Cass Ave. Bank v. Greenwald

• Decision Date: 13 June 1930
• Parties: CASS BANK AND TRUST COMPANY, A CORPORATION, APPELLANT, v. FRED GREENWALD, DOING BUSINESS AS OAKVILLE MOTOR COMPANY, RESPONDENT. [*]
• Court: Missouri Court of Appeals

29 S.W.2d 209

224 Mo.App. 344

CASS BANK AND TRUST COMPANY, A CORPORATION, APPELLANT, v. FRED GREENWALD, DOING BUSINESS AS OAKVILLE MOTOR COMPANY, RESPONDENT. ^[*]

Court of Appeals of Missouri, St. Louis

June 13, 1930

Appeal from the Circuit Court of St. Louis County.--Hon. Jerry Mulloy, Judge.

REVERSED AND REMANDED (with directions).

Judgment reversed and remanded.

Rassieur Long & Yawitz for appellant.

(1) Only proof of bad faith in purchasing a negotiable note, or else proof of actual knowledge of failure of consideration prior to the purchase, can defeat a suit thereon by a purchaser for value in due course--mere suspicion, as would lead a reasonably prudent man to investigate, and even negligence, is not sufficient. Levy v. Artophone Co., 249 S.W. 158 (Mo. App.); Jennings v. Todd, 118 Mo. 296; Hamilton v. Marks, 63 Mo. 167; Mayes v. Robinson, 93 Mo. 114; Reeves v Letts, 143 Mo.App. 196; Downs v. Horton, 230 S.W. 103 (Mo. Sup.); Morehead v. Cummins, 230 S.W 656 (Mo. App.); Hill v. Dillon, 176 Mo.App. 192; Link v. Jackson, 158 Mo.App. 63; Farmer's Bank of Farley v. Stamper, 250 S.W. 959 (Mo. App.); Hunter v. Johnson, 119 Mo.App. 487. (2) Knowledge of the consideration for a negotiable instrument and knowledge of the fact that the consideration is executory does not deprive one of the character of innocent purchaser for value. Levy v. Artophone Co., 249 S.W. 159 (Mo. App.); Morehead v. Cummins, 230 S.W. 565. (3) Knowledge of a contemporaneous agreement to the effect that a negotiable note shall not be paid if an executory contract is not performed, will not affect the validity of the note in the hands of an endorsee who purchases prior to maturity and prior to the breach. Jennings v. Todd, 118 Mo. 296. (4) In absence of testimony to warrant an inference of bad faith or to warrant an inference of knowledge of an infirmity prior to purchase, there is no issue for a jury and a peremptory instruction for appellant must be given. Levy v. Artophone Co., 249 S.W. 158 (Mo. App.); Downs v. Horton, 230 S.W. 103 (Mo. Sup.); Reeves v. Letts, 143 Mo.App. 199; Bank of Hale v. Linneman, 235 S.W. 178 (Mo. App.).

George F. Heege for respondent.

(1) The contract for the sale of the tractor, etc., being in writing, was part of the instrument sued on, and being attached to the instrument, it should be read with it. People's Bank v. Rankin, 282 S.W. 95; Citizens Bank v. Kriegshauser, 244 S.W. 107. (2) Notice to plaintiff need not be shown by direct and positive testimony, but may be shown by facts and circumstances which afford the inference that appellant had knowledge. Citizens Bank v. Kriegshauser, 244 S.W. 107. (3) The notation on the contract of the goods sold "subject to demonstration" impeaches the validity of the trade acceptance and the plaintiff therefore took with notice. American Trust Co. v. McDermott, 256 S.W. 106. (4) Where a contract between the parties was made simultaneously with the execution of the note, and the appellant took the note with notice of the contract, he thereby took the instrument subject to any infirmity that might be in the contract. Whether the agreement made was collateral or dependent is a matter of intention. Simpson v. Van Laningham, 183 S.W. 326. (5) Whether the account showing the conditional sale was attached to the instrument at the time of purchase by the bank was a question for the jury. If it was, plaintiff took with knowledge. If it was not, the instrument was obtained by fraud and plaintiff was not a holder in due course. American Trust Company v. McDermott, supra. (6) Appellant, having asked and obtained instruction No. 1, waived his objection to the refusal of the court to give its peremptory instruction. Union State Bank v. Wagner, 254 S.W. 741.

SUTTON, C. Haid, P. J., and Becker and Nipper, JJ., concur.

OPINION

SUTTON, C.

This is an action on a trade acceptance. The trial, with a jury, resulted in a judgment for defendant, and plaintiff appealed.

Since the perfecting of the appeal the Cass Bank & Trust Company, as successor to the Cass Avenue Bank, plaintiff below, has been substituted here as party appellant in place of said Cass Avenue Bank, hereinafter referred to as plaintiff.

The acceptance is for the sum of $ 399.90, and is payable to Boyce & Ohm. It is dated June 1, 1925, and was accepted by defendant on June 3, 1925. It was purchased by plaintiff from Boyce & Ohm for $ 393.90, and was transferred to them by endorsement, on June 4, 1925. It was given for the purchase price of one tractor, one riding sulkey, one ten inch plow with cultivator attachments, one large disc, and one pair of hilling shovels.

As a defense to the acceptance defendant charges in his answer that contemporaneous with the signing of the acceptance by him he entered into a contract with Boyce & Ohm, whereby he purchased the tractor and equipment for the price of $ 399.90; that said purchase was subject to demonstration; that after the execution of the acceptance the tractor and equipment was shipped to him and demonstrated, and proved to be unsuited, and was rejected by him; that he notified Boyce & Ohm that he would not pay the acceptance; that the consideration for the acceptance wholly failed; that plaintiff had actual knowledge of said contract and of said facts; that the act of plaintiff in taking said acceptance amounted to bad faith.

Appellant complains here of the refusal of the court to give a peremptory instruction directing a verdict for plaintiff for the amount of the acceptance sued on, with interest.

Defendant testified that on June 1, 1925, he was doing business as the Oakville Motor Company, at Oakville, in St. Louis County; that he purchased the tractor and equipment from Boyce & Ohm through their salesman; that the tractor was delivered to him by the salesman on the morning of May 23, 1925, and that the rest of the equipment was delivered to him later, at his place of business in Oakville; that the salesman and Mr. Boyce both came out to his place of business on a truck, with the rest of the equipment; that they did not have any plow to demonstrate the tractor with; that at that time the accepance in suit was presented to him; that when it was so presented there were papers attached; that Mr. Boyce at that time gave him the acceptance and had him sign it; that later on a demonstration was made of the tractor, and that it would not work with the plow they had brought along; that it did not work; that after the acceptance was signed and after this demonstration, he refused to accept the tractor; that the demonstration was made the next day after the acceptance was signed; that the salesman told him that if the tractor did not work satisfactorily he would not have to accept it; that he left the tractor there that day and came back several days afterwards; that he did not know what day it was he came back, but that it was some time in June; that the acceptance was signed after June 1st; that he did not know just the day but it wasn't on June 1st; that the tractor was in his garage from May 23rd up to the time he signed the acceptance; that the salesman had taken it out of the garage and was connecting up the machinery on it when he signed the acceptance; that he signed it without seeing a demonstration of the tractor, and that the tractor was sold subject to demonstration; that he did not know exactly when the tractor was demonstrated; that it was not demonstrated on June 3rd; that it was demonstrated two or three weeks after that; that they came out and demonstrated it, but they did not demonstrate it on June 4th.

The papers referred to by defendant in his testimony as having been attached to the acceptance when he signed it, consisting of two sheets pinned together, were introduced in evidence. The first sheet is an order for the tractor and equipment. It is dated May 23, 1925, and is signed by defendant. It directs Boyce & Ohm to ship to him at Oakville, Missouri, the tractor and equipment, "subject to demonstration." The second sheet is an invoice, setting forth the items of machinery sold, with the prices charged therefor, aggregating $ 399.90. It states that the tractor and equipment itemized is sold to defendant, "subject to demonstration" and states the "terms" thus: "Trade acceptance, ninety days." It is dated May 23, 1925, and indicates that the tractor and equipment invoiced were "shipped" on that date. The testimony does not show in what manner these papers were attached to the acceptance when defendant signed it.

The evidence for plaintiff shows that it took the acceptance by endorsement, without any knowledge of any infirmity in the acceptance or of any existing defense thereto, and without any knowledge of any facts tending to show bad faith on its part, and there was no evidence on the part of defendant showing such knowledge.

Defendant contends, however, that the testimony of plaintiff's cashier shows knowledge on his part of the facts impeaching the validity of the acceptance. The testimony relied on by defendant, is substantially as follows: "I personally bought the acceptance for the bank from Boyce & Ohm, paying them $ 393.90 for it; there was nothing attached to the acceptance when I bought it; they had the bill there of what they sold and what it was for; there was nothing attached to the acceptance; all I know is that they had the bill there showing what they sold."

Defendant contends that this testimony shows that the cashier had knowledge of the contract of sale between defendant and Boyce & Ohm, stipulating that the tractor and equipment were sold subject to demonstration, and that this amounted to knowledge of the facts impeaching the validity of the acceptance. We are unable to agree with this view. If we assume that the papers exhibited to the...