WOOD V. SEITZINGER.
843
WOOD V. SEITZINGER.-
(Oircuit Oourt, E. D. Pennsylvania. April 30, 1880.) NEGOTIABLE NO'l'E-TRANSFER OF AS COLLATEHAL SECUHITY FOR PREEXISTING DEBT-RIGHTS OF HOLDEH-FRAUD.-The holder of a negotiable note, who has taken it as a security for a pre-existing debt, is a holder for value, and is protected against any ec!uities subsisting between the original parties.
Case stated between R. D. Wood & Co., plaintiffs, and Fergus G. Farquhar and others, assignees in bankruptcy of Ruddell & Seitzinger, defendants, in which the following facts were agreed upon: That R. D. Wood & Co. were the holders of two promissory notes drawn by Jacob J. S. Seitzinger to the order of Ruddell & Seitzinger, and by the latter indorsedone dated June 23, 1876, for $4,000, at two months, and the other dated June 24, 1876, for $3,000, at two months-each duly protested and notice of dishonor given to the indofsers. That both of said notes were received by said R. D. Wood & Co. from one B. T. Boyer, under the following circumstances: R. D. Wood & Co., on June 2, 1876, delivered to said Boyer two of their own notes, for $4,000 each, Boyer agreeing to have the same discounted and to apply the proceeds to the redemption of certain accommodation notes of the same amount given to the Mill Creek Iron Company. Some time afterwards Boyer improperly used for his own purposes one of these notes, and R. D. Wood & Co. thereupon called upon him to return them the other note, which was still in his possession. In consideration, however, upon June 24, 1876, of the delivery by Boyer to said R. D. Wood & Co. of the two notes of Jacob J. S. Seitzinger, now claimed upon, and two other notes of other persons, said R. D. Wood & Co. permitted the said Boyer to retain and use for his own benefi t tbeir (R. D. Wood & Co's.) other notes, aforesaid, which said Boyer did, and R. D. Wood & 'Co. paid said last-mentioned note at maturity. oll'The opinion in this case was inadvertently pUblished on page 285 of this volume, before this report o! the case, prepared by Frank .1'. Prich_ ard, Esq., of the Philadelphia bar, came to hand.
844
lI'lIDEBAL RBPORTE&.
That the notes claimed upon were procured by said Boyer from Seitzinger upon June 24, 1876, by untrue representations made by Boyer to Seitzinger that R. D. Wood & Co. needed accommodation. That neither Seitzinger nor HuddeR & Seitzinger received any consideration therefor. That R. D. Wood & Co. had no knowledge or notice of this, and supposed the notes represented a debt due by the maker to Boyer. That if the court should be of opinion that the plaintiffs are entitled to recover, judgment is to be entered for the plain. tiffs for $351.49, being 5 per cent. on the amount of the said two notes, with interest, viz., $7,029.84, the said 5 per cent. being the dividend theretofore declared upon the allowed claims against the estate of Ruddell & Seitzinger, bankrupts; otherwise, judgment for defendants. Both parties reservel1 the right to take a writ of error to the judgment. Thomas Hart, Jr., for plaintiffs. E. G. Platt and Samuel Dickson, for defendants. PER CURIAM. Is the holder of a negotiable note, who hal taken it as a security for a pre-existing debt, a holder for value, and so protected against any equities subsisting between the original parties to it? This is the only question presented by this ease. If the rule established in Pennsylvania by the decisions of her highest court is to be followed,it must be answered in the negative. But these deoisions are only persuasive, as may be said also of the recent decision in this court by a late eminent judge, conformably to the state rule. The question involved is not one of local law, but of general commeroial jurisprudence; henoFl ihe duty of the courl is imperative to follow the guidance of general judicial opinion concerning it. As to the preponderating weight of this opinion there is scarcely ground for doubt. In perhaps & majority of the United States the law is settled that the taking of a note as collateral security for & pre-existing debt is .. holding for value. So it is held in England. See 2 C. M.& R. 180; Percival v. Frampton and Poi.rier v. Morris, 2 E. & B. 89. It is stated to be the better doctrine in 3 Kent's Com. "'81; in Story on Prom. Notes, § 195; in 1 Parsons' Prom. Notes, 218; and in Byles on Bills, by
I1{ BE MAY.
845
Sharswood, -28. It has the judicial sanction of Judge Story in Swift v. Tyson, 16 Pet. 1, whose adoption of it is dis. tinctly approved by the supreme court in McCarty v. Root, 21 How. 439. Such weight of authority must be regarded, in this court, as decisive, and judgment is t.herefore entered for the plaintiffs on the case stated. NOTE.-The ., recent decision in this court," referred to in the above opinion, is probably the case of Mack v. Bakf!J1', reported in Ii WeeklI Notes of Cases, 212.,
In re MAY, Bankrupt. (District Court, W. D. PennsyZfJania.
June 9,
FRA.UD--CONVEYANCE-MARRIED WOMAN.-A conveyance to a married woman in fraud of her husband's creditors is valid as to a subsequent creditor with notice. SAME - SAME - MARRIED W OMAN-TRUST.-Such conveyance will not create a trust in the wife for the benefit of her husband.
In Bankruptcy. Sur exceptions. to the report of the regis.. ter in distributing the proceeds from sale of real estate. Geo. K. Powell, for exceptions. Wm. M. Piatt &; Son, for report. ACHESON, D. J. This case comes before the court upon exceptions to the report of the register distributing the fund derived from the sale of the real estate of Thomas May, the bankrupt, which was sold under an order of this court divested of liens. The bankrupt acquired, by purchase, an equitable interest in this real estate about the year 1851, and there.. after, and until the saie by the assignee in bankruptcy, he and his wife resided op the land. His equitable title was sold at sheriff's sale in 1861. He purchased it back from the sheriff's vendees and caused them to convey the title to his wife, Marilla, in 1867. Having paid the balance of his original purchase money, he naused the legal title to be conyeyed by his vendor and the grantee of his vendor to his wife, 16·