Commercial Sec. Co. v. Jack

• Decision Date: 02 January 1915
• Citation: 29 N.D. 67,150 N.W. 460
• Parties: COMMERCIAL SECURITY CO. v. JACK.
• Court: North Dakota Supreme Court

29 N.D. 67

150 N.W. 460

COMMERCIAL SECURITY CO.

v.JACK.

Supreme Court of North Dakota.

Nov. 25, 1914.

On Petition for Rehearing, Jan. 2, 1915.

Syllabus by the Court.

In a suit by the indorsee of a negotiable promissory note, the title of the payee of which is not shown to have been defective, within the meaning of section 6940, Comp. Laws 1913 (R. C. 1905, § 6357), the burden is upon the maker, who seeks to defeat payment, to first prove that plaintiff is not an indorsee thereof in due course. In other words, the burden is upon him of overthrowing the prima facie presumption, as prescribed in section 6944, Comp. Laws, that plaintiff is a holder in due course. Held, that defendant failed to meet such burden.

The title of a payee of a promissory note is defective, within the meaning of the above statute, only “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.” Tested by this statutory rule, it is held that the title of the payee of the note in suit was not defective.

Defendant's contention that plaintiff waived the benefit of the presumption created by section 6944, Comp. Laws, by the introduction of certain testimony for the purpose of proving the sale and indorsement of the note by the payee to the plaintiff is held untenable.

The contention that the testimony of the plaintiff's witness, who was called to prove the sale and indorsement of the note, and who testified that such sale and indorsement took place on September 29, 1911, was sufficiently impeached by proof of certain letters written by the witness after such date but long prior to the maturity of the note to authorize a submission to the jury of the question whether such sale and indorsement were made before the maturity of the note, held without merit.

While the testimony of a witness may be impeached by proof of contradictory statements of the witness made out of court, such impeachment must be confined to such testimony as is relevant and material to the issues.

Appeal from District Court, Grand Forks County; C. M. Cooley, Judge.

Action by the Commercial Security Company against W. R. Jack. From judgment for plaintiff non obstante verdicto, defendant appeals. Affirmed.

Scott Rex, of Grand Forks, for appellant. W. J. Mayer, of Grand Forks, for respondent.

FISK, J.

Plaintiff and respondent, a foreign corporation, brought this action to recover upon a negotiable promissory note for $350 executed and delivered by defendant and appellant to the American Manufacturing Company and indorsed by it to plaintiff. The complaint is in the usual form, alleging the corporate existence of plaintiff, the execution and delivery of the note as aforesaid, and the transfer thereof by indorsement to plaintiff for value and before maturity. By his answer defendant expressly admits the allegations as to the corporate existence of plaintiff, the execution and delivery of the note, and the nonpayment thereof, but denies generally the other allegations of the complaint. He then alleges certain new matter by way of defense as follows:

III. “Further answering, and for a separate defense herein, defendant alleges that the consideration for the giving of said note was the agreement on the part of said American Manufacturing Company to furnish material for and superintend a voting contest to be carried on in connection with the skating rink business which was then operated by defendant at Grand Forks, N. D., and that company thereby stipulated and agreed to increase the gross proceeds of such business during the six months commencing October 1, 1911, in the sum of $3,000; that said American Manufacturing Company failed to furnish the material for such contest and failed to superintend the same, and wholly failed to increase the gross proceeds of this defendant's business; and that, by reason of the premises, the consideration for said note has failed.”

IV. “Further answering, and for a separate defense herein, defendant alleges that the consideration for the note in suit was the agreement on the part of said American Manufacturing Company to furnish material for and to superintended a voting contest to be carried on in connection with the skating rink business which was then operated by defendant at Grand Forks, N. D., and that said company thereby stipulated and agreed to increase the gross proceeds of such business during the six months commencing October 1, 1911, in the sum of $3,000, and whereby it agreed to refund to defendant 6 per cent. of each dollar it so failed to increase the gross proceeds of such business; that the gross proceeds of defendant's business during the period aforesaid were not increased in any sum whatsoever by the said contest; that said American Manufacturing Company failed to furnish material therefor and to superintend the same; and that, by reason of such failure of said company to carry out the terms of said contract, this defendant has been damaged in the sum of $1,000 and upwards.”

It is observed that nowhere is it alleged in such answer that plaintiff ever had any notice or knowledge of the facts thus averred as a defense, or that there was a rescission of the contract; defendant evidently relying upon the fact that plaintiff, if it purchased the note at all, took it subject to all defenses and not as an indorsee in due course. In other words, he relied upon the assumption that he had put in issue, by the denial in the answer, plaintiff's allegations respecting the sale and indorsement of the note by the payee to plaintiff before its maturity, and for value, and that such issue would, at the trial, be resolved in his favor. The issues thus framed were tried to a jury, and, in brief, the following proceedings took place: Plaintiff proved by the deposition of one G. H. Partin, president of the payee, that the note in suit was on September 29, 1911, which was prior to its maturity, sold and indorsed by such payee to the plaintiff for value. Thereupon the note, together with the indorsement on the back thereof: “Pay to the order of the Commercial Security Co. American Mfg. Co., G. H. Partin, President”-was offered and received in evidence without objection. Defendant's counsel then read from such deposition certain testimony given by such witness on cross-examination, which we need not here set out, as we do not deem it very material. Thereupon plaintiff rested its case. The defendant was then permitted, over plaintiff's objections, to testify relative to the various defensive matters alleged in his answer and to the contract entered into between him and the payee of the note, also to two letters, one dated September 30, 1911, and the other October 16th of that year, both written on letter heads of the payee of the note, addressed to defendant, and signed “American Manufacturing Company, by G. H. Partin, President,” and both pertaining to such note; the purpose of the latter proof being to discredit Partin's testimony as to the transfer of the note to plaintiff on September 29th. Defendant's testimony discloses that the note in suit was given by him pursuant to and in consideration of an order or contract between him and the American Manufacturing Company, of date July 14, 1911, as follows:

“American Manufacturing Co., Lexington, Tenn.-Gentlemen: Please reserve and ship me at your earliest convenience f. o. b. Minot, N. D., or distributing point, your piano, dinner sets and advertising matter described on this and reverse side, in payment for which I hereby hand you my installment note for $350, payable to your order, with the understanding that if this order is not approved this contract is to be cancelled and returned to me. My past twelve months' sales were $3,000 and you are to increase my next six months' sales to $6,000 with the understanding that if my gross...