Alfred Williams & Co., Inc. v. Wiltz

• Decision Date: 06 June 1927
• Citation: 137 A. 759,106 Conn. 147
• Parties: ALFRED WILLIAMS & CO., INC., v. WILTZ.
• Court: Connecticut Supreme Court

137 A. 759

106 Conn. 147

ALFRED WILLIAMS & CO., INC., v. WILTZ.

Supreme Court of Errors of Connecticut.

June 6, 1927

Appeal from City Court of New Haven; Robert L. Munger, Special Judge.

Action by Alfred Williams & Co., Inc., as the indorsee of a trade acceptance against the acceptor, Frank Wiltz, to recover the amount thereof, brought to the city court of New Haven, and tried to the jury before Munger, Acting Judge; verdict for the defendant, which the court set aside as against the evidence, from which action the defendant appealed. Error and cause remanded, with direction to render judgment for the defendant on the verdict.

Robert J. Woodruff and Harry A. Cohen, both of New Haven, for appellant.

Nathan Sachs, of New Haven, for appellee.

Argued before WHEELER, C.J., and MALTBIE, HAINES, HINMAN, and BANKS JJ.

BANKS J.

Plaintiff's cause of action is based upon a trade acceptance in the sum of $200, drawn by the Otis Oil Burner Corporation upon the defendant under date of September 1, 1925, and accepted by him on that date, payable 60 days after date. It was transferred to the plaintiff by indorsement without recourse on September 12, 1925. The answer alleges that the execution of the trade acceptance was procured by false and fraudulent representations made by the Otis Oil Burner Corporation in connection with a certain contract entered into between such corporation and the defendant, and that the plaintiff took the paper with knowledge of that fact. Upon the trial counsel for the plaintiff admitted that the instrument was procured by the fraudulent representations of the Otis Oil Burner Corporation, and the case was submitted to the jury upon the issue of whether the plaintiff was the holder of the instrument in due course. As relevant to that issue the jury could reasonably have found the following facts: The plaintiff was a so-called " finance company," incorporated about May 1, 1925. The Otis Oil Burner Company was incorporated June 22, 1925. In this transaction the plaintiff was represented by its president, Alexander Koenig. Koenig first met a representative of the Otis Company in August, 1925, who at that time offered to sell him certain trade acceptances, including that of the defendant, which was undated when signed by him, but bears the date of September 1, 1925. Koenig purchased for the plaintiff from the Otis Company trade acceptances of the face value of about $30,000 during August and September, 1925; the first purchase being made August 19, 1925, and the last on September 17, 1925. The acceptance in suit was one of the fifth lot of acceptances purchased by the plaintiff from the Otis Company on September 12, 1925, being acceptances of a face value of $4,000, for which plaintiff paid $2,679.26. The last lot of acceptances purchased on September 17, 1925, was of a face value of $10,000, for which plaintiff paid $5,000. A few months later plaintiff put the Otis Company into bankruptcy. Plaintiff, at the time of the purchase of this acceptance, had received a report from a mercantile agency upon the Otis Company to the effect that it maintained a small office which was locked upon the occasion of calls that there was no stock of materials in evidence, and that investigation elicited no information as to amount of capital involved or extent of financial responsibility. Plaintiff had also received reports from a mercantile agency, a trade authority, and a bank as to the financial responsibility of the defendant, which were to the effect that he was doing a good business, carried a satisfactory bank balance, and was good for his credit requirements. So far as appeared plaintiff made no inquiry as to the circumstances under which these trade acceptances were given to the Otis Company.

The plaintiff, as the holder, is deemed prima facie to be a holder in due course, but, it being conceded that the instrument came to it from one having a defective title, the burden under the statute was upon the plaintiff to prove that it was a holder in due course. General Statutes, § 4417. This provision abrogates, so far forth, the general rule that it is for him who pleads facts to prove them. Parsons v. Utica Cement Mfg. Co., 80 Conn. 58, 60, 66 A. 1024.

That plaintiff became the holder of this paper before maturity was not disputed, but it was contended by defendant that the evidence disclosed facts and circumstances in connection with the purchase which justified a finding that the plaintiff was chargeable with notice of the infirmity in the instrument because of its knowledge of such facts that its action in taking the instrument amounted to bad faith. General Statutes, § 4414. Chief among these was the admitted fact that this instrument, with others of like character, was bought by plaintiff at a substantial discount from...