Adair v. Lenox

• Decision Date: 19 December 1887
• Citation: 16 P. 182,15 Or. 489
• Parties: ADAIR v. LENOX.
• Court: Oregon Supreme Court

16 P. 182

15 Or. 489

ADAIR v. LENOX.

Supreme Court of Oregon

December 19, 1887

Appeal from circuit court, Douglas county.

Plaintiff B.A. Owens Adair, brought suit in the circuit court of Douglas county against David Lenox, on a promissory note. Judgment for plaintiff. Defendant, Lenox, appeals to the supreme court. The facts appear in the opinion.

W.R Willis, for respondent.

J.C Fullerton and J.W. Hamilton, for appellant.

THAYER J.

This appeal comes here from a judgment of the circuit court for the county of Douglas. The respondent brought an action in that court against the appellant upon a promissory note for $324.16 executed by the appellant January 2, 1886, payable to the order of Caro & Brothers, at Roseburg, Douglas county Oregon, one day after date, with interest at 10 per cent. per annum, and indorsed by them on the sixth day of July, 1886, to one W.F. Owens. That said Owens, on the twenty-third day of July, 1886, indorsed the note to the respondent. The defense interposed by the appellant was payment made by him to said W.F. Owens on the twenty-fourth day of August, 1886. The case was tried by jury, who rendered a verdict for the respondent for the amount of the note and interest, and upon which the judgment appealed from was entered.

The main question in the case is, whether the payment to W.F. Owens, conceding the transaction between appellant and Owens, would have amounted to payment, had the latter at the time been the holder of the note. The respondent testified, as a witness in the case, that on the twenty-third day of July, 1886, she signed a note for $5,000, as security for said W.F. Owens, and that he got the money on it, and gave her the note in suit, with other notes, as security for anything she might have to pay on the $5,000 note; that she afterwards had to pay the latter note; that the first time she notified the appellant that she owned the note in suit, or gave him any notice regarding it, was the eight day of November, 1886. Simon Caro, one of the firm of Caro & Bro., testified that he indorsed the note in suit to W.F. Owens for collection, which was the only interest said Owens had in it. The appellant testified that he paid the note sued on to W.F. Owens in full, by hauling him his crop of wheat for the year 1886; that he finished hauling about the latter part of August of that year; that the reason that he did not take the note up immediately, or at least demand it, was because Owens told him he had the note from the Caros, and he paid it, not doubting but that it was all right to pay it; that he had no notice that respondent claimed any interest in it, until along in November, 1886, when her attorney wrote to him about it. The court instructed the jury to the effect that any payment made upon the note to W.F Owens, after he transferred it to respondent, was no defense, and refused to instruct them that, in case the transfer was made to respondent after it became due, the appellant was entitled to notice of it; and that if, before notice of the transfer, the appellant paid the amount of the note in payment thereof to W.F. Owens, it was a defense to the action. To the instruction given, and refusal to give the other, respectively, the appellant's counsel saved an exception; and which presents the matter to be determined.

The whole question resolves itself into this: If the payee of a negotiable promissory note indorses it to a third person after it becomes due, and the latter subsequently indorses it, for value, to the holder, will a payment by the maker to such third person, intended as a payment of the note, made after his indorsement to the holder, but without notice thereof, constitute a valid payment of the note? The counsel for the appellant contends that it will, and he relies, I think, entirely upon the provision contained in section 28, Civil Code of this state, which reads as follows "In the case of an assignment of a thing in action, the action by the assignee shall be without prejudice to any set-off or other defense existing at the time of, or before notice of, the assignment; but this section shall not apply to a negotiable promissory note or bill of exchange transferred in good faith and upon good consideration before due." The counsel has cited a number of cases from the different states in which a similar provision or statute has been adopted, which have construed it as applicable to promissory notes transferred after due. That construction has been adopted in the cases referred to by construing the negative words, "but this section shall not apply to a negotiable promissory note," etc., as implying the affirmative, that a negotiable promissory note, or a bill of exchange transferred after due, stands upon the same footing of an assignment of a thing in action; and in an action by the holder, shall subject the same to any set-off, etc., "existing before notice of the transfer." But I am not...