Bank Of Sutton v. Skidmore
| Decision Date | 01 November 1932 |
| Docket Number | No. 7346.,7346. |
| Citation | 167 S.E. 144 |
| Court | West Virginia Supreme Court |
| Parties | BANK OF SUTTON. v. SKIDMORE et al. |
Rehearing Denied Dec. 7, 1932.
1. A mere denial of the title of the holder of a negotiable note is not sufficient to overcome the statutory prescript that the holder is to be deemed prima facie "a holder in due course."
2. When a negotiable note is sent to a bank indorsed "for collection, " and after maturity the bank pays the owner the amount due on the note from its own funds, the bank becomes a holder for value, under Code 1923, c. 98A, § 26 (the Negotiable Instrument Law).
3. An estoppel does not arise merely because of action taken upon a misleading statement. In addition thereto, it must appear that the one making the statement intended or should reasonably have expected that it would be acted upon by the other party, and that such party, without fault himself, did act upon it to his prejudice.
Appeal from Circuit Court, Braxton County.
Action by the Bank of Sutton against Oley Skidmore and others. From an adverse judgment, plaintiff appeals.
Reversed and remanded.
E. G. Rider, of Sutton, for appellant
John N. Charnock, of Charleston, for appellee B. A. Wise & Co.
Eakle & Eakle, of Clay, for appellee W. H. Eakle.
Hines, Hall & Hines, of Sutton, for appellees G. Stanley Hamric and others.
HATCHER, P.
This appeal involves the question of whether a note was discharged or purchased by the Bank of Sutton. The bank (plaintiff below and appellant) alleged a purchase, but the circuit court held a payment, and decreed that plaintiff take nothing.
By deed of April 1, 1925, A. Hamric, G. S. Hamric, and Lot Carroll conveyed to W. H. Eakle a lot in the town of Sutton. The consideration was $1,000 cash and six notes of $1,000 each, payable at the Home National Bank of Sutton, in from one to six years from date, respectively, and secured by a vendor's lien. Eakle conveyed the lot to Oley Skidmore by deed of May 14, 1925, In which the grantee assumed the payment of the six notes above referred to. Skidmore paid the first three notes. The fourth note, due April 1, 1929, was indorsed in blank and sold by the payees to B. A. Wise & Co. of Charleston, before maturity. The purchaser indorsed the note on March 20, 1929, and forwarded it through its local bank stamped "for collection" to the Bank of Sutton. On April 10th, the local bank received from the Bank of Sutton its cashier's check for $1,240 (in fullof the note), accompanied by a form letter of advice captioned "Local Collection, " which after describing the note contained the imprint "Bank of Sutton, Paid April 2, 1929, Sutton, W. Va." Shortly after this transaction, Wise & Co. purchased the fifth and sixth notes of the series, which its manager deposed would not have been done had the fourth note not been paid.
The bill herein (1) alleged that the Bank of Sutton purchased the fourth note, and that payments thereon have been made by Skid-more, reducing it to $700; (2) invoked the benefit of the vendor's lien; and (3) sought to enforce collection of the alleged balance on the note by a sale of the lot. The note was exhibited with the bill. Skidmore did not answer. Eakle, Wise & Co., and G. S. Hamric et al., answered separately, denying the above allegations. No testimony was submitted by the plaintiff, the above statement of fact being taken from written exhibits and from oral evidence introduced by the defendants.
As holder of the note plaintiff was "deemed prima facie to be holder in due course, " under section 59, Negotiable Instrument Law (hereinafter, for brevity, N. I. L.), Code 1923, chapter 98A. Plaintiff was entitled to rest its case upon exhibiting the note, as the denial in the answers of its title was not sufficient to overcome the statutory presumption of title accorded to it as holder. A plea denying the validity of the note itself will put a holder on proof, but a mere denial of the holder's title will not. Merchants' Bank & Trust Co. v. People's Bank, 99 W. Va. 544, 130 S. E. 142; Holdsworth v. Drug Co., 118 Va. 359, 362, 87 S. E. 565; Beacon Trust Co. v. Barry, 260 Mass. 449, 157 N. E. 530.
It is contended that the negotiability of the note became suspended when it was indorsed restrictlvely ("for collection") and that it became nonnegotiable (in a technical sense) when not paid at maturity (April 1st). Both contentions may be admitted without giving the defendants any coign of vantage. The law does not forbid the purchase of nonnegotiable paper--it simply subjects the purchase to any defenses in favor of the payee or a prior holder. 8 C. J., subject Bills and Notes, §§ 67, 71, 577, and 1096; Bigelow on Bills, Notes, etc. (3d Ed.) § 483. No equity is advanced in favor of any defendant except Wise & Co., reference to which will be made later. It cannot be contended seriously that the words "for collection, " ex vi termini, impair the plaintiff's right of recovery since, under section 48, N. I. L., it could have struck out the restrictive words at any time, even during trial. Ensign v. Fogg, 177 Mich. 317, 143 N. W. 82; New Haven Mfg. Co. v. Pulp & Board Co., 76 Conn. 126, 55 A. 604, 606; Waldock v. Winkler, 51 Okl. 485, 152 P. 99, 100; First Nat. Bank v. Ficklin, 185 Ill. App. 381; 30 A. L. R., Annotation 341, etc.; 8 C. J., supra, § 553. This was the law even prior to the stat ute. Jones v. Berryhill (1868) 25 Iowa, 289. See, also, Jerman v. Edwards, 29 App. D. C, 535, 537; Vanarsdale v. Hax (C. C. A.) 107 F. 878, 880; Bigelow, supra, §§ 277 and 278.
In the furtherance of justice, we are warranted in regarding this transaction from the standpoint of common experience. Wood v. Trust Co., 128 U. S. 416, 423, 9 S. Ct. 131, 32 L. Ed. 472. The money paid to Wise & Co. by plaintiff presumably represented either its own money or that of Eakle or Skidmore, who were the respective parties liable for the note. Eakle's answer makes no claim to and precludes the thought that he supplied that money or had the bank pay It for him. Citizens' Trust Co. v. Milling Co. (Mo. App.) 210 S. W. 774, stressed by counsel for Wise & Co., has no application here, because it was demonstrated there that a note sent by the payee to the bank for collection had been paid by the bank from the maker's funds. There is no such proof in this suit. Even if the bill should not be taken as confessed as to Skidmore (because of the denials in the answers), it is beyond belief that he would remain silent had he furnished or arranged for that payment. The defendants alleged that he had paid the note; but the plaintiff denied that allegation and no proof was taken thereon. The only reasonable inference is that the bank paid its own money. Whether payment operates as a discharge of the instrument or as a purchase depends on the payor's intention. Bigelow, supra, § 567. The payment of the bank's own money on behalf of either Eakle or Skidmore would have been entirely gratuitous. Banks simply do not indulge intentionally in gratuities of that character. "The presumption is against the payment as a discharge, and in favor of the payment as a purchase." Federal Land Bank v. Neely, 110 W. Va. 433, 436, 158 S. E. 659, 660 (). There Is nothing in the record to overcome that presumption. "The possession of a note uncancelled, by a person other than the maker, is prima facie evidence that the debt evidenced thereby is unpaid." 5 Uniform Laws Annotated (Neg. Inst.) 601. Therefore we must conclude that the bank purchased the note for its own purpose.
Many cases are cited in the briefs of the several defendants which at first glance seem relevant but are not, because they were decided either before or without taking into consideration the N. I. L. The strongest citation is People's & Drovers' Bank v. Craig, 63 Ohio St. 374, 59 N. E. 102, 52 L. R. A. 872, 81 Am. St. Rep. 639, which held that payment by a bank from its own funds of a note indorsed for collection, if without the consent of the maker, extinguished the note. That case was...
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