[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 8 This action was brought to recover the amount claimed to be due upon a promissory note made by the defendant whereby he promised to pay to H.D. Henderson or bearer one thousand dollars with interest six months after date at the Spraker National Bank at Canajoharie, and by said Henderson transferred for value to the plaintiff within a few days after its execution.
The principal defense relied upon to defeat a recovery was that the plaintiff was not a bona fide holder of the note.
The trial court directed a verdict for the plaintiff, thus disposing of this question as one of law, and refused a request by the defendant to submit it to the jury.
The evidence given upon the part of the defendant was sufficient to warrant the conclusion that the note had been obtained from him through a fraud practiced upon him by Henderson and Van Valkenburgh and the burden was thus cast upon the plaintiff to show that he was a bona fide purchaser. (Vosburgh v. Diefendorf, 119 N.Y. 357, and cases cited.)
This burden the plaintiff met by his own evidence as to the circumstances attending the purchase and his knowledge of the party from whom he obtained it, and the credibility of his testimony was for the jury to determine.
That question was decided in Canajoharie Natl. Bank v.Diefendorf (123 N.Y. 191). That case was upon a note obtained by the same parties from this defendant and grew out of the same transaction as the note in suit and was transferred to the bank by Henderson.
The question of the good faith of the bank's purchase depended entirely upon the evidence of its cashier, and it was held that his relation to the bank and his interest in the transaction brought him within the rule that the credibility of a *Page 10 party or an interested witness is a question for the jury to determine. No distinction in this respect is apparent between that case and the one under consideration. The court, therefore, erred in refusing to submit the case to the jury and the judgment must be reversed.
It was also claimed that the note was void for usury in that before it had any legal inception, it was transferred to the plaintiff at a discount much greater than the legal interest.
The question of usury was not raised at the trial in the Canajoharie bank case, and there was no ruling which presented it for consideration in this court, and we cannot, therefore, assume that the court decided it, although it was incidently referred to in the opinion.
We think that defense is not available in this case.
The substance of the defendant's evidence was that Henderson and Van Valkenburgh represented that they, with one Ackley, were engaged in business as partners; that they could buy out Ackley for $8,000; and by these and other representations induced defendant to agree to become a member of the firm in Ackley's place and to execute and deliver his notes to them for $8,000.
That the notes were to be held by the firm and were not to be sold or disposed of and were to be paid out of the proceeds of the business.
Although these representations were false, it cannot be said that the notes had no legal inception.
They were intended to represent an obligation.
The rule which renders void a note in the hands of a third party, who has purchased at a discount greater that the legal interest applies to instruments that have no inception between the parties or which are not intended to be available until discounted. This note in suit does not fall within that rule.
The judgment must be reversed and a new trial granted, costs to abide the event.
All concur, except POTTER, J., not sitting.
Judgment reversed. *Page 11