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sold to the defendant a span of horses, harness and wagon
for the sum of $700, and the defendant executed and delivered



72 ^\



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206 LITCHPIELD COUNTY.

BobertB v. Hall.

to him therefor his two negotiable notes, payable to Yale or
bearer, dated August Ist, 1865, each for the sum of 9350,
with interest annually, one payable one year from date and
the other two years from date. As collateral security for the
payment of the notes the defendant placed in tlie hands of
Yale two other promissory notes, one for the sum of $400,
given by Joseph Doming and made payable to the defendant,
the otlier for $300, given by Edward Taintor, payable to the
defendant, and secured by a mortgage deed of real estate
from Taintor to the defendant.

At the time of the sale of the horses Yale fraudulently
represented them to be sound, and warranted them to be
sound, when in fact they were permanently lame and unsound,
which was known by Yale ; and on the next day the defend-
ant told Yale that the horses were lame and unsound, and
oflFered to return them and the harness and wagon, and de-
manded of Yale the notes and securities, but Yale refused to
take the property back and deliver up the notes and securities.

Afterwards, about the 1st of August, 1866, when the first
note became due, Yale collected of Joseph Deming the amount
of the note of $400 held as collateral security, and the value
of the same, adding the accumulated interest to the principal,
was $450. The amount due at that time on the first note,
together with interest for one year, was $371, and tlie money
received by Yale paid the first note and left a balance of $79
to be applied as part payment on the second note.

At the time of the sale the horses were worth $350, and
the harness and wagon $50, of which the defendant had the
benefit.

In the month of May, 1867, before the second note became
due, Yale transferred and assigned by delivery, and without
consideration except as hereinafter set forth, to the plaintiff, the
brother of the defendant's wife, the two first mentioned notes,
together with the note of Taintor and its mortgage security,
in trust for the following purposes, to wit, that the plaintiff
should collect whatever might be due on the second note and
pay over the same to his, Yale's, creditors, viz : to Lymaii
Dunning about $77 ; to H. J. Mead about $75 : to Daniel



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AUGUST TERM, 1870. 207

Roberts v. Hall.

and John Dean about $75 ; to Wm. Adam about $50 ; and
the balance, if any there should be, to Yale's wife, who was
then living separate from her husband and has since been
divorced from him. The plaintiff accepted the trust, and no-
tified the creditors of the same, and they ratified and confirmed
the transfer ; and the plaintiff is following their directions
in bringing and prosecuting the present suit against the* de-
fendant for the collection of the note.

At the time of the assignment and transfer of the notes to
the plaintiff he had not any knowledge of any failure in the
consideration of the notes, but took them in good faith for
the purposes stated. Yale at the time informed him that he
had collected the collateral $400 note of Deming and that the
amount was to be applied as part payment on the defendant's
two notes.

The auditor found, subject to the opinion of the court upon
the questions of law arising on the facts found, that the
plaintiflF was entitled to recover of the defendant the sum of
$347.48.

On the hearing on the report the defendant claimed that,
on the facts reported, the plaintiflF was not the honk fide
holder of the note for value paid, and that in his hands it was
subject to a deduction of the amount found by the auditor to
be justly due him on account of the breach of warranty ;
and that the amount being greater than the balance due on
the note, judgment should be rendered for the defendant.
Also that the assignment of the note by Yale to the plaintiff
was void as against the defendant, because it was not in writ-
ing for the benefit of all the creditors of Yale in proportion
to their respective claims, of which creditors the defendant
was one, being found to be such by the auditor.

The court (^Chranger^J,^^ overruled all the claims of the
defendant and rendered judgment for the plaintiflF for the
sum found due by the auditor and costs. Tlie defendant
brought the record before this court by a motion in error,
assigning as errors the adverse rulings of the court upon
the points above stated.

Cr. (7. Woodruff and Hitchcock^ for the plaintiflF in error.

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208 LITCHFIELD COUNTY.

Roberts v. Hall.

The plaintiff is the mere collecting agent of the payee ;
and in the plaintiflF's hands the note is subject to all the in-
firmities to which it would be subject in the hands of the
payee. In the hands of the payee it would be subject to the
claim of the defendant, growing out of the fraud by which it
was obtained from him, and the breach of the warranty ; and
it is subject to the same claims in the hands of the plaintiff.
Story on Prom. Notes, § 190 ; Denniston v. Bacon, 10 Johns^
198 ; Herrick v. Carman, id., 224 ; Gfrew v. Burditt, 9 Pick.,
266 ; Lawrence v. Stonington Bank, 6 Conn., 521 ; Buller v.
Sarrisony Cowp., 565, 568 ; Collins v. Martinj 1 Boss. & Pul.,
651 ; Barker v. Prentiss, 6 Mass., 430.

U. W. Seymour J for the defendant in error.

The note was transferred by Yale to Roberts before due,
and in good faith, for the benefit of certain creditors named,
and as security for their debts. There were several creditors,
and the note was more than large enough to pay them all.
Yale, instead of putting it into the hands of one of the cred-
itors, chose to put it into the hands of a third person for theur
benefit. He treated him as the agent of the creditors and
treated the putting into his hands of the note as giving the
creditors security for their claims. Roberts understood the
transaction in the same way. He accepted the notes as se-
curity for the claims of the creditors named, so far as he
could as between him and Yale. He notified the creditors
of the security Yale had put into his hands for their benefit,
and they " ratified and confirmed the transfer ;'' thus in the
fullest manner accepting him as their agent to hold the se-
curity, collect the same when due, and account to tliem,
accepting also the security in his hands ; by all which Roberts
came under obligations to the creditors to retain possession
of the note for them, and to collect it and account to them
for the proceeds. Yale had no more control over it ; his
delivery of it as security had been accepted, and that he un-
derstood that he relinquished all control over it is apparent
from the fact that he provided for the disposition of the resid-
uum after the creditors were paid. In short Roberts received



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AUGUST TERM, 1870. 209

Roberts v. Hall.

the note as trustjce for the creditors. The creditors accept
him and accept the note as security in bis hands, and to the
fullest extent confirm his appointment as their agent in the
matter. As trustee for the creditors Roberts could bring suit
in his own name for the benefit of his cestui que tfiists ; and
the creditor, treating the security as given directly to them,
could direct their agent to commence suit in his own name in
their behalf.

It is now generally held, in conformity to our Connecticut
decisions, that a party to whom a negotiable note is trans-
ferred before maturity, as security for an antecedent debt, is
a bond fide holder for value, and that such note is taken in.
" the regular course of business." Brwh v. Scribner^ 11
Conn., 388 ; Bridgeport City Baide v. Wdck, 29 id., 475 ;.
Swift V. Tyson, 16 Peters, 1 ; 1 Parsons' Notes & Bills, 256,.

The question then briefly is, whether Yale parted with the
note in the regular course of business. If the effect of the
tralisaction was to give the creditors security for an antecedent
debt, tliere will be no real difliculty in the case. It will of
course be admitted that the creditors took the note in good,
faith, if, as we contend, they did take it, for the contrary is
not claimed nor found, and the decisions now unite in holding
that knowledge of want of consideration, fraud, &c. must be
affirmatively proved as against a holder for value. 1 Parsons.
Notes & Bills, 268.

Carpenter, J. The facts of tliis case are briefly these.
The note in suit is one of two notes, given for the purchase
money of certain property sold to the defendant by one Yale.
The defendant was induced by fraud to give his notes for
$700, for property which was worth but $400. The day after
the sale the fraud was discovered by the defendant, who there-
upon offered to return the jwroperty to Yale, and demanded a
return of his notes, but Yale refused to accept the property
and return the notes. The otlier note, and $79 of tliis note,
were paid to Yale from the avails of certain collaterals, which
payments exceeded the value of the property. This note,
before due, was transferred to the plaintiff, in trust for the

Vol. XXXVII. — 27



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210 LITCHFIELD COUNTY.

Roberts r. Hall.

payment of certain creditors named, with a balance payable
to the wife of Yale, who was then linng apart from her hus-
band, and who has since been divorced. The creditors
assented to the trust, and directed the plaintiff to commence
and prosecute this suit. The note is more than sufficient to
pay the creditors named, so that if collected there will be a
balance to be paid to the wife. The plaintiff had no knowl-
edge of the fraud, and took the note in good faith for the
purposes stated. There was no consideration for the transfer
except the claims of the creditors. Whether the payee was
or was not, at the time of the transfer of the note, insolvent,
does not appear.

Upon these facts the Superior Court rendered judgment for
the plaintiff. The court therefore must have decided that
the plaintiff took the note in good faith, for a valuable con-
sideration, and in the regular course of business.

The case presents two questions.

1. Is the plaintiff to be regarded as a trustee for the
creditors, or the agent of the payee ? If the latter, it is con-
ceded that the plaintiff is not entitled to recover ; if the for-
mer, then the plaintiff insists upon his right to recover and
the defendant denies it.

We think the plaintiff, to a certain extent, is a trustee for
the creditors. The auditor has clearly found that the note
was transferred to the plaintiff in trust for the creditors and
Mrs. Yale, and that the creditors ratified and confirmed the
transfer, and that the plaintiff is following their directions in
bringing and prosecuting this action.

In respect however to that portion of the note which was
payable to Mrs. Yale, we are clearly of the opinion that he
was the agent of the payee, and was in no sense a trustee
for creditors. The ordinary relations between husband and
and wife will be presumed to have existed in this case until
the contrary appears. It is only found that they were living
apart, and have since been divorced. No indebtedness from
him to her is found ; and, so far as appears, the money, as
soon as paid to her, would have been subject to his control.
The legal effect of the transaction then, so far as it relates to



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AUGUST TERM, 1870. 211

Boberts v. Hall.

this question, is the same that it would have been if the bal-
ance had been payable to him. To the extent of that balance,
therefore, the judgment is clearly erroneous, and it must be
reversed.

2. Was this note taken in the regular course of business ?

In the discussion of this question we shall not controvert
the legal proposition that a negotiable note transferred before
due in the regular course of business to a creditor, in payment
of, or as security for, a pre-existing debt, is taken in good
faith and for a valuable consideration, and is collectible in
the hands of the creditor, notwithstanding any equities exist-
ing as between the original parties thereto. That question
has been correctly settled in this state, and elsewhere, and
we have no disposition to disturb it. Brush v. Scribner^ 11
Conn., 388 ; Bridgeport City Bank v. Welchy 29 Conn., 479.

Nor do we place our decision upon the ^ound that this
note was obtained by fraud. We suppose the general rule to
be that fraud is not available as a defense in cases of this
character. To this rule however there are exceptions. Fos-
ter V. Machinon^ Law Bep., 4 C. P., 704 ; Nance v. Lary^ 5
Ala., 370.

But it is not material to our present purpose to enquire
whether this case falls within those exceptions. Our object
is rather to consider whether the rule of law which exempts
commercial paper from legal defences applies to a case like
this. We think it is pertinent to that inquiry to call attention
to the fact that this note was obtained by fraud, and that the
contract was not only voidable but was actually avoided by
the maker immediately upon discovering the fraud. We need
not say that it is the duty of the court to protect the maker,
and prevent the consummation of the fraud, if it can be done
consistently with the rules of law.

The only difficulty that we can perceive is, in preserving
unimpaired the rule of law giving immunity to negotiable
paper and the principles upon which it rests. Tliat rule
does not protect paper which was not taken in the usual
course of business. That phrase, as Mr. Parsons in his work
on Notes and Bills, Vol. 1, p. 256, justly remarks, is open to



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212 LrraHWELD COUNTr.

III! I ■ ■ I ■

some objecti<m, for ti^e reason that it does not clearly indicate
what are the legitimate vses of negotiable paper. The qoes*
tion is variously expressed in the boc^s :— *^^ Was it in the
com'se of trade ?" " Was it in the ordinary and regular
course of business V^ *^ Was it a transaction which the law
views as according to the usage of n>erchants ?"

A more definite idea of its meaning may be bad, however,
by stating the question more specifically. Isnegotiiable paper
ordinarily used in the way and manner in which this was
used ? Would a bvisiness man ci ordinary intelligence and
capacity receive commercial paper, when offered f<H* the pur-
poses for which this was transferred, as money, and upon its
credit part with his property ? Or would he at once suspect .
the integrity of the paper itself, and the credit and standing
of tlie party ofifering it ? A correct answer to these questions
must settle conclusively ihe mercantile character of this
transaction.

The fundamental principle of the law, a|^icable to nego-
tiable paper, is, that it is the representative of money, and
may be used in all mercantile transactions as its substitute.
But when used for any purpose outside the usual and ordinary
course of business, it ceases to carry with it the privileges
and immunities with which the law clothes negotiable paper.
The tendency of the law, in respect to the legitimate uses of
negotiable paper, is tiius referred to in 1 Parsons on Kotes &
Bills, p. 257 : — ^'^And therefore we are disposed to believe
that the law of this country is tending towards the rule, that
whether negotiable paper is sold, or discounted, or indorsed
over to pay a new debt, or for a new purchase, or to secure a
new debt, or an old debt, or to pay an old debt, it becomes in
each case the property of the holder, and carries with it all
the privileges of negotiable paper, unless there be something
in the particular transaction which is equivalent to fraud,
actual or constructive." It will be noticed that this language
is comprehensive, and was doubtless intended to embrace
every instance in which such paper may be used and still
retain its privileges. But it is not sufficiently broad to cover
this case, as we shall presently see.



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AUOUOT T1»M, 18T0. tU



Roberts i^. HaU.



The doctrine that oommerdol paper may be properly used
as jieeurity for a pre-existing debt has been disputed, and
there are conflicting decisions upon that point ; but it is now
pretty generally establifehed. The profession, however, did
not readily acquiesce in the doctrine, inasmuch as there is an
apparent hardship in allowing the holder of such paper, who
parted with nothing upon its credit, to recover of one who,
as against other parties, has a good defense. The reason
upon which this doctrine rests, and without which the law
would undoubtedly have been determined otherwise, is, that
a very considerable portion of the negotiable paper made in
business is used in this way. We can easily understand,
therefore, that among business men, accustomed to dc&l in
tills kind of paper, the receiving or offering it as security for
an old debt is not in itself calculated to excite suspicion, for
the simple reason that it is according to usage ; and if ac-
cording to usage, presumptively at least, such use facilitates
trade, and should receive the sanction of the courts unless
there is some real and substantial objection to it.

But in the case before us no such usage appears. On tlie
contrary the purpose for which the paper was used is excep-
tional and unusual. We apprehend that cases like this are
rarely to be met with in business circles. Let us examine it
more carefully. A man has a piece of negotiable paper with
which he wishes to pay or secure certain debts. If there is
but one debt he can transfer it directly to the creditor, and
the law protects the transaction. That is according to the
usual course of business. But if he transfers to a friend, to
hold till due, and then collect it, and with its avails pay the
creditor, that is unusual and suspicious upon its face, and re-
quires explanation. Unless some good reason can be shown
for such a proceeding, the law ought not to protect it. But
it is said that here were several creditors, which, it is claimed,
sufficiently explains the fact that the security was effected
through the intervention of a trustee. Let us test this posi-
tion. If the paper is right and free from defects, why not sell
it in market or get it discounted, and with its avails pay the
debts at once ? Or, if the debts are not to be paid until the



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214 LITCHFIELD COUNTY.

Roberts v. HaU.

paper is due and collected, why not retain it in his own hands
until due, and if necessary sue and collect in his own name ?
Such a course would be natural and usual. But what honest
reason can be suggested why it should be transferred to a
third party, who has no interest in the matter, to be sued in
his name ? Such a course is unusual, and not in the course
of trade. The transaction at once suggests the idea that
there is some equity in favor of the maker inherent in the
note itself, and which can be made available as against the
payee, and which the payee is seeking to avoid.

But tliere is another circumstance appearing in the case
which makes the unusual character of the transaction still
more apparent. The creditors are informed of the transfer,
they ratify and confirm it, and direct the commencement and
prosecution of this suit. What occasion is there for all this,
except to make it appear that t^ie plaintifi' is a trustee for the
creditors ? And why is it desirable that it should appear
that he is a trustee for the creditors, unless for the very pur-
pose of shutting out this defense ? If Yale was in fact solvent.
Ibis proceeding was extraordinary and inexplicable upon any
theory consistent with honesty and fair dealing. At least
no sufficient reason for it appears in tlie case. If he was in-
solvent, another and insurmountable difficulty is at once
encountered. The conveyance, not being in conformity to
the provisions of our insolvent law, and operating to pay the
creditors named in full, thereby giving them a preference,
contravenes the policy of that law, and is therefore void as
against creditors. Surely it will not be contended that such
a conveyance should receive the sanction of this court as a
legitimate mercantile transaction.

The fact that a part of this money was payable to the wife
of Yale is worthy of notice also in this branch of the case.
To that extent, as we have already seen, the plaintiff was the
agent of Yale. We have no occasion to say that this circum-
stance alone renders this conveyance void at common law.
But if there was a secret trust in favor of Yale, and the
operation of the conveyance should be to defraud creditors, it
certainly would be void as against creditors. A fraudulent



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AUGUST TERM, 1870. . 215

Roberts v. Hall.

conyejance can in no sense be said to be in the nsual course
of business. But be this as it may, the fact that Yale him-
self is still interested in this note, either in his own right or
in right of his wife, should suggest to all parties concerned
an inquiry as to the reason and occasion of this conveyance.

We are not referred to any case directly in point, and are
not aware that any exists ; but we believe the views above
expressed are in harmony with reason and good sense, and
not in conflict with any adjudged case. In BiUings v. CoUim,
44 Maine, 271, it was held that the assignment of negotiable
paper, by operation of a bankrupt or insolvent law, was not
in the i*egular course of trade, and that the assignee could
only acquire the rights of the insolvent. The opinion of the
court is brief, simply announcing the result without adducing
any argument in its support ; but we have no reason to doubt
the correctness of the decision. So far as it goes it supports
our position in the present case.

For these reasons, after careful consideration, we have
come to the conclusion that this note was not taken in the
regular course of business, and that the judgment of the
court below upon that ground was erroneous, and must be
reversed.

In this opinion the other judges concurred ; except Gran-
ger, J., who tried the case below, and Seymour, J., who had
been consulted in the case when at the bar, and who did not
sit.



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216 LTTCHPIELD COUNTY.



Dodd o. Northrop.



% ^ Isaac Dodix vi. Isaac A* Nobthbop.

eo 428

The statute (Gen. Stat, tit. 1, sec. 141 J provides that " the party, his attomej,
or anj person interested, shall not write, draw up, or dictate any deposition,''
lie. The magistrate who took a deiKMition in behalf of the defendant was the
law partner of the defendant's counsel, and was himself counsel for the defend-
ant in another case, and was employed to draw up the notice for taking the
deposition ; but the partnership with the defendant's counsel had been ixx»nt-
Ij formed and did not embrace suits preriovsly brought, of whieh this waa
one. Hdd that the deposilsoa oi^ht to be excluded.

The object of the statute is to secure the utmost fiumess and impardalitj in
the taking of depositions, and it should be liberally construed to effect that
object.

AssuifPSiT, tried to tlie juiy in the Superior Court in
Litchfield County, before Phdp9^ J.

On the trial the defendant offered the deposition <^ os»
Polly A. Cox, to the admission of which the plaintiff objected
on the ground that it was taken before and drawn by William
Burke, a justice of the peace, and then the law partner of
Mr. Kni^p, who was at that tune the attorney for the defend-
ant in the {uresent cause sjid acting counsel for him on the
trial ; which was conceded to be true.

Upon this question the court found the facts to be, that the
notice to take the dq)08ition wai drawn by Burke, but signed
by the defendant personally ; that at the time of the taking
of the deposition Burke wa^ tbe law partner of Bjiapp and
attorney for the defendant in another action pending in the
Superior Court in Fairfield County ; that the copartnership
was formed several months subsequently to the commence-
ment of the present cause, and, by the terms of the contract
between them, each copartner was to have no interest in the
fees which the other should thereafter receive in cases in
which they were respectively employed prior to the formation
of the copartnership. It further appeared by the deposition,
that the plaintiff and his attorney attended at the taking of
the deposition and cross-examined the witness. Upon these
facts the court sustained the objection and ezduded the depo-
sition.



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AUGUST TERM, 1870. 217

Dodd V, Northrop.

A verdict vas rendered in favor of the plaintiff, and the



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