Cole Banking Co. v. Sinclair

• Decision Date: 19 November 1908
• Docket Number: 1915
• Citation: 34 Utah 454,98 P. 411
• Court: Utah Supreme Court
• Parties: COLE BANKING CO. v. SINCLAIR et al

98 P. 411

34 Utah 454

COLE BANKING CO. v. SINCLAIR et al

No. 1915

Supreme Court of Utah

November 19, 1908

APPEAL from District Court, Third District; T. D. Lewis, Judge.

Action by the Cole Banking Company against C. G. Sinclair and another. From a judgment for plaintiff, one of defendants appealed.

AFFIRMED.

J. E Darmer and S. P. Armstrong for appellant.

E. A Walton for respondent.

STRAUP J. McCARTY, C. J., and FRICK, J., concur.

OPINION

STRAUP, J.

This action was brought to recover money alleged to be due on a promissory note. It was alleged in the complaint that the defendant Hensel executed and delivered the note to the defendant Sinclair; that, before maturity, Sinclair indorsed and delivered the note to plaintiff, guaranteeing the payment thereof; and that payment was demanded of the defendants which they failed and refused to make. The defendant Hensel answered admitting the execution and delivery of the note, and further alleged that he executed it in payment of premiums on a life insurance policy delivered to him by Sinclair as the agent of the insurance company issuing the policy, and upon the further consideration that Sinclair promised him "that the company would require his services [those of a physician] in the examination of applicants for insurance, and that it would furnish him with a sufficient amount of such business to reimburse him for the premiums which he might pay on the policy; that afterwards this defendant and said Sinclair learned that said company did not have the business as promised, and canceled said policy of insurance, and same was delivered back to said Sinclair as agent of said company, and that said note should have been delivered up and canceled;" that plaintiff paid no consideration for the note, but took it for collection only, and that it was not purchased nor held by it in good faith. In its reply the plaintiff denied that the note was only received by it for collection, and averred that it was purchased by it before maturity and in good faith, and for a valuable consideration. The case was tried to the court, who found the note negotiable, and that the plaintiff before maturity, in due course of business, purchased it from Sinclair, who indorsed and delivered it to plaintiff in good faith and for a valuable consideration, and without notice of any equities or defenses thereto. Judgment was thereupon entered in favor of plaintiff, from which the defendant Hensel has prosecuted this appeal.

He insists (1) that there is not sufficient evidence to support the finding that the plaintiff purchased the note before maturity in good faith for a valuable consideration and without notice of the defense pleaded by him, and that the burden of proving such facts was upon the plaintiff; and (2) that the evidence which was introduced by plaintiff in support of such facts was incompetent and erroneously admitted over the defendant's objections.

By section 1604, Comp. Laws 1907, "a holder in due course" is defined. Section 1611 provides that

"Every holder is deemed prima facie to be a holder in due course; but, when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title in due course."

By section 1607 it is provided that

"The title of a person who negotiates an instrument is defective within the meaning of this title 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 negotiates it in breach of faith, or under such circumstances as amount to a fraud."

By section 1609 that

"A holder in due course holds the instrument free from any defect of title of prior parties and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon."

The defense pleaded was not illegal, but mere partial failure of consideration....