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1860.

V.

SPAULDING MILWAUKEE &

HOR. R. R. Co.

the plaintiffs, directed the clerk of the circuit court of Dodge June Term, county to enter, discontinuing the suit commenced in that court for the foreclosure of the mortgage above named, at the costs of the plaintiffs therein. They also show that a copy of this order was served upon the appellants, with a notice that the suit had been discontinued at the plaintiffs' costs, and the counsel for the respondents offer, in their notice, to pay the appellants all of their costs in said action, upon presentation of a taxed bill thereof; also to appear, with or without formal notice, before any taxing officer, at such time as the appellants might designate, for the purpose of attending to the taxation of the same; and further, they stipulate in the notice that the order of the circuit court, appointing the receiver in the action, and which had been. taken to this court on appeal, might be rescinded and cancelled at the costs of the respondents; and they offered to pay the costs of the appeal, upon presentation of a taxed bill thereof.

Under these circumstances, it is very clear to our minds that we ought not to grant an injunction to stay proceedings under this appeal. The respondents have endeavored to discontinue the foreclosure suit in the Dodge circuit court, and have stipulated that the order made in that suit, appointing a receiver (which has been appealed to this court), might be rescinded and annulled. Now, whether the suit was absolutely out of court, when the respondents' counsel entered the order of discontinuance with the clerk of the Dodge circuit court, and gave notice thereof, with an agreement to pay all costs to the adverse party, upon presentation of a taxed bill thereof, so that the Dodge circuit court had no further jurisdiction over the same, and could make no order therein. for the protection of the rights of all parties, and such as the justice and equity of the case might seem to require, is a question not necessary to be decided at the present time. It is said to be a matter of course, to permit a complainant to dismiss his bill at any time before interlocutory or final decree has been made in the cause, upon payment of costs. Cummins vs. Bennett, 8 Paige, 79; Saxton vs. Stowell, 11 id., 526; Simpson vs. Brewster, 9 id., 245; James vs. Delavan, 7 VOL. XII-39

V.

June Term, Wend., 511; Smith vs. White, 7 Hill, 520; The Seaboard 1860. & R. R. R. Co., vs. Ward, 18 Barb. (S. C.), 595; Averill vs. SPAULDING Patterson, 10 How. Pr. R., 85; Schenck vs. Fancher & Long, MILWAUKEE & 14 id., 95. Whether there is any thing in the circumstances HOR. K. R. Co. of this case which would take it out of the operation of this general rule, it becomes immaterial to inquire. The counsel for the appellants contends that there is. He insists that ordinarily a case in the attitude of, and like the one at bar, could not be absolutely dismissed from the jurisdiction of the circuit court, by merely entering an order of discontinuance with the clerk in vacation, and offering to pay the costs of the adverse party, but that there must be some action of the court itself, dismissing the cause, and that the case is still pending in the circuit court of Dodge county. It may be conceded that this position is correct, that the Dodge cir cuit court still retains jurisdiction of the foreclosure suit, notwithstanding the efforts of the plaintiffs to discontinue it, and that that court can make any proper order therein which may be necessary to protect the rights of all parties, and yet that this application for a stay of proceedings should be denied. It does not follow that because the Dodge circuit court may have jurisdiction of the foreclosure case for certain purposes, or because the appeal from the order appointing the receiver may still be pending in this court, that we should enjoin parties from interfering with the subject matter of the appeal, namely, the railroad and its property and franchises, in other cases. Certainly the circuit court would not permit the plaintiffs further to prosecute the foreclosure suit, in that court, after discontinuing it by entering the order with the clerk. The court would not treat them as being in court and out of court at the same time. It would not suffer its proccedings thus to be trifled with, even if parties were disposed thus to back and fill, and to vacillate in the conduct of a suit. So that the respondents can claim no further benefit or advantage from the foreclosure suit in the circuit court. They must, at all events, go out of court upon such terms as the circuit court may see fit to impose, if they are not out already. The appeal in this court would fall, as a matter of course, with the principal cause. And such being the case,

we think the rule requiring the respondents to show cause why an injunction should not issue herein, must be discharged, with costs.

June Term, 1860.

BOND et al.

V.

WILTSE et al.

BOND and others vs. WILTSE and another.

A and others delivered to the treasurer of a railroad company their note for $5,000, payable to his order, at six months after date, upon an express agreement with said company, that the note should be negotiated and its proceeds applied solely to the purchase of iron for said road, in whose early completion they were interested; but before the maturity of said note, the company borrowed $2,000 from B, (no part of which was used in the purchase of iron), and indorsed and pledged to him said note for $5,000, as security for its repayment. The loan not being repaid when it fell due, B gave notice that he would sell said note of $5,000, at public sale, for the purpose of raising the amount of said loan: Held, that B, to the extent of the loan made by him on the credit of said note, without notice of facts impeaching its validity, was a bona fide holder for value, and that a complaint by the makers of said note, stating the facts and praying that B might be enjoined from selling said note, and that as to any liability of the makers thereof to B, it might be declared void, was bad, on demurrer.

APPEAL from the Circuit Court for Kenosha County. The case is sufficiently stated in the opinion of the court. The co-defendant of Wiltse was one Tymeson, whose name was signed, as auctioneer, to the advertisement by Wiltse of the sale of the note for $5,000, pledged to him as security for the loan of $2,000.

Mat. II. Carpenter & Gridley, for appellants:

1. Wiltse, having taken the note of the respondents, without notice of the purposes for which it was made, as a security for the payment of an indebtedness not pre-existent, but contracted at the time of such taking, is a bona fide holder for value. Bay vs. Coddington, 20 John. R., 637; Bank of Salina vs. Babcock, 21 Wend., 499; Bank of Sandusky vs. Scoville, 24 id., 115; Mohawk Bank vs. Corey, 1 Hill, 513; Stalker vs. McDonald, 6 id., 93: Montross vs. Clark, 2 Sandf. S. C., 115; White vs. Springfield Bank, 3 id., 222; Young vs. Lee, 2 Kern., 551; White vs. Springfield Bank, 1 Barb., 225; Seneca

June Term, 1860.

BOND et al.

V.

Co. Bk. vs. Neass, 5 Denio, 329; Affd., 3 Coms., 442; Swift vs. Tyson, 16 Peters, 1, 22; Tarbell vs. Sturtevant, 26 Vt., 513; Scott vs. Betts, Hill & Denio, 363; Agawam Bk. vs. Strever, 18 WILTSE et al. N. Y., 506. 2. The note of respondents was delivered to the railroad company "to be negotiated and sold," without restrictions as to the manner of negotiation, or the amount of money to be raised thereon, and the note having effected the substantial purpose for which it was designed, the obtain ing of money by the R. R. Co., the subsequent diversion of the money cannot effect the validity of the note in the hands of Wiltse. Powell vs. Waters, 17 John., 176; Bank of Chenango vs. Hyde, 4 Cow., 567; Bank of Rutland vs. Buck, 5 Wend, 66; Wardell vs. Howell, 9 id., 170.

November 19.

O. S. & F. H. Head, for respondents:

1. In a suit against the railroad company, the original holder of the note, the respondents would have been entitled to the relief demanded in the complaint. 2 Story's Eq. Jur., §§ 10, 11; Reed vs. Bank of Newburgh, 1 Paige, 215. 2. Wiltse, having taken the note merely as collateral security, did not acquire the rights of a bona fide purchaser, before maturity, for a valuable consideration. Bay vs. Coddington, 5 John. Ch. R., 54, and 20 id., 637; Stalker vs. McDonald, 6 Hill, 93; Payne vs. Cutler, 13 Wend, 606-7; Rosa vs. Brotherton, 10 Wend., 85; Williams vs. Little, 11 N. H., 66; Clark vs. Ely, 2 Sandf. Ch. R., 166; Kirkpatrick vs. Muirhead, 16 Penn. St., 123; Bertrand vs. Barkman, 8 Eng. (Ark.), 150; Jenness vs. Bean, 10 N. H., 266; Prentice vs. Zane, 2 Gratt., 262; and Bramhall vs. Beckett, 31 Me., 205.

By the Court, COLE, J. A demurrer was filed to the complaint in this case, on the ground that the same did not state facts sufficient to constitute a cause of action. The circuit court held the complaint good, and from the order overruling the demurrer this appeal is brought. We are, however, of the opinion that the demurrer was well taken, and that it should have been sustained.

Without attempting to give the complaint at length, we will say that, according to our understanding of it, it disclo ses the following facts: On or about the 5th day of May,

V.

1857, the respondents made and delivered to one Z. G. Sim- June Term, 1860. mons, the treasurer of the Kenosha & Rockford Railroad Company, their joint and several promissory note, for five BOND et al. thousand dollars, payable to the order of said Simmons, six WILTSE et al. months after date. It is alleged that the note was made and delivered with the express and positive understanding between the makers and the company, that the note was to be negotiated, and the proceeds thereof applied to the purchase of iron to aid in the construction of the road. About the 14th of May, 1857, the railroad company borrowed two thousand dollars of the appellant Wiltse, and gave therefor the promissory note of the company, signed by the treasurer thereof, and pledged the note made by the respondents, as security for the payment of the two thousand dollar note of the company; and all this was done without the knowledge or consent of the makers. As the note of the company was not paid according to its terms, Wiltse gave notice, through a newspaper of Kenosha, that he would proceed and sell the five thousand dollar note, indorsed and pledged to him, for the purpose of raising money to pay his debt. And the respondents ask that Wiltse be enjoined from selling the note thus advertised, or disposing of it in any manner, until the further order of the court, and that the note, so far as concerns any liability of any or either of them to the holder, Wiltse, may be adjudged null and void.

In the elaborate opinion delivered by Mr. Justice STORY, in the case of Swift vs. Tyson, 16 Peters, 1, he seemed to affirm the doctrine that the holder of a negotiable instrument, who had taken it bona fide for a valuable consideration, in the ordinary course of business, before due, and without notice of facts which impeached its validity, as between the antecedent parties, had a title unaffected by those facts, and could recover on the instrument, although it might be without any legal validity as between the antecedent parties; and that where the note is received in payment of a pre-existing debt, or is taken as collateral security for a precedent debt, the person receiving it should be treated as a bona fide holder for value, within the meaning of this rule. And this doctrine he subsequently lays down in his work on Promissory Notes,

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