(83 Misc. Rep. 412) BASS v. GOLDSTEIN et al. (Supreme Court, Appellate Term, First Department. December 30, 1913.) TRIAL (8 59*)-Order oF PROOF-EXCLUSION OF EVIDENCE. Under Negotiable Instruments Law (Consol. Laws 1909, c. 38), § 98, providing that, when it is shown that the title of any person who has negotiated an instrument was defective, the burden is on the holder to prove that he is a holder in due course, where plaintiff, an indorsee in an action on notes, showed merely that he took the instruments regular on their face, and before maturity, and for an adequate consideration, and did not also show as required by section 91, that they were taken in the ordinary course of business and under circumstances not operating as constructive notice of infirmity, it was error to exclude defendant's evidence that the notes were originally delivered as a secret preference, merely because defendant had not introduced evidence to show that plaintiff was not an innocent holder for value. [Ed. Note. For other cases, see Trial, Cent. Dig. §§ 138–140, 142, 143, 145; Dec. Dig. § 59.*] Page, J., dissenting. Appeal from City Court of New York, Trial Term. Action by Paul Bass against Barnett Goldstein and another. From a judgment for plaintiff on directed verdict and from denial of new trial, the defendant named appeals. Reversed, and new trial ordered. Argued November term, 1913, before LEHMAN, PAGE, and WHITAKER, JJ. Eugene I. Gottlieb, of New York City, for appellant. LEHMAN, J. The plaintiff herein sues the defendant upon four promissory notes. The defendant sets up in his answer that the plaintiff is not a bona fide holder for value, and that the notes were originally delivered by him to a certain M. H. Mann as a secret preference under a composition agreement which the defendant made with his creditors. At the trial the plaintiff testified that he received the notes from an indorser before maturity, and that he paid the indorser adequate consideration for the notes. He also introduced in evidence the check by which he paid for the notes. Plaintiff was not cross-examined, and rested. The defendant then attempted to introduce evidence to establish his claim that the notes were originally delivered as a secret preference. The trial justice refused to admit this testimony until such time as the defendant had introduced testimony to show that plaintiff was not an innocent holder for value. The defendant claimed that, if he could show Mann's title to the notes was defective, then the burden would be on the plaintiff to show that he was a bona fide holder for value. The trial justice recognized the correctness of this proposition as an abstract proposition of law, but held, under the authority of Eisenberg v. Lefkowitz, 142 App. Div. 569, 127 N. Y. Supp. 595, that where the plaintiff, instead of merely introducing the notes in evidence and resting on the presumption that he is a bona fide holder. for value, successfully assumes the burden of proving affirmatively that For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes he is a bona fide holder for value, then all evidence of affirmative defenses available as between prior parties becomes immaterial, and that it lies in the discretion of the trial judge to require that the order of proof shall be that testimony to meet the plaintiff's proof that he is a holder for value shall be presented before testimony as to the affirmative defense is admitted. The Negotiable Instruments Law (Consol. Laws 1909, c. 38) § 98, provides that: "When it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims, acquired the title as a holder in due course." And under that section the maker of an instrument is entitled to show the defect in the title of a prior holder as against a present holder, unless the present holder has so borne the burden of proof that there can be no question of fact that he is a holder in due course. The order of proof prescribed by the trial justice might be proper if the testimony of the plaintiff that he was a bona fide holder were so complete and conclusive that, even if the defendant should prove that the title of a prior holder was defective, there could still be no question of fact left for the jury on the issue of whether plaintiff is a bona fide holder; but I find no such proof in this case. Upon that issue the plaintiff must show not only that he has taken the instrument before maturity, and for value, but also that he took it in good faith, and that he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it. Negotiable Instruments Law, § 91. In this case the plaintiff has shown only that he took the instruments regular on their face, and before maturity, and for an adequate consideration; but in my opinion this evidence still leaves open the question whether he took it in good faith and without notice. There is no doubt in my mind that the adequacy of the consideration is some evidence of the plaintiff's good faith, yet it is undoubtedly true that that evidence is not conclusive on the issue of good faith. If that evidence were supplemented by evidence showing that the notes were taken in the ordinary course of business, and under circumstances that do not operate as constructive notice of the infirmity, then and only then would the plaintiff conclusively establish that he was a holder for value, and the testimony offered as to the infirmity of the instrument become immaterial as to him. See Canajoharie National Bank v. Diefendorf, 123 N. Y. 191, 25 N. E. 402, 10 L. R. A. 676. In the case of Eisenberg v. Lefkowitz, supra, such testimony was presented by the plaintiff, and the decision in that case rests, in my opinion, on that testimony. In this case, however, the plaintiff fails to show such facts. There is no testimony that the plaintiff took the notes in the ordinary course of business; and no testimony as to his relations with the indorser, nor of the relations of the indorser to the original holder. No testimony even as to the defect was admitted, so that it is impossible to say that the plaintiff may not have taken the notes under circumstances which would at least raise a question of fact as to his bona fides. Judgment should therefore be reversed, and a new trial ordered, with costs to appellant to abide the event. WHITAKER, J., concurs. PAGE, J. (dissenting). I dissent. The plaintiff placed in evidence the notes upon which he is suing. They are regular upon their face. He further proved that he purchased them for an adequate consideration before maturity and placed in evidence the check with which he paid for them. The defendant then attempted to prove fraud between two prior parties to the instruments without offering a scintilla of evidence to connect it with the plaintiff, to charge him with notice of it, or to impeach his position as a holder in due course. The learned trial justice refused to receive the evidence until the defendant should first produce some evidence that the plaintiff had knowledge of the alleged fraud. Though it was within the power of the court to receive such evidence subject to being later connected with the plaintiff and subject to a motion to strike it out in case it was not so connected, I am of the opinion that the trial justice was within his discretion in refusing to receive it until at least a question of fact was raised as to the plaintiff's status as a bona fide holder. The plaintiff, in my opinion, fully sustained the burden placed upon him by section 98 of the Negotiable Instruments Law of proving that he acquired title as a holder in due course. It was not necessary for him to show that he had no knowledge of any specific fraud. While the ultimate burden of proof was upon him to establish his lack of knowledge of any fraud proved, the burden of going forward with the evidence of infirmity in the plaintiff's title was upon the defendant. The defendant refused. to produce any evidence to connect his alleged fraud with the plaintiff, and until such connection was established, or at least an issue of fact raised, the evidence was properly excluded. Eisenberg v. Lefkowitz, 142 App. Div. 569, 127 N. Y. Supp. 595. It is also significant that the fraud of which the defendant was attempting to give evidence was his own fraudulent transfer as a preference. Under these circumstances, I think the learned trial justice was justified in holding the defendant to the strict letter of the law and in not allowing him more latitude than he was entitled to. The judgment appealed from should be affirmed, with costs. TITUS v. SPENCER. (Supreme Court, Appellate Term, First Department. December 30, 1913.) 1. WITNESSES (§ 159*)-COMPETENCY-TRANSACTION WITH DECEDENT. Testimony of plaintiff, in an action for medical services rendered deceased, as to personal transactions with deceased is prohibited by Code Civ. Proc. § 829, as to competency of witnesses. [Ed. Note. For other cases, see Witnesses, Cent. Dig. §§ 629, 664, 666669, 671-682; Dec. Dig. § 159.*] *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 2. EVIDENCE (§ 376*)-BOOKS OF ACCOUNT-FOUNDATION. Account books of plaintiff, in an action for services rendered deceased, are inadmissible, in the absence of independent, competent evidence, showing the course of dealing between the parties and the rendering of some service by plaintiff to deceased. [Ed. Note.-For other cases, see Evidence, Cent. Dig. 88 1628-1646; Dec. Dig. § 376.*] 3. APPEAL AND ERROR (§ 837*) — REVIEW EVIDENCE. CONSIDERATION OF INCOMPETENT Inability of plaintiff, in an action for medical services rendered deceased, to produce competent proof is no ground for sustaining a judgment on insufficient and incompetent evidence. [Ed. Note. For other cases, see Appeal and Error, Cent. Dig. §§ 32623272, 3274-3277, 3289; Dec. Dig. § 837.*] Appeal from Municipal Court, Borough of Manhattan, First District. Action by Edward C. Titus against Lydia A. Spencer, executrix of Armon Spencer, deceased. From a judgment for plaintiff, defendant appeals. Reversed, and new trial ordered. Argued December term, 1913, before SEABURY, GUY, and BIJUR, JJ. William H. Darrow, of New York City, for appellant. Booth & Ellis, of New York City (Raymond C. Thompson, of New York City, of counsel), for respondent. SEABURY, J. The plaintiff, a practicing physician, sues the defendant, as executrix of the last will and testament of Armon Spencer, deceased, to recover $250 for medical services alleged to have been rendered the deceased from 1907 to 1912. [1] Over objection and exception of defendant, plaintiff was permitted to testify to personal transactions had with the deceased. This testimony was clearly prohibited by section 829 of the Code of Civil Procedure. That the testimony received was incompetent seems not to be seriously disputed on this appeal, and the theory of the respondent seems to be that this court should disregard the error committed in the reception of this evidence and affirm the judgment because of other proof offered by plaintiff. The difficulty in the way of adopting this suggestion is that, if we disregard the evidence erroneously received, the evidence contained in the record is insufficient to establish plaintiff's cause of action. [2] The account books of the plaintiff, which were received in evidence, were received without a proper foundation having been laid for their reception. The course of dealings between the parties and the rendering of some service by the plaintiff to deceased was not shown by independent, competent evidence. Levinson v. Katz, 75 Misc. Rep. 465, 133 N. Y. Supp. 439. [3] The real contention of the respondent seems to be that, because he is unable to produce competent proof, the court should sustain a judgment entered upon insufficient and illegal evidence. In Corless v. Carlisle, as Executor, 137 App. Div. 611, 122 N. Y. Supp. 407, Mr. *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes Justice Scott disposed of the same contention in the following language: "Of course the provisions of section 829 of the Code of Civil Procedure interpose obstacles to the proof of a claimant in such a case as this, but the inability to produce competent proof does not authorize the allowance of a claim upon insufficient proof, as was done in this case." Judgment reversed, and new trial ordered, with costs to the appellant to abide the event. All concur. (83 Misc. Rep. 432) EMSHEIMER v. THORNER et al. (Supreme Court, Appellate Term, First Department. December 30, 1913.) LANDLORD AND TENANT (§ 184*)-RENT-DEPOSIT BY TENANT. Where a lease required the lessee to deposit the amount of one month's rent with the lessor, to be applied as liquidated damages for the performance of the terms of the lease and at its expiration to be returned to the lessor, such sum was not the limit of the landlord's recovery in an action for the last two months' rent, being merely intended as security and to be paid to the lessor as the last month's rent; the deposit being wholly disproportionate to the landlord's actual damages, which were readily ascertainable. [Ed. Note. For other cases, see Landlord and Tenant, Cent. Dig. §§ 743-750; Dec. Dig. § 184.*] Appeal from Municipal Court, Borough of Manhattan, Ninth District. Action by Jacob Emsheimer, as executor of the estate of Julius Flato, deceased, against Max D. Thorner and another, doing business. under the firm name and style of Thorner Paper Box Manufacturing Company. From a judgment for defendants, plaintiff appeals. Reversed, and new trial ordered. Argued December term, 1913, before SEABURY, GUY, and BIJUR, JJ. Rose & Paskus, of New York City (Benjamin G. Paskus, of New York City, and Louis S. Ehrich, Jr., of New York City, of counsel), for appellant. Louis E. Goldstein, of Brooklyn (David T. Smith, of counsel), for respondents. SEABURY, J. Plaintiff sues to recover rent for the months of April and May, 1913, alleged to be due under the terms of a written lease. The only question in dispute relates to the construction of a clause contained in the lease. This clause provides as follows: "The lessee shall pay to the lessor at the time this agreement is entered into, the sum of eighty-three and 33/100 ($83.33) dollars (the receipt of which is hereby acknowledged) as one month's rent to be applied on this lease, as liquidated and stipulated damages for the faithful performance of the terms and covenants of this lease, and at the expiration of this lease, the said sum shall be returned to the lessor." *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes |