Bunzel v. Maas

• Decision Date: 28 June 1897
• Parties: BUNZEL v. MAAS ET AL.
• Court: Alabama Supreme Court

22 So. 568

116 Ala. 68

BUNZEL v. MAAS ET AL.

Supreme Court of Alabama

June 28, 1897

Appeal from city court of Selma; John W. Mabry, Judge.

Action by J. Bunzel against Maas & Schwarz on six notes of $500 each, executed by I. I. Levy on February 25, 1892, payable in bank to defendants, at various times, from September 20th to October 25th after date, and indorsed in blank by defendants. From a judgment in favor of defendants, plaintiff appeals. Reversed and remanded.

At the time these notes were executed, they were indorsed by the appellees, and delivered to said I. I. Levy, and a few days thereafter he, in turn, delivered them to one Louis J. Adler of Uniontown, with the understanding that Adler should sell them, and apply $1,000 of the proceeds in part payment of a debt Levy owed Adler's employers, and pay over the remainder of the proceeds to Levy. In pursuance of this understanding, Adler, on February 29th, sold said notes to J Marx & Co., of Demopolis, and carried out his agreement with Levy. In less than a month after this transaction, Levy failed in business. In August following, Marx & Co. sold said notes to M. I. & C. Ernst, of New York. Early in September before any of said notes fell due, M. I. & C. Ernst sold the notes to plaintiff, also of New York. All these sales were made without any indorsement of the notes by the parties selling them, and the notes in each instance were sold for cash at a greater rate of discount than 8 per cent. per annum. It appeared from the evidence that, before and at the time of the execution and indorsement and delivery to Levy of said notes, Levy promised and agreed to use the notes in redeeming collaterals of a greater amount which he had with Lehman, Durr & Co., of Montgomery, and to turn said collaterals over to appellees, to cover his indebtedness to them, and to S. Maas & Co., and to indemnify appellees against liability on the indorsements; that, at the same time, Levy promised to procure and deliver to appellees the guaranty of Steiner Bros., of Birmingham, against such liability; and that appellees never received said collaterals or guaranty. The defendants contend that the several purchases of said notes were not made in good faith, while this contention is denied by plaintiff. Sixteen pleas were filed. Demurrers to pleas 2, 3, 4, 5, 6, 7, 8, 9, 11, 12, and 16 were sustained. Demurrers to pleas 10 and 15 were overruled. Plea 1 was the general issue. Plea 10 alleges infirmity of notes, and notice of plaintiff. Plaintiff, in replication 3 to plea 10, denies notice, and sets up purchase in good faith, for value, before maturity, and defendants took issue on this replication. Plea 13 sets out infirmity of notes, and avers discount by Levy with bankers in Alabama at usurious rate, and failure of Levy to use funds for purpose agreed on, and avers, further, that plaintiff did not become the holder or owner of said notes for value before maturity. Plea 14 is like plea 13, except that it does not aver failure to use funds for purpose agreed on, and that it avers that plaintiff never was legal holder of said notes for value before maturity. Replication 4 to pleas 13 and 14 sets up purchase of notes in good faith, for value, before maturity and defendants took issue on this replication. Plea 15 is like 14, except that, instead of averring that plaintiff never was legal holder for value before maturity, it avers that plaintiff did not acquire said notes before maturity in the usual course of business. Replication 2 to plea 15 sets up purchase of notes in good faith, for value, before maturity; and defendants took issue on this replication. The case was tried on these issues. The other facts of the case necessary to an understanding of the decision on the present appeal are sufficiently stated in the opinion.

The plaintiff requested the court to give to the jury the following written charges, and separately excepted to the court's refusal to give each of them as asked: (1) "If the jury believe from the evidence that the plaintiff, before maturity of any of the notes sued on, at the plaintiff's place of business in the city of New York, in good faith, bought of M. I. & C. Ernst the said six promissory notes indorsed in blank by the defendants in their firm name, and paid the sum of twenty-nine hundred and sixty and 89/100 dollars therefor, without notice that the indorsements were without consideration, or had been procured by fraud, or that the notes or the proceeds thereof had been misapplied, or that said notes had been dealt with in any manner which would impeach their validity, then the verdict should be in favor of the plaintiff." (5) "The fact, if it is a fact, that the plaintiff knew, at the time he acquired the notes sued on, that I. I. Levy was insolvent is no evidence of bad faith on the part of the plaintiff, and does not charge him with notice that the indorsements were without consideration, or had been procured by fraud, or that the notes or the proceeds thereof had been misapplied, or that the notes had been dealt with in a manner which would impeach their validity." (6) "If the jury believe from the evidence that the plaintiff, before the maturity of any of the notes sued on, at the plaintiff's place of business in the city of New York, in good faith, bought of M. I. & C. Ernst the said six notes indorsed in blank by the defendants in their firm name, and paid the sum of twenty-nine hundred and sixty and 89/100 dollars therefor, without notice that the indorsements were without consideration, or had been procured by fraud, or that the notes or the proceeds thereof had been misapplied, or that said notes had been dealt with in any manner which would impeach their validity, then the verdict should be in favor of the plaintiff; and the burden is upon the defendants to prove that the plaintiff, at the time he became the holder of the notes sued on, had notice that the indorsements were without consideration, or had been procured by fraud, or that the notes or the proceeds thereof had been misapplied, or that the notes had been dealt with in a manner which would impeach their validity." (7) "If the jury believe the evidence, they must find the issues in favor of the plaintiff." The court, at the request of the defendants, gave to the jury the following written charges, to the giving of each of which the plaintiff separately excepted: (2) "That if the jury believe from the evidence that the indorsements of the defendants were obtained by I. I. Levy for the purpose of being used with Lehman, Durr & Co., to take up collaterals which Levy had deposited with Lehman, Durr & Co., as security for money which Levy owed them, and that Levy then and there promised defendants to so use said notes, and to deliver said collaterals to defendants to indemnify them against liability on said indorsements, and also to secure other debts which said Levy owed to Maas & Schwarz; and if the jury further find from the evidence that said Levy received said six notes so indorsed from Maas & Schwarz for said purpose and on said promise, and fraudulently diverted said notes from the purpose for which they were intended, and through his agent, Louis Adler, discounted said notes to J. Marx & Co., at Demopolis, in this state, for the sum of $2,773, and no more,-then the said Jacob Marx & Co. obtained said notes at a usurious rate of discount, and were not bona fide holders of said notes. And if the jury further find from the evidence (in addition to the matters above supposed) that, since said Jacob Marx & Co. received said notes, the said notes have never passed into the hands of a bona fide holder for value, then the plaintiff cannot recover." (3) "That although notes payable in bank are governed by mercantile law, and are valid in the hands of a holder in good faith, for value, and before maturity, even if obtained by fraud, or fraudulently diverted from the purpose for which they were made and intended, still this rule applies only in favor of the holder of such notes, after such notes have passed into the hands of a holder in good faith, for value, and before maturity." (4) "That, as the jury are the exclusive judges of the credibility of witnesses, they are not bound to believe the evidence of any witness, if, from other evidence in the case, they have cause to believe, and do believe, that the evidence...