Angus v. Downs

• Decision Date: 13 April 1915
• Docket Number: 12135.
• Citation: 147 P. 630,85 Wash. 75
• Parties: ANGUS v. DOWNS.
• Court: Washington Supreme Court

147 P. 630

85 Wash. 75

ANGUS v. DOWNS.

No. 12135.

Supreme Court of Washington

April 13, 1915

Department 2. Appeal from Superior Court, Spokane County; J. Stanley Webster, Judge.

Action by Grace Angus against George A. Downs. Judgment on a directed verdict for plaintiff, and defendant appeals. Affirmed.

Mulligan & Bardsley, of Spokane, for appellant.

George W. Shaefer, of Spokane, for respondent.

FULLERTON J.

This is an action brought by the respondent, Grace Angus, against the appellant, George A. Downs, to recover upon a promissory note. In her complaint the respondent alleged that the note had been assigned to her for value, prior to maturity, and that she was a holder thereof in due course. The appellant interposed two defenses: First, that the note was stolen from his possession prior to delivery; and, second, that the respondent was not a holder of the note in due course. At the trial which was being had before the court and a jury, the respondent introduced testimony tending to establish the allegations of her complaint. The appellant thereupon offered to show that the note was stolen from his possession after its execution and that there had been in fact no delivery of the note by him or on his behalf, but made no offer to combat the evidence of the respondent to the effect that she was a holder in due course. On objection by the respondent, the proffered evidence was excluded, and the jury instructed to return a verdict for the respondent for the amount due upon the note. A verdict was so returned and judgment subsequently entered thereon. This appeal is prosecuted from the judgment so entered.

The appellant's assignments of error are based upon the ruling of the court excluding the proffered evidence. He first contends that a holder of commercial paper, although received by him in due course, cannot recover thereon against a maker from whose possession it has been taken before delivery by theft. His learned counsel argue that the question is not controlled by the Negotiable Instruments Act and they cite many cases decided under the common-law rules applicable to the law merchant which sustain the principle that recovery cannot be had under such circumstances. There are, however, many cases maintaining the contrary rule, and, were we to conclude that the act cited is without application to the question, it would be an interesting inquiry to ascertain with which side lay the better reason. But we think the act itself controlling. Section 16 of the original act (section 3407, Rem. & Bal. Code) provides:

'Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. As between immediate parties, and as regards a remote party other than a holder in due course, the delivery, in order to be effectual, must be made either by or under the authority of the party making drawing, accepting or indorsing, as the case may be; and in such case the delivery may be shown to have been conditional or for a special purpose only, and not for the purpose of transferring the property in the instrument. But where the instrument is in the hands of a holder in due course, a valid delivery thereof by all parties prior to him so as to make them liable to him is conclusively presumed. And where the instrument is no longer in the possession of a party whose signature appears thereon, a valid and intentional delivery by him is presumed until the contrary is proved.'

This section, it will be observed, provides in terms that, where the instrument is in the hands of a holder in due course, a valid delivery thereof by all parties prior to him so as to make them liable to him is conclusively presumed. Language could hardly be made plainer, and is as applicable to a holder in due course of commercial paper stolen before delivery as it is to commercial paper stolen subsequent to delivery, or commercial paper the title to which is defective for any other reason.

Our attention has not been called to many adjudicated cases where this precise question was at issue. In Greeser v. Sugarman, 37 Mise. Rep. 799, 76 N.Y.S. 922, the defendant executed a promissory note payable to the order of himself. It reached the hands of a holder in due course, who brought an action thereon. The defendant sought to defend on the ground that it was lost or stolen from his desk, and that there was hence no valid delivery of the note. The court, quoting the section of the Negotiable Instruments Law of New York corresponding to the section quoted above, held that the fact, if shown, would constitute no defense to the action.

In Poess v. Twelfth Ward Bank, 43 Misc. 45, 86 N.Y.S 857, the plaintiff held a certified check on the bank named dawn by himself against his own deposit. Some time thereafter he indorsed the check in blank and made out a deposit slip for redeposit in the bank. On the way to the bank he lost the check, and about five days thereafter it came up through the exchange for collection from another bank which had cashed it. The plaintiff sued the bank for the amount of the...