Page:Federal Reporter, 1st Series, Volume 7.djvu/351

 LANCiSTBB V. COLLINS. 339 �of said Company, under an agreement for the payment of $3,000 in cash, and the execution by defendant of his note for $10,000, payable in 90 days; said shares to be deposited with plaintiff as collateral to the note, and with the privilege to defendant of renewal, and, within one year, to forfeit the cash paid and the shares of stock, and be discharged of all further obligation on the note. The notice of said right to elect a forfeiture was duly giveh by the defendant. Whether said shares of stock were duly forfeited to the company, or the same were surrendered by the plaintiff accordingly, pur- suant to defendant's notice, does not appear; but it is averred, in the answer, that the plaintiflf never bas tendered to defendant the said shares. �In this stateof the pleadings a motion for judgment on the answer is interposed. �The plaintiff was the fourth indorser, with full knowledge of all the facts etated, for he had, as president of the com- pany, negotiated the transaction, and presnmably the note had been negotiated, with his knowledge, in violation of the agreement. Said note being negotiable in form, innocent parties for vaine had a right to rely upon its tenor. Hence judgment was had npon it by an innocent holder for value against the defendant, plaintiff, and others. The plaintiff paid part of said judgment. What, then, under the aver- ments, is the right of the plaintiff as against this defendant. He induced the stock subscription and the giving of the note under the agreement made. After prior indorsements, to which the plaintiff added his indorsement, the note was ne- gotiated to the bank. He is not only charged with notice of the original equities, but had actual knowledge thereof, and the proceeds of said note, presumably, went to the company of which he was president, or to himself personally. As to third parties, his obligation as indorser was perfect; but, as betweenhim and the maker, what were his rights and duties? He knew that the note was to be renewed and finally can- celled on notice and the shares surrendered, which shares were deposited with him for the purpose. He was the pro- moter of the corporate scheme, and on the faith of the agree- ��� �