Bird Fin. Corp. v. Lamerson
| Decision Date | 25 November 1942 |
| Docket Number | No. 16.,16. |
| Citation | 6 N.W.2d 732,303 Mich. 422 |
| Parties | BIRD FINANCE CORPORATION v. LAMERSON et al. |
| Court | Michigan Supreme Court |
OPINION TEXT STARTS HERE
Action by the Bird Finance Corporation against Anna Lamerson and another to recover on a note. From a judgment for plaintiff, defendants appeal.
Reversed and remanded for new trial.
Appeal from Circuit Court, Kent County; Leonard L. Verdier, Judge.
Before the Entire Bench, except WIEST, J.
Earl F. Phelps, of Grand Rapids, for defendants-appellants.
Cleland & Snyder, of Grand Rapids (Winston C. Moore, of Grand Rapids, of counsel), for plaintiff-appellee.
I cannot agree with the conclusion reached by Mr. Justice Boyles, because that portion of the note in suit that represents usury is void for want of consideration. The note, therefore, at the time of its delivery to the original payee, was not free from infirmities.
The statute, 2 Comp.Laws 1929, Sec. 9301 (Stat.Ann. Sec. 19.94), provides in part,
‘A holder in due course is a holder who has taken the instrument under the following conditions: * * *
‘Fourth, That at the time it was negotiated to him he had no notice of any infirmity in the instrument of defect in the title of the person negotiating it.'
Justice Boyles' findings, which are amply supported by the record, are to the effect that the plaintiff at the time it acquired the note had knowledge that at least a portion thereof was void for want of consideration, being the amount of the usury included therein. Therefore, plaintiff had notice of this infirmity in the instrument.
In view of Justice Boyles' findings, the note in suit in the hands of the plaintiff is subject to the same defenses as if it were a non-negotiable instrument, or as if the suit had been instituted by the original payee. This is in accordance with 2 Comp.Laws 1929, Sec. 9307 (Stat.Ann. Sec. 19.100), and cases decided in other jurisdictions having this same statute. The following cases all hold that a purchaser for value with notice of the usury is not a holder in due course. Bowen v. Mount Vernon Savings Bank, 70 App.D.C. 273, 105 F.2d 796;Mollohan v. Masters, 45 App.D.C. 414;Newcomb v. Niskey's Lake Inc., 190 Ga. 565, 10 S.E.2d 51;Bolen v. Wright, 89 Neb. 116, 131 N.W. 185;Daniels v. Bunch et al., 69 Okl. 113, 172 P. 1086;Keene v. Behan, 40 Wash. 505, 82 P. 884.
We, therefore, hold that a note given for a usurious amount should be treated as being subject to an infirmity, and that a purchaser of such note with notice or knowledge of this infirmity should not be held to be a holder in due course so as to be entitled to protection against the equities and defenses which would be available against the original payee, but that he takes the instrument subject to such equities, defenses, set-offs and counterclaims as would be available as between the original parties.
The rule is well established that if the purchaser of the instrument is not a holder in due course, other defenses than that of which he had knowledge are available. 2 Comp.Laws 1929, Sec. 9307 (Stat.Ann. Sec. 19.100).
Entertaining this view, the judgment should be reversed and the case remanded for a new trial, with costs to appellants.
This suit is brought on a promissory note for $968. Plaintiff is a Massachusetts corporation, incorporated for the purpose of dealing in commercial paper, with is principal office at East Walpole, Massachusetts, and a branch office at 1472 West 76th Street, Chicago, Illinois. It is not authorized to do business in Michigan and was organized primarily to finance jobs done with imitation brick siding manufactured by Bird & Son, Inc. Its capital stock is wholly owned by Bird & Son, Inc., which is likewise a Massachusetts corporation, engaged in the manufacture of composition roofing and imitation brick siding, having a factory at East Walpole, Massachusetts, and a branch factory at 1472 West 76th Street, Chicago, Illinois. Bird & Son, Inc., is authorized to do business in Michigan, has several agents in Michigan selling its products. Plaintiff is the financing corporation for Bird & Son, Inc., the manufacturing corporation. Their out-of-state offices are together, some of the officers and employees of Bird & Son, Inc., have part duties for the finance corporation.
The defendant Anna Lamerson is an elderly widow owning a small home in Grand Rapids, Michigan, encumbered by a mortgage. Defendant Frank Novak was a roomer and boarder at Mrs. Lamerson's, with no title or interest in the house and property repaired.
On April 7, 1937, one Alfred Smith, a resident of Chicago, made an arrangement with plaintiff, Bird Finance Corporation, and Bird & Son, Inc., in Chicago, whereby Smith was to go to Grand Rapids and obtain jobs putting Bird composition imitation brick siding on houses, and accept paper for the jobs; plaintiff, Bird Finance Corporation, was to take the paper, and Bird & Son, Inc., was to furnish the materials. The proposition was to sell materials manufactured by Bird & Son, Inc., and use the plaintiff, Bird Finance Corporation, as a medium for discounting the paper received as a result of the sales. Harold W. Altman, Western credit manager for Bird & Son, Inc., who was also assistant treasurer of plaintiff, Bird Finance Corporation, made the arrangement with Smith. Previously, on March 22, 1937, Smith had filed in the office of the county clerk of Kent county a certificate under the assumed name act, as the Federal Home Improvement Company, giving his address as the Rowe Hotel (Grand Rapids). On April 12, 1937, Smith and one Eli Marcus filed a certificate of copartnership under the above name and the first filing by Smith was withdrawn. Later, on June 3, Smith again filed under the assumed name act, using the same name of Federal Home Improvement Company, and the copartnership filing was discontinued.
Smith called at defendant Lamerson's home early in April, 1937, said that he wished to get started in Grand Rapids in the business of putting on imitation brick siding, that he would like to start with her home and make it the ‘model’ home which he could show others, that for every additional job he could obtain he would give her $10, would guarantee two jobs a month, and that he would make the payments on her job only $26.89 a month, she would receive $20 a month from him, leaving only a balance of $6.89 per month for her to pay. He drew up a paper to that effect which she signed. It was a ‘request’ by Mrs. Lamerson, as owner, to Smith's ‘Federal Home Improvement Company,’ called the ‘contractor,’ to furnish the labor and materials for re-siding the outer walls of her home with ‘Bird Bric.’ In it she agreed to pay $986 in equal monthly installments of $26.89 each, and it contained the following recital:
Smith left a copy of this order with her. A few days thereafter Smith returned and said that the company would not accept the contract unless there were two names on it and he presented to her for her signature another order which was styled ‘Bird Finance Corporation-Non-Recoupe Finance Plan C4039-Estimate and Agreement,’ which she signed without reading after Smith explained that it was just the same as the other paper, and he asked Frank Novak (defendant), a boarder who happened to be present, to sign the order also so as to have two names on it in order to make it acceptable to the company in Chicago, Illinois. Smith did not leave a copy of this paper with her but it turned out to be a different order addressed to the Federal Home Improvement Company asking it to furnish the labor and materials and put on the imitation brick siding in a good, workmanlike manner, for $800. It provided that Mrs. Lamerson was to give her note for $968, and that: ‘The giving of said note shall also be evidence that the material and workmanship furnished by you is satisfactory.'
The order provided that the agreement was subject to the approval of plaintiff, Bird Finance Corporation. Defendants claim that the difference between the cost of the job, $800, and the $968 for which she was to give a note, was to cover the interest at seven per cent for three years, the time the note was to run. Smith mailed this order to the plaintiff, Bird Finance Corporation, at Chicago, it was dated April 17, 1937, received on April 20 by Harold W. Altman, Western credit manager for Bird & Son, Inc., and assistant treasurer of the Bird Finance Corporation, who checked Mrs. Lamerson's credit and then accepted the contract.
Workmen came and put on the imitation brick siding. According to credible testimony, the total cost of the job done in a good and workmanlike manner should have been $279, for which plaintiff was to be paid $968, a difference or profit of $689; also it was proven that the work was defective and not properly done.
After the job was finished, Smith brought some papers for Mrs. Lamerson and Frank Novak to sign, stating that they wanted a statement that the work was done. The defendants signed the papers, relying on Smith's word as to their contents. One of them was the note now sued upon, payable to Federal Home Improvement Company, later negotiated to plaintiff. Defendants claim they did not know they had signed a promissory note until they received notice from the plaintiff, Bird Finance Corporation, relative to making the payments. After making two or three payments, Mrs. Lamerson learned that the cement substance supposed to be used on the job had been left out and hauled away, and rain was coming through onto her paper inside. Mrs. Lamerson wrote the Bird Finance Corporation on October 18, 1937, about the defective workmanship and that she would refuse to make further payments until it was corrected. In...
To continue reading
Request your trial
-
Carper v. Kanawha Banking & Trust Co.
...the buyer-borrower are couched and calculated in terms of 'interest or percentage,' a further indicia arises. Bird Finance Corp. v. Lamerson, 303 Mich. 422, 6 N.W.2d 732 (1942); Torrey v. Grant, 18 Miss. (10 Smedes & M.) 89 (1848); Wood v. Commonwealth Trailer Sales, Inc., supra; Lloyd v. G......
-
Paul v. U.S. Mut. Financial Corp.
...which is usurious on its face gives actual notice of the usury defense thereby precluding a HIDC status. See Bird Finance Corp. v. Lamerson, 303 Mich. 422, 6 N.W.2d 732 (1942) (discussing the notice provision under pre-Uniform Commercial Code Law). Moreover, a finding of good faith is precl......
-
Hillman's v. Em 'N Al's
...however, as expressed is subject to the qualification described in Mr. Justice Boyles' opinion in Bird Finance Corporation v. Lamerson, 303 Mich. 422, 433, 6 N.W.2d 732, 737. (Although this was a dissenting opinion there was no division in the court as to the finding that usury was '(b) Def......
-
Rutter v. Troy Mortg. Servicing Co.
...is defeated and they are subject to all defenses and claims, even those of which they had no knowledge. Bird Finance Corp. v. Lamerson, 303 Mich. 422, 443, 6 N.W.2d 732 (1942). Since there is a material factual issue as to whether appellees accepted the assignments with knowledge of the all......