Cassedy v. Wells, Jones, Wells & Lipscomb, 29494

• Court: United States State Supreme Court of Mississippi
• Citation: 137 So. 472,162 Miss. 102
• Docket Number: 29494
• Parties: CASSEDY v. WELLS, JONES, WELLS & LIPSCOMB
• Decision Date: 02 November 1931

137 So. 472

162 Miss. 102

CASSEDY v. WELLS, JONES, WELLS & LIPSCOMB

No. 29494

Supreme Court of Mississippi

November 2, 1931

Division A

1. BILLS AND NOTES. Negotiation of note by maker in violation of conditions and agreement of parties to note held breach of faith, rendering maker's title defective (Code 1930 section 2711).

Evidence disclosed that indorsement of note was purely for accommodation of makers and for purpose of leaving note with certain person who was to advance money to maker to buy necessities, but, on being unable to obtain money from such person, maker then negotiated the note to another person, and for purposes other than those named in the conditions and agreement.

2. BILLS AND NOTES.

Where title of one negotiating note was defective, holders had burden of proving they were holders in due course (Code 1930 sections 2708, 2711, 2713).

3. BILLS AND NOTES.

Notice of financial necessity requiring negotiation of note did not require purchaser to inquire regarding defects or want of title in one negotiating it.

4. EXECUTORS AND ADMINISTRATORS. Partners seeking to probate note against estate where title of one negotiating it was defective held not to have met burden of showing they were holders in due course (Code 1930, section 2713).

The testimony of one partner tended to show that negotiations by which note was acquired for firm were conducted and concluded by such partner, but it did not show that he did not consult with and act on advice of the other members of firm, and the record was silent as to knowledge of or notice to members of firm other than one who conducted negotiations.

5. EXECUTORS AND ADMINISTRATORS.

Question of sufficiency of affidavit to claim against estate filed by partnership could not be raised for first time in supreme court (Code 1930, section 1672).

6. EXECUTORS AND ADMINISTRATORS.

Monetary judgment against administrator for sum for which claim on note was allowed held erroneous.

HON. V J. STRICKER, Chancellor.

APPEAL from chancery court of Lincoln county HON. V. J. STRICKER Chancellor.

Wells, Jones, Wells & Lipscomb probated a note against the estate of James W. Cassedy, deceased, and thereafter Ethel Cameron Cassedy, administratrix of the estate, filed her contest and objections to the allowance of the claim. From the decree, the administratrix appeals. Reversed and remanded.

Reversed and remanded.

Butler & Snow, of Jackson, for appellant.

We take the position that the title of Mrs. Logue to the note was defective because she negotiated it in breach of faith or under such circumstances as amount to fraud; that under such circumstances the burden was upon appellees to prove that they were the holders in due course, and that they took it in good faith and without notice of the defect in the title of Mrs. Logue; that they failed to meet this burden; on the contrary, that in view of their relation to Mr. and Mrs. Logue, their knowledge of the circumstances attending the transaction, they are charged with notice.

No point is made but what appellees paid value within the meaning of section 2681, Code of 1930, and there can be no doubt but what Cassedy was an accommodation party, under section 2685, Code of 1930.

The title of a person who negotiated an instrument is defective within the meaning of this chapter, when he obtained the instrument, or any signature thereto, by fraud, duress or force and fear or other unlawful means, or for an illegal consideration, or when he negotiated it in breach of faith, or under such circumstances as amount to fraud.

Sec. 2711, Code of 1930.

In the hands of any holder, other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were non-negotiable.

Sec. 2712, Code of 1930.

Section 2713, Code of 1930, casts upon appellees, and each of them, the burden of proving that they were holders in due course.

The record is entirely silent as to what notice, or lack of notice, that each partner had of the circumstances and conditions and the purposes for which this note was endorsed by Messrs. Cassedy and Franklin and turned over to Mrs. Logue. Notice to any one of them would have been notice to the partnership. 47 C. J. 897; Fletcher v. Stamps, 6 How. (Miss.) 487.

It was incumbent upon appellees for each of them to show that they had no notice of the defect in the title of Mrs. Logue at the time they acquired the note.

Section 2713, Code of 1930; 8 C. J. 984, 986.

If the holders are partners, the good faith of all must be shown.

8 C. J. 986.

We seriously maintain that the testimony of Major Wells fails to meet the burden imposed upon him as one of the holders of this note, by section 2713, Code of 1930.

Meek v. Perry, 36 Miss. 190; Hitt v. Terry, 92. Miss. 671; Ham v. Ham, 146 Miss. 161; 8 C. J. 496, et seq.

Formal notice is not necessary but any knowledge of the holder of defenses is equivalent to notice.

Note (a), 8 C. J. 497; Note 94, page 498; 8 C. J. 498.

Good faith means not only honesty of intention, but the absence of suspicious circumstances, or, if such circumstances exist, then such inquiry as will satisfy a prudent man of the validity of the transaction.

8 C. J., Note 18, p. 502.

Everyone must conduct himself honestly in respect to the antecedent parties, when he takes negotiable paper, in order to acquire a title which will shield him against prior equities. While he is not obliged to make inquiries, he must not wilfully shut his eyes to the means of knowledge which he knows are at hand, for the reason that such conduct, whether equivalent to notice or not, would be plenary evidence of bad faith.

McNamara v. Jose, 28 Wash. 461; State Bank v. Lawrence, 42 L. R. A. (N. S.) 326; 39 L. R. A. (N. S.) 1207.

One who suspects, or ought to suspect, is bound to inquire and the law presumes that he knows whatever proper inquiry could disclose.

Goodman v. Simonds, 15 L. R. A. 934; Ward v. City Trust Company, 192 New York, 61; 8 C. J., p. 506.

Inadequacy is always a fact to be considered by the jury as evidence of bad faith, and may, with suspicious circumstances authorize a finding of bad faith, especially if the consideration is grossly inadequate.

Strong v. Jackson, 123 Mass. 60.

Accommodation indorsers are not held to strict accountability as indorsers for value.

8 C. J., page 252; 8 C. J. 265.

Claimants may not have acted from bad motives "even if his actual good faith is not questioned, if the facts known to him should have led him to inquire, and upon inquiry he would have discovered the real situation, in a commercial sense, he acted in bad faith.

The statutes, sections 1669 and 1671, Code of 1930, require the creditor to make the affidavit specified. The record shows that the firm is composed of four individuals. We respectfully submit that under the statute and the authorities construing it, and similar statutes, it was absolutely necessary for each member of the firm to make an affidavit to this account. The affidavit as made is an absolute nullity. The statute requires the affidavit to be made by the creditor himself. It cannot be made by an agent.

McWhorter v. Donnell, 39 Miss. 779; Cheairs v. Cheairs, 81 Miss. 662; Walker v. Nelson, 87 Miss. 268; Saunders v. Stephenson, 94 Miss. 676; Persons v. Griffin, 112 Miss. 643.

In the case of a partnership each member of the firm is required to make the affidavit.

8 Am. & Eng. of Law, 1087; 24 C. J. 357; Gregory v. Bailey, 4 Harr. Del. 256.

It is perfectly clear that the attempted probate of this claim is absolutely void.

Section 1687, Code of 1930.

Under the law, one cannot waive the general statute of limitations.

Henderson v. Illsley, 11 S. & M. 9; Byrd v. Wells, 40 Miss. 711; Saunders v. Robertson, 23 Miss. 389.

Nor can one waive the requirements of the statute making it mandatory that the claims be probated within a specified time.

11 Am. & Eng. Encl. of Law, 924; Nagle v. Ball, 71 Miss. 330; Woods v. Elliott, 49 Miss. 168; Davis v. Robertson, 23 Miss. 389.

The administratrix cannot waive the requirements of the statute even by an express promise in writing to waive it.

Toler v. Wells, 158 Miss. 628; Huntington v. Babbett, 46 Miss. 528.

The statute expressly prohibits the administratrix from paying this claim, unless probated within the time and manner specified.

The judgment in this case allowing the claim was absolutely void.

Mayes Food Products Co. v. Gloster Lumber Co., 137 Miss. 691; Paepcke Leitch Lumber Co. v. Savage, 137 Miss. 11; Reinecke v. Reinecke, 105 Miss. 798; Alexander v. Porter, 88 Miss. 585.

The court was without jurisdiction, and even if the point was not raised, it would refuse to affirm.

Alexander v. Porter, 88 Miss. 585; Gates v. Union Naval Stores Co., 92 Miss. 227; Gardner v. R. R. Co., 78 Miss. 640; Ball v. Sledge, 82 Miss. 794; Xydias v. Pollman, 121 Miss. 401; Rogers v. Hattiesburg, 99 Miss. 639; Brashman v. State, 140 Miss. 712.

It was not proper to render a monetary decree against the estate.

Section 1678, Mississippi Code of 1930; Bell v. Faison, 53 Miss. 354.

Geo. R. Nobles, of Jackson, for appellee.

A holder in due course is a holder who has taken the instrument under the following conditions: (1) That it is complete and regular upon its face; (2) That he became the holder of it before it was overdue and without notice that it had been previously dishonored, if such was the fact; (3) That he took it in good faith and for value; (4) That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.

Sec. 2708, Code of 1930.

The chancellor expressed grave doubts as to whether or not the instrument was affected with any...