Commercial Bank Of Danville v. Burowyn

• Decision Date: 03 March 1891
• Court: North Carolina Supreme Court
• Parties: Commercial Bank of Danville v. Burowyn.

12 S.E. 952

108 N.C. 62

Commercial Bank of Danville

v.Burowyn.

Supreme Court of North Carolina.

March 3, 1891.

Negotiable Instruments—Innocent Holders— Burden op Proof.

Where, in an action on a note by an indorsee against the maker, defendant pleads fraud in the inception of the note, and gives evidence tending to establish it, the burden is on plaintiff to show that he is an innocent holder.

Appeal from superior court, Vance county; Womack, Judge.

Battle & Mordecai, for appellant.

A. W. Grab aw, for appellee.

Shepherd, J. The note sued upon was negotiable, "and there is a prima facie presumption of law in favor of every holder of a negotiable paper to the extent that he is the owner of it, and that he took it for value and before dishonor." 1 Pars. Notes & B. 255; Tredwell v. Blount, 86 N.C. 33. Where, however, fraud or illegality in the inception of the instrument is pleaded, and the defendant introduces evidence tending to establish such plea, then the prima, facie case made by the indorsee, who simply offers the note and proves its execution, is so far rebutted as to shift the burden of proof, and to render it essential to his right of recovery that he show that he is a bona tide purchaser for value and without notice. Pugh v. Grant, 86 N. C. 39; 1 Daniel, Neg. Inst. §815. Mr. Daniel says (section 166) that in such a case "a new coloring is imparted to the transaction. The plaintiff, if he has become innocently the holder of the paper, is not permitted to suffer; but as the knowledge of the manner in which it came into his hands must rest in his bosom, and the means of showing it must be much easier to him than to the defendant, he is required to give proof that he became possessed of it or a sufficient consideration. If he is in nocent, the burden must generally be a light one; and if g.iiltv, it is but a proper shield to one who would be, but for its protection, his victim." Applying these principles to the case before us, it is plain that his honor erred in charging the jury that if they believed the evidence, the plaintiff was a purchaser for value and without notice. The defendant pleaded that the execution of the note was induced by the fraudulent representation of the payee, and there was evidence tending to establish the alleged fraud. It then became incumbent on the plaintiff to show that he purchased for value and without notice, and, failing to do this, he was not entitled to the instruction given by the court. It is but just to say...