Conqueror Trust Co. v. Reves Drug Co.

• Citation: 176 S.W. 119
• Decision Date: 26 April 1915
• Docket Number: (No. 333.)
• Parties: CONQUEROR TRUST CO. v. REVES DRUG CO.
• Court: Supreme Court of Arkansas

176 S.W. 119

CONQUEROR TRUST CO. v. REVES DRUG CO.

(No. 333.)

Supreme Court of Arkansas.

April 26, 1915.

Appeal from Circuit Court, Crawford County; Jas. Cochran, Judge.

Action by the Conqueror Trust Company against the Reves Drug Company. From a judgment for defendant, plaintiff appeals. Reversed and rendered.

The appellant instituted this suit against the appellee to recover upon three promissory notes executed by appellee to the order of the Vernon Advertising & Manufacturing Company (hereinafter designated as the Vernon Company). Appellant alleged that the notes were indorsed by the payee to the appellant, being purchased by appellant in the usual course of business, before maturity, and for value, and without notice. The appellee admitted the execution of the notes, but denied that appellant was the innocent holder thereof, and alleged that the notes were procured by fraud. The only issue presented on this appeal is whether or not the appellant was an innocent holder for value.

Julius A. Becker, on behalf of the appellant, testified that he was the treasurer of the appellant, and that appellant bought the notes in the usual course of its business, on the 17th day of March, 1913, a short time after the notes were executed, and several months before their maturity, and without any notice at the time of any defense or that there was any alleged fraud in their execution; that the notes were purchased at a discount of 10 per cent., and the proceeds placed to the credit of the payee, the Vernon Company, which it checked out in the usual course of its business within two weeks thereafter. He further testified that he had made an investigation before the purchase of the notes as to the financial standing of the appellee by writing to the Bank of Alma and to the Commercial Bank of Alma. The Bank of Alma replied, stating that the appellee was doing a good business, and that it was considered good for the amount of $400. The Commercial Bank replied as follows:

"From what information we have the Reves Drug Company, owe about all that their business justifies, although with Mr. W. R. Reves behind the obligation it would be gilt-edge, and worth many times more."

The witness further stated that he investigated the rating given the appellee by Dun's Mercantile reports. Witness stated that appellant had bought other similar notes from the Vernon Company, given by other residents of Arkansas whom witness had not seen nor heard of when the notes were offered to appellant for purchase, and witness stated that he bought these notes as the agent of appellant after careful investigation through local banks and commercial agencies as to the standing of the makers of the notes; that the appellant had bought four or five sets of notes similar to the ones in controversy. Witness stated that at the time he purchased the notes as the agent of appellant he did not know the appellee Reves, nor did he know his signature. Appellant had bought other notes from the Vernon Company, and the signatures of the makers of these notes had been genuine and regular in every instance, and witness had...