Robinson v. Smith

Baldwin, J. delivered the opinion of the Court—Cope, J. concurring.

This case has been argued very fully and learnedly. Several interesting questions are discussed, which we do not consider, in the view we have taken of the case, as necessary to a decision.

J. A. Sutter owed Bobinson a considerable sum of money, and gave Bobinson an order on one Fowler, Sutter’s agent, to turn .out to him, Bobinson, security for the debt, in the shape of such promissory notes belonging to Sutter, in Fowler’s hands—there being a large number—as Bobinson might select. Fowler assigned to Bobinson the note sued on, being a note for three thousand dollars, dated May 27, 1850, due 1st October, 1851. This note was given to secure the payment of part of the purchase money of certain lands sold, about this time, by Sutter to the makers, for ten thousand six hundred dollars. A deed for the land, with covenants of warranty, was executed by Sutter to these makers, and they executed a mortgage to Sutter to secure the purchase money. The mortgage contains this provision :

“ This conveyance is intended as a mortgage to secure the payment of the sum of ten thousand six hundred dollars, in four several notes, bearing even dates with these presents, in manner following, to wit: One thousand dollars on the 1st October, 1850; one thousand on the 1st of February, 1851; three thousand on [98]the 1st of October, 1851; five thousand six hundred on the 1st February, 1852. Provided, that previous to the dates of said payments, it shall have been decided by competent authority that the title to the said land is fully vested in the party of the second part, and the party of the first part are given full and peaceable possession.”

The assignment of the note was before its maturity.

When Eobinson took this note, he took it as collateral security for a pre-existing debt, and saw, and had notice of, this mortgage. The defense set up is, that it never has been declared by competent authority that Sutter had title; and, further, that the defendants were not put in peaceable possession. On the contrary, they assert that they were evicted by legal proceedings from a portion of this land.

This raises two questions: 1. Is commercial paper, indorsed before maturity, as collateral security for a pre-existing debt, subject to defenses of payor against payee ?