Tanners National Bank of Catskill v. Lacs

Kellogg, J. (dissenting):

The defendants chose to put their obligation in the form of a negotiable promissory note, and apparently assumed the liability arising from that form of obligation. The note was written by filling in a blank form. In the lower left-hand corner, opposite and a little below the line of the signature, are the words “ No.” and Due,” with a blank space about an inch between. This blank‘was intended for the convenience of the payee, where he might indicate the number which the note bears-in the series of notes held by him and the particular- date upon which it fell due. It' was intended and is used for that purpose only, the note being complete without it. The defendants requested Exl to exchange notes with them, as they desired to borrow money at their bank and could not get it upon their own notes, but could have Exl’s note discounted as business paper. Defendants’ note was to be held by Exl as security that the note given to the defendants would be paid. Defendants said their note was not to be discounted, and Exl said he did not care about that, he would hold it. The defendants’ agent also sxaid to Exl, You are no good, Exl, and if Lacs sues on your note he would never realize on his judgment, whereas his note is perfectly good.” The defendants’ agent then wrote the note and the memorandum in the left-hand corner, and delivered it to Exl. It does not appear that Exl’s attention was called to the words in the left-hand corner, or that he knew that the note received had any such memorandum *96upon it. The memorandum was made by putting a character after the word “ Ho.” which might be considered a “t ”or a capital “ A,” and crowding into the space after it and before the word “Due.” what might be read, if standing alone, as “ fanferxalle.” The writing is cramped and does not appear to be the same, of in' the saíne hand, as the-.body of the nóte. The letters written in between the words “Hod’ and “Due” were, no doubt, meant to make the sentence read, “ Hot transferrahle. Due.” It might be read “ Ho. A fanferxalle. Due.” We may assume that the words were intendedtoread, “Hot Transferrahle. Due.” Whether the-memorandum took tlie form it did through the carelessness of the agent, or whether -it was done to escape the observation of Ex-1, or why .it was put'.in such ambiguous form, does not appear. It certainly deceived the plaintiff.' Gordon, who acquired the nóte from Exl and transferred it to the plaintiff, could not read English; but before he purchased-the note he submitted it to a business man, a friend of his, to ascertain whether it was good -paper. The friend' took the note and, after inquiry as to the responsibility of the parties, returned it with the statement that it was good commercial paper, and Gordon acquired it without, any knowledge or suspicion of the existence of the memorandum in the corner. Hone of the parties discovered the memorandum at all, and from the photograph in evidence it is fair to assume that the note could be'negotiated .at almost any bank without conveying notice that it is not transferable.

When the defendants elected to issue their note in negotiable form and thén put upon the paper, in -an unusual, unexpected place, a notice that' it was not transferable, they took the chance whether what they intended as a notice would actually give notice. The position, the words and the character of the notice are theirs.' If the..plaintiff saw the. words, or they were s'o written, that in the ordinary course of business it should have seen them, it may Well be denied the position of a holder in due Course. If the notice in the corner of the note was-'so obscurely and blindly given that it would not be seen by an ordinary purchaser., and was not seen by the plaintiff, we may well say that it was a purchaser in due course. It was easy to restrict the negotiation of this note by a proper memorandum, or tó make the form of the note non-negotiable. When the defendants issued their negotiable promissory note, they could only *97restrict or prevent its transfer by notice that the note was not what it seemed. The question is, did they give such notice to the plaintiff ? If they did, the plaintiff cannot recover; if they did not give such notice, but only attempted in a careless, unbusiness-lilte manner to give it- and brought no knowledge or information to the plaintiff upon the subject, they and not the plaintiff should suffer.

The question in the case, therefore, is whether the memorandum was such that it conveyed to the indorsees of the note notice of its actual character, or whether the memorandum was of such a character that the plaintiff’s failure to receive the notice was' such an oact of gross carelessness as ought to prevent its recovery.

The judgment should be reversed upon the law and the facts and a new trial granted, with costs to the appellant to abide the event.

Sewell, J., concurred.

Judgment affirmed, with costs.