Beasley Hardware Co. v. Stevens
| Decision Date | 02 October 1930 |
| Docket Number | 19990. |
| Citation | 155 S.E. 67,42 Ga.App. 114 |
| Parties | BEASLEY HARDWARE CO. v. STEVENS. |
| Court | Georgia Court of Appeals |
Syllabus by the Court.
Purchaser of series of notes after one note became due with knowledge that notes constituted one transaction took all notes with notice of dishonor; purchaser of series of notes which to his knowledge constituted one transaction, after one of the series was past due, held not "holder in due course" (Laws 1924, p. 137, § 52; Civ. Code 1910, § 4287).
The purchaser of a series of notes constituting one transaction who acquires the notes with knowledge of this fact after one of the notes has become due, takes all the notes with notice that they have been dishonored, as provided in section 52 of the Negotiable Instruments Law.
No question is presented as to whether the law of a foreign jurisdiction is applicable to this case.
The evidence authorized the inference that the plaintiff, the transferee of the notes sued on, was not a holder in due course, and that the consideration for which the notes were given had entirely failed. It was therefore error to direct a verdict for the plaintiff.
Error from City Court of Reidsville; R. H. Burroughs, Judge.
Suit by F. L. Stevens against the Beasley Hardware Company. Judgment for plaintiff, defendant's motion for a new trial was overruled, and defendant brings error.
Reversed.
Bruce D. Dubberly, of Glennville, and H. H. Elders, of Reidsville for plaintiff in error.
A. S Way, of Reidsville, for defendant in error.
F. L Stevens, as transferee, instituted suit against Beasley Hardware Company, as maker, upon six promissory notes, all of the same date, namely, October 26, 1926, and aggregating in the principal sum of $360, maturing on successive dates, namely, the second, third, fourth, fifth, sixth, and seventh months after date, executed by Beasley Hardware Company, and payable to the order of Brenard Manufacturing Company, at Iowa City, Iowa. The defendant pleaded that the notes had been given to the payee, the Brenard Manufacturing Company, pursuant to a contract between it and the payee, by which the defendant, for the consideration of the notes, purchased of the payee certain radio sets, and became the agent for the payee to sell radio sets within the defendant's territory; that the radio sets had proved entirely worthless, and, for this reason, the consideration for the notes had totally failed; and that the plaintiff, by reason of having purchased and acquired the entire series of notes after the maturity of the first one of the series, was not a holder in due course.
The court, after hearing the evidence, directed a verdict for the plaintiff in the amount of the notes which on their face had not matured at the time when the defendant claimed the plaintiff became the transferee by indorsement. The verdict was directed in the amount of all the notes except the one with the earliest maturity date. The defendant moved for a new trial upon the general grounds and upon the special ground that the court erred in directing a verdict for the plaintiff. The defendant's motion for a new trial was overruled, and the defendant excepted.
The evidence was sufficient to authorize the inference that the radio sets were entirely worthless and not suited for the purposes intended, and that the plaintiff purchased, and became the transferee of, the notes after the first note of the series had become due, but before the maturity dates named in the remaining notes of the series. In none of the notes was there a clause accelerating maturity upon the nonpayment at maturity of any of the other notes. Each note, as respects its date of maturity, was unconditional. Each note, with the amounts and dates of maturity eliminated, reads as follows: There was nothing on the face of any one of the notes expressly indicating that they constituted a series of notes arising out of a single transaction, and that their principal amounts in the aggregate represented one consideration. However, all the notes purport on their face to have been executed at the same place, on the same date, by the same maker, and to the same payee.
It appears, from the evidence, that the Brenard Manufacturing Company was a manufacturing company which sold radio sets and was located in Iowa City, Iowa, and that the plaintiff, F. L. Stevens, lived in the same city, was acquainted with the Brenard Manufacturing Company, and was engaged in the business of purchasing negotiable paper. According to his own testimony, he was "acquainted with the Brenard Manufacturing Company of Iowa City, Iowa," and knew that it was a partnership, and who composed it. It was therefore clearly inferable that he, who, with this knowledge, was engaged in the business of buying commercial paper for investment, knew the nature of the business of the Brenard Manufacturing Company, which was to sell radio sets and other goods to customers and take purchase-money notes therefor. It is therefore inferable that the plaintiff, when purchasing from the Brenard Manufacturing Company the notes sued on, which were similar in every respect except as to the principal amounts and the maturity dates, and were due serially, knew that the notes were taken by the Brenard Manufacturing Company for purchase money in the sale of its products, and that they were serial notes executed in one transaction.
The defendant, who is the plaintiff in error, insists that the plaintiff, as transferee, was not a holder in due course, and that, although, at the time of the execution of the note sued on, Georgia had adopted the Negotiable Instruments Law, section 4287 of the Civil Code of 1910 was still in force. This section reads as follows: "If the holder receives it after it is due, its non-payment at maturity is notice to him of dishonor, and he takes it subject to all the equities existing between the original parties thereto; and if there be several notes constituting one transaction, but due at different times, the fact that one is overdue and unpaid shall be notice to the purchaser of all, to put him on his guard as to each." The plaintiff insists that this Code section has been superseded and the rule announced therein has been repealed by the Negotiable Instruments Law, and that, under the Negotiable Instruments Law, the plaintiff, notwithstanding he purchased the entire series of notes after one of the notes of the series had become due, was nevertheless, as to the remaining notes which had not matured, a purchaser in due course. If the rule announced in section 4287 of the Civil Code of 1910, whether by virtue of the authority of the section itself or of the Negotiable Instruments Law, is still in force, it cannot be held as a matter of law that the plaintiff was the holder in due course of the notes sued on, and the court erred in directing a verdict for the plaintiff; but, if the rule announced in that Code section has been repealed and is not now in force, the plaintiff, in purchasing the remainder of the notes of the series before any one of them was due, was a holder in due course of the notes, and the verdict for the plaintiff in a sum representing the amount due on these notes, was properly directed.
Sections 52 to 59, inclusive, of the Negotiable Instruments Law (Ga Laws 1924, pp. 137, 138 et seq., Michie's Code 1926, § 4294(1) et seq.), defines a holder in due course of a negotiable instrument. They define the status of a holder of a negotiable instrument and the character of notice which deprives him of the status of a holder in due course. Whether these sections of the Negotiable Instruments Law operate to repeal section 4287 of the Civil Code of 1910, which defines the status, as respects one situation, of the holder of a negotiable instrument, they are nevertheless exhaustive as respects the definition of what constitutes a holder in due course. The Negotiable Instruments Law contains no definition of what constitutes a dishonored paper, and to this extent it is hot exhaustive, and contains no express provision applicable to the situation of a holder of a series of notes which constitute one transaction where the holder acquired the notes after one of them had become due. See article 7 of the act. In 8 C.J. 48, it is stated that, Sections 52 to 59 of the Negotiable Instruments Law therefore supersede section 4287 of the Civil Code of 1910, except in so far as that section may be a codification of the law merchant, which is part of the common law, as respects a situation not provided for in the Negotiable Instruments Law. By the same reasoning it would seem that these sections of the Negotiable Instruments Law would supersede sections 4286 to 4292 inclusive of the Civil Code of 1910. This question, however, is not now presented for determination. While section 4287 of the Civil Code of 1910 as such, and as a statutory enactment, may be superseded by sections 52 to 59 of the Negotiable Instruments Law, it does not necessarily follow that the rule announced in the Code section has been repealed by the provisions of the Negotiable...
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