95; Sickles v. Mather, 20 Wend. 72; Chamberlin v. Cuyler, 9 Id. 125; Edmonstone v. Thomson, 15 Id. 554; Green v. Ames, 14 N. Y. (4 Kern.) 225.