Clough v. Holden

• Citation: 21 S.W. 1071,115 Mo. 336
• Parties: Clough v. Holden, Appellant
• Decision Date: 25 March 1893
• Court: United States State Supreme Court of Missouri

21 S.W. 1071

115 Mo. 336

Clough v. Holden, Appellant

Supreme Court of Missouri

March 25, 1893

Appeal from Jackson Circuit Court. -- Hon. R. H. Field, Judge.

Reversed and remanded.

Warner Dean & Hagerman for appellant.

(1) The instruction given for plaintiff was erroneous, because it based plaintiff's right to recover upon the finding of a single fact (and did not properly state the law as to that fact), while it ignored every other question in the case. Clark v. Hammerle, 27 Mo. 55, 70; Birtwhistle v Woodward, 95 Mo. 113; Bank v. Metcalf, 29 Mo.App. 384. (2) The court erred in excluding the evidence offered by defendant to show that the note was presented for payment after business hours. 1 Daniel on Negotiable Instruments [4 Ed.] secs. 601, 603; Tiedeman on Commercial Paper, sec. 317, and cases cited; Story, Promissory Notes [3 Ed.] sec. 226; Story, Bills of Exchange, secs. 236, 349; Swan v. Hodges, 3 Head (Tenn.) 251; Sulzbacher v. Bank, 86 Tenn. 201; Baumgardner v. Reeves, 35 Pa. St. 250; Shed v. Brett, 1 Pick. (Mass.) 412; Parker v. Gordon, 7 East, 385; Dana v Sawyer, 22 Me. 244; Lunt v. Adams, 17 Me. 230. (3) The court erred in refusing to allow defendant to show that the original notes, for which the note sued on was a renewal, were obtained from Bancroft by the fraudulent misrepresentations of Leland, and that plaintiff was a partner of Leland, and knew of his fraud and misrepresentations in obtaining the original notes; and that Bancroft at the time he gave the note sued on was ignorant of plaintiff's connection with Leland, and supposed he was an innocent holder for value of the note sued on. Brown v. North, 21 Mo. 528; Bank v. Fowler, 36 Mo. 33; 1 Daniel on Negotiable Instruments [4 Ed.] secs. 193, 789. (4) The court erred in permitting plaintiff to dismiss as to Bancroft and prosecute the action as to appellant after appearance and answer filed by said Bancroft, it appearing that appellant stood in the relation of an accommodation indorser or surety for said Bancroft. (5) Under the general allegation of fraud in the answer defendant was not bound to prove any particular kind of fraud. Edgell v. Sigerson, 20 Mo. 494; Smalley v. Hale, 37 Mo. 102; Fox v. Webster, 46 Mo. 181. (6) Where a compromise is obtained by fraud it should be treated like any other fraud; no sanction can attach to it because it is a compromise. Hoge v. Hoge, 1 Watts, 216. (7) It was not necessary for defendant to first tender back the property to which he is equitably entitled, and respecting which a court of equity would have compelled a surrender and cancellation in his favor in the first instance. 1 Bigelow on Fraud, p. 424; Moody v. Drown, 38 N.H. 45; Montgomery v. Bucyras, etc., 92 U.S. 257. Even if plaintiff was entitled to a surrender of the original notes and collateral, a delivery at the trial was sufficient. Tozier v. Crafts, 123 Mass. 480. (8) When a plaintiff invokes the aid of a court to obtain the benefit of a contract founded on fraud he cannot obtain standing therein on the ground therein that prior to the bringing of the suit the party he has defrauded had not rescinded the agreement. 1 Bigelow on Fraud, 438.

Karnes, Holmes & Krauthoff for respondent.

(1) Plaintiff's instruction omits no issue as to which there was any evidence before the court; it covers the whole case and was rightly given. The three things said to be requisite to support the plaintiff's case were all shown by the notary's certificate of protest read in evidence. This certificate was prima facie evidence of the facts therein stated. (1 Revised Statutes, sec. 4880.) Being documentary in its character, in the absence of any evidence to the contrary, its prima facie character became conclusive. Kelley v. Jackson, 6 Pet. 622; United States v. Wiggins, 14 Pet. 334; Magoffin v. Railroad, 102 Mo. 540. (2) Business hours except in cases of banks range through the whole day down to the hours of rest in the evening. Cayuga Bank v. Hunt, 2 Hill, 635; Salt Springs Bank v. Burton, 58 N.Y. 430; DeWolf v. Murray, 2 Sandf. 166; Triggs v. Newnham, 1 C. & P. 631; Morgan v. Davison, 1 Starkie, 114; Wilkins v. Jadis, 2 B. & Ad. 188; 1 Daniel on Negotiable Instruments [4 Ed.] secs. 911, 912; Worley v. Lyon, 117 Ill. 244; Skelton v. Dustin, 92 Ill. 49. The direct ruling of the highest court of the state whose law governs the point under consideration is conclusive of the question. Roquette v. Overman, L. R. 10 Q. B. 525. (3) The rule must now be regarded as settled that it is not sufficient to plead fraud generally but that the facts constituting the alleged wrong must be set out. Bliss on Code Pleading, sec. 211; Smith v. Sims, 77 Mo. 269; Reed v. Botts, 100 Mo. 62; Hoester v. Sammelmann, 101 Mo. 619; Duffy v. Byrne, 7 Mo.App. 417. (4) Before liability on the note sued on could have been escaped, it was necessary to tender back to Clough the $ 6,900 note and the collateral security he held for its payment, for, in spite of all these, defendants could say that note constituted a valid obligation against Leland. 1 Bigelow on Fraud, p. 75, et seq; 2 Chitty on Contracts, [11 Am. Ed.] p. 1089, note m., p. 1092; Ackerman v. McShane, 9 So. 483; Kinne v. Webb, 49 Fed. Rep.; 2 Daniel on Negotiable Instruments [4 Ed.] sec. 193; Brown v. Morgan, 65 Miss. 369; Brown v. Ins. Co., 117 Mass. 479. (5) Under our statute the plaintiff was at liberty to sue any or all of the parties to the note described in the petition. 1 Revised Statutes, secs. 2384, 2387; 1 McQuillin's Missouri Practice, secs. 123, 124. A dismissal of the suit as to one of the defendants placed him out of court as if he had never been brought in. Bank v. Cottey, 70 Mo. 150. (6) And the same rule has been applied where the suit was originally brought against the maker and his accommodation indorsers, and subsequently dismissed as to the former and prosecuted to judgment as to the latter. Faulkner v. Faulkner, 73 Mo. 327; Young v. Brown, 10 Iowa 537.

Gantt, J. Sherwood, J., dissents, and Barclay, J., concurs in the judgment; but he dissents from the third paragraph and refers to his opinion in Reed v. Bott(1889), 100 Mo. 67, for a statement of his views upon the point of difference.

OPINION

In Banc.

Gantt J. --

This action was originally commenced against John B. Bancroft as maker, and Howard M. Holden as indorser, of the following note:

"$ 4,000. Chicago, October 6, 1888.

"On the first day of July, 1889, after date, I promise to pay to the order of the Union Tie Company, Chicago, $ 4,000 at room 70, Home Insurance Building, Chicago, Illinois, value received.

"No. 9995. John D. Bancroft."

Indorsed: "Union Tie Company, J. D. Bancroft, Treasurer. Pay to the order of D. M. Clough, Esq., Howard M. Holden, Kansas City, Mo. D. M. Clough. Pay D. Hoyt, cashier or order, for collection, account of Bank of Minneapolis, M. Bofferding, Cashier."

This last indorsement was erased when the action was begun.

John D. Bancroft, the maker, entered his voluntary appearance to the cause and filed his answer. Holden, the indorser, was duly served in Jackson county and filed his answer.

After the issues were made up, Bancroft applied for a change of venue, pending which the plaintiff dismissed as to him, to which action of the court, defendant Holden excepted.

The answer of defendant Holden contained first, a general denial and these special defenses:

"2. This defendant, for his further answer to said petition, states that it is true that the said Bancroft made and the said Holden indorsed the note described in said petition, but defendant further states that he was merely an accommodation indorser, and that he had no greater or further interest in said note than as accommodation indorser for the said Bancroft.

"3. This defendant further states that the said note was obtained from the said Bancroft by fraud and misrepresentation and without consideration, and that the plaintiff at the time he took said note knew that the same had been obtained from said Bancroft by fraud and misrepresentation and without consideration, and that he never paid value for the same, and that said Holden was merely an accommodation indorser on said note.

"4. This defendant, further answering, states that plaintiff in this cause did institute suit against him and the said John D. Bancroft, the maker of said note. That since the institution of said suit, and after answer filed by said Bancroft, plaintiff has dismissed his action and refuses further to prosecute his action against the said Bancroft.

"Wherefore this defendant, having fully answered, asks to be hence discharged with his costs in this behalf created."

To this answer plaintiff filed the following reply:

"The plaintiff, for amended reply to the answer of defendant in the above entitled cause, says it is true that the defendant Bancroft made and the said Holden indorsed the said note described in the petition, but denies each and every other allegation contained in said answer and says that for value received before the maturity thereof the said note was indorsed and delivered to this plaintiff and he is now the owner and holder thereof in good faith, without any knowledge then or now that there was any fraud or defect, or failure of consideration in any wise connected with said note, and prays judgment as in the petition."

The trial resulted in a judgment for plaintiff, from which defendant Holden has appealed to this court. The errors assigned will be considered in the order in which it is alleged they occurred.

I. To sustain his case against defendant Holden as an indorser, plaintiff offered a copy of the note with all the indorsements thereon as above set forth, with the following certificate of protest:

"State of Illinois, Cook County.] ss.

"Be it known, that on...