61 U.S. 343 (1858), Goodman v. Simonds

Citation:61 U.S. 343, 15 L.Ed. 934
Party Name:TIMOTHY S. GOODMAN, PLAINTIFF IN ERROR, v. JOHN SIMONDS.
Case Date:April 26, 1858
Court:United States Supreme Court
 
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61 U.S. 343 (1858)

15 L.Ed. 934

TIMOTHY S. GOODMAN, PLAINTIFF IN ERROR,

v.

JOHN SIMONDS.

United States Supreme Court.

April 26, 1858

THIS case was brought up, by writ of error, from the Circuit Court of the United States for the district of Missouri.

Goodman was a citizen of Ohio, and Simonds of Missouri.

The suit was brought by Goodman, upon the following bill of exchange:

EXCHANGE FOR $5,000.

CINCINNATI, O., Sept. 12, 1847.

Four months after date of this, my first of exchange, (second unpaid,) pay to the order of John Sigerson five thousand dollars, value received, and charge the same to account.

Your ob't serv't,

WALLACE SIGERSON.

Mr. John Simonds, St. Louis, Mo.

Upon the face of the bill was written, 'Accepted, John Simonds;' and endorsed upon the same was the following:

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'Pay to T. S. Goodman & Co., or order; John Sigerson.' 'Pay W. Nesbit & Co., or order; T. S. Goodman & Co.' 'Pay Timothy S. Goodman, without recourse to W. Nesbit & Co.'

Two of these parties, viz: John Sigerson and Simonds, lived in St. Louis, and the other two, viz: Goodman and Wallace Sigerson, in Cincinnati. The bill of exchange was sent from St. Louis to Wallace Sigerson, at Cincinnati, endorsed by John Sigerson, and accepted by Simonds, but without date, and without the signature of the drawer.

The narrative of the transactions which led to the possession of the bill by Goodman is given in the opinion of the court.

Upon the trial, there were several rulings of the court, but the one upon which the case came up to this court was the following, viz:

The defendant asked the court to give the following instruction to the jury:

'The defendant moves the court to instruct: If the jury find, from the evidence in the cause, that Wallace Sigerson never had any interest in the bill sued on, nor in the proceeds thereof, nor any authority to use the same for his own benefit, and did dispose of the same for his own benefit to T. S. Goodman & Co., and the plaintiff was at the time one of said firm, and when the bill was so transferred to said firm such facts and circumstances were known to the said Goodman as caused him to suspect, or that would have caused one of ordinary prudence to suspect, that said Wallace had no interest in the bill, and no authority to use the same for his own benefit.'

To the giving of which by the court the plaintiff objected, and the court gave to the jury that instruction amended so as to read as follows:

Same instruction, as amended by the court:

'And by ordinary diligence he could have ascertained that said Wallace Sigerson had no interest in said bill, and no authority to use the same for his own benefit, then they will find for the defendant.'

To the giving of which, as thus amended, the plaintiff objected, and excepted then and there to the giving of the same to the jury.

Under this instruction, the jury found a verdict for the defendant, and the plaintiff brought the case up to this court.

COUNSEL

It was argued by Mr. Pugh for the plaintiff in error, and by Mr. Geyer for the defendant.

Mr. Pugh made the following points:

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I. The title of a holder of negotiable paper, acquired before it was due, for valuable consideration, is not affected by the fraud of a prior party, in the absence of actual notice, without proof of bad faith on the part of the holder.

1. This was the original rule declared in Engand. (Miller v. Race, 1 Bur. R., 452; Price v. Neal, 3 Bur. R., 1355; S. C., 1 Blackstone, 390; Grant v. Vaughan, 3 Bur. R., 1516; S. C., 1 Blackstone, 485; Anonymous, 1 Ld. Raymond, 738; Peacock v. Rhodes, 2 Douglas, 633; Lawson v. Weston, 4 Espinasse, 56; Morris v. Lee, 2 Raymond, 1396; S. C., 1 Strange, 629.)

2. This rule was afterwards varied, and it was declared that the title of the holder of negotiable paper would not be protected, where it had been acquired under circumstances which ought to have excited the suspicions of a prudent and careful man. (Gill v. Cubitt, 3 Barn. and Cress., 466; Down v. Halling, 4 Barn. and Cress., 330; Snow v. Peacock, 2 Car. and Payne, 215; Beckwith v. Corral, 2 Car. and Payne, 261; Snow v. Leathem, 2 Car. and Payne, 314; Slater v. West, 3 Car. and Payne, 325; Strange v. Wigney, 6 Bing., 677.)

3. The rule was again modified, and it was held that the want of care, necessary to impeach the title of the holder of negotiable paper, must have been gross. (Crook v. Jadis, 5 Barn. and Adolphus, 909; Backhouse v. Harrison, 5 Barn. and Adolphus, 1098.)

4. Finally, the original rule was restored, and it was decided that his title would be good, unless the holder was guilty of bad faith. Lord Denman said, 'We have shaken off the last remnant of the contrary doctrine.' (Goodman v. Harvey, 4 Adolphus and Ellis, 870; Uther v. Rich, 10 Adolphus and Ellis, 784; Arbouinv. Anderson, 1 Adolphus and Ellis, N. S., 498; Stephens v. Foster, 1 Cromp., Mees., and Roscoe, 849; Palmer v. Richards, 1 Eng. Law and Eq. R., 529; Marstonv. Allen, 8 Mees. and Wels., 494; Raphael v. Bank of England, 33 Eng. Law and Eq. R., 276.)

5. The rule is understood in this country according to the latest cases in England. (Story on Bills of Exchange, 194, 416; Hull v. Wilson, 16 Barbour S. C. R., 550; Saltmarsh v. Tuthill, 13 Ala. R., 390.)

Mr. Geyer made the following points:

The decision of the Circuit Court in overruling the motion of the plaintiff for a new trial not being the subject of review on a writ of error, the only questions for the consideration of this court arise on the instructions given to the jury; and these, the defendant submits, were quite as favorable to the plaintiff as the law would allow.

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I. It having been established, by the evidence at the trial, that Wallace Sigerson, the drawer, had no interest in the bill sued on, and no authority to use, transfer, or otherwise dispose of it for his own benefit; that he transferred it to the plaintiff fraudulently, in violation of a special trust, the burden devolved upon him to prove that he acquired the bill in good faith, for a valuable consideration, in the usual course of trade; failing in that, he was not entitled to recover. (Baily v. Bidwell, 13 Mees. and W., 73; Harvey v. Towers, 6 Welsby, H. and G., p. 656; Monroe v. Cooper, 5 Pick., 412; Bissell v. Morgan, 11 Cushing, 198; Sanford v. Norton, 14 Vermont R., 228; Bertrand v. Barkman, 13 Ark., 150: Thompson v. Armstrong, 7 Ala. R., 256; Snyder v. Riley, 6 Barr. Pa. R., 664; McKeeson v. Stansbury, 3 Ohio N. S., 156; Ware v. Boydell, 3 M. and S., 148; Beltzhoover v. Blackstock, 3 Watts, 26; Vallet v. Parker, 6 Wend., 615; Catlin v. Hanson, 1 Duer N. Y. R., 322.)

II. The bill was not transferred absolutely and unconditionally, in the usual course of trade, for a valuable consideration. It was delivered to the plaintiff, and received by him, merely as collateral security for an antecedent debt, the general property remaining in the drawer, not in the plaintiff; there was no money, goods, or credit given, or liability incurred; no security or valuable right relinquished by the plaintiff, nor any new and distinct consideration of any kind for the transfer of the bill. Therefore the plaintiff was not a bona fide holder for value as against the defendant, so as to exclude the defences which he had against the drawer. (Jenness v. Bean, 10 N. H. R., 266; Williams v. Little, 11 ib., 66; Coddington v. Bay, 20 Johns. R., 637; Wardell v. Howell, 9 Wend., 170; Clark v. Eli, 2 Sandf. Ch. R., 166; Whitev. Springfield Bank, 1 Barb. S. C. R., 225; Stalker v. McDonald, 6 Hill N. Y. R., 93; Petrie v. Clark, 11 Sergt. and R., 388; Jackson v. Pollock, 2 Miles Pa. R., 362; Evans v. Smith, 4 Binney, 366; Napier v. Elam, 6 Yerg., 108; Nichol et al. v. Bate, 10 Yerg., 429; Kimbro v. Lyttle, 417; Van Wyck v. Norvell, 2 Humph. R., 192; Prentice v. Weisinger et al., 2 Gratton, 262; Bank of Mobile v. Hall, 6 Ala. R., 639; Andrews v. Brothers & McCoy, 8 ib., 920; Bertrand v. Barkman, 13 Ark. R., 150; Anderson v. Long, 1 Mo. R., 365; Goodman v. Simonds, 19 Mo. R., 106.)

III. It was fully proved, and found by the jury, that the drawer (Sigerson) never had any interest in the bill or its proceeds, and no authority to dispose of it for his own benefit; that, at the time of the transfer, facts and circumstances were known to the plaintiff which caused him to suspect, or would have caused a person of ordinary prudence to suspect, the defect of the title and authority of the drawer, and that by ordinary

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diligence he might have ascertained that the drawer had no interest in the bill, or authority to use it for his own benefit. The plaintiff must therefore be held to have taken the bill subject to all the defences which the defendant had against the drawer. (Peacock v. Rhodes, Douglass, 633; Down v. Halling, 4 B. and C., 330; 2 Car. and P., 11; Snow v. Peacock, 3 Bing., 406; 2 C. and P., 215; Slater v. West, 3 Car. and P., 325; Solomans v. Bank of England, 13 East, 135; Gill v. Cubitt, 4 Barn. and C., 466; De La Chaumette v. Bank of England, 9 Barn. and C., 208; Haynes v. Foster, 4th Tyrw., 65; Hatch v. Searles, 31 Eng. L. and E. R., 219; Ayer v. Hutchins, 4 Mass., 370; Cone v. Baldwin, 12 Pick., 545; Hall v. Hale, 8 Con., 336; Beltzhoover v. Blackstock, 3 Watts, 25; McKeesonv. Stansbury, 3 Ohio N. S.; Russell v. Haddock, 3 Gil. Ills., 233; Nicholson v. Patton, 13 La. R., 216; Lapice v. Clifton, 17 ib., 152; L'Anfear v. Blosman, 1 La. An. R., 156; La. State Bank v. N. O. Nav. Co., 3 La. An., 294; Fowler v. Brantly, 14 Pet., 318; Andrews v. Pond, 13 Pet., 79.)

Mr. Geyer then proceeded to review the cases and elementary authorities in an elaborate...

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