Coopersmith v. Mahoney

Decision Date24 May 1928
Citation143 S.E. 313
PartiesCOOPERSMITH . v. MAHONEY. SAME . v. RUDD.
CourtVirginia Supreme Court

Error to Law and Equity Court of City of Richmond, Part 2. i

Suits by A. Coopersmith against W. P. Ma-honey and against E. W. Rudd. To review judgments for defendants, plaintiff brings error. Reversed and rendered.

Cary Ellis Stern & Chumbley, of Richmond, for plaintiff in error.

David Meade White, of Richmond, for defendants in error.

McLEMORE, J. These cases, in which there are the same questions involved, and in which the same evidence was introduced, are here upon writs of error to the judgment entered against the plaintiff in the law and equity court of the city of Richmond, part II, and will be considered as though they had been consolidated.

The plaintiff, A. Coopersmith, treasurer of City Corrugated Paper Products Company, Inc., of New York, and also an investor in commercial paper when attractive propositions were offered, purchased from Otis Oil Burner Corporation, of New York, certain acceptances (six in number) of the defendants Mahoney and Rudd, plumbers and heaters of Richmond, aggregating $1,374, for which he paid $1,031.

Payment on these notes or acceptances was demanded of the obligors as they became due. The first note due by each defendant was paid, and all of the others refused, whereupon actions were brought to recover judgments against the makers of the notes, Mahoney and Rudd.

Defendants pleaded the general issue and also filed special pleas alleging that the acceptances were fraudulently procured by the Otis Oil Burner Corporation and that plaintiff knew of these facts. The issues thus raised were submitted to a jury, and verdicts returned in favor of defendants, and judgments entered thereon.

The errors asssigned are: First. Improper instructions to the jury. Second. That "the evidence is not sufficient, as introduced, to warrant a finding for the defendant under the pleadings."

There were a number of instructions offered by the plaintiff, most of which were refused, and there were others offered and given at the instance of the defendants. The refusal to give those asked by the plaintiff, and the giving of those requested by the defendants, were excepted to by plaintiff's counsel, but no grounds of exception were presented to the court as required by rule XXII of the Supreme Court of Appeals.

The certificate of the judge of the trial court says:

"The foregoing instruction requested by the plaintiff was denied, and the plaintiff excepted."

Again:

"The foregoing instruction was granted at the request of the defendant, and the plaintiff excepted."

The observations of Campbell, J., In Kelly v. Schneller, 148 Va. 573, 139 S. E. 275, are pertinent here:

"No objections are set forth in the certificate of the trial judge. Nowhere does it appear in the record that the attention of the trial court was called to the alleged errors in the instructions. All that is said on the subject of objections to the instructions is found in the following certificate."

No specific objections to the granting or to the refusing of instructions appear to have been presented to the trial judge, and we are therefore precluded from considering the objections raised, for the first time, in the brief of the plaintiff. Had the objections now being urged been suggested to the learned trial judge, the errors complained of might have been there corrected. Kelly v. Schneller, supra; Levine v. Levine, 144 Va. 330, 132 S. E. 320; Universal Motor Co., Inc., v. Snow (Va.) 140 S. E. 653.

The second ground for asking the reversal of the judgments is that the evidence did not justify the jury in finding for the defendant. This, in effect, amounts to a demurrer to the evidence.

Upon the threshold of a consideration of this question, we are met with the objection that exceptions to the entering of judgment for the defendants was not properly preserved and brought to this court by bill of exceptions or certificate from the trial judge (Va. Code, § 6253), and is therefore not before the court.

The court order entered October 21, 1926. overruling the motion to set aside the verdict is as follows:

"This day came again the parties, by counsel, and the motion heretofore made by the plaintiff to set aside the verdict of the jury herein and grant him a new trial having been fully heard, the court doth overrule the same. It is therefore considered by the court that the plaintiff take nothing by his suit, etc., but that the defendant go thereof without day and recover against the plaintiff his costs by him about his defence in this behalf expended.

"To which ruling of the court, the plaintiff, by counsel, excepted."

While the better practice is to preserve the exception by a certificate or bill of exceptions signed by the judge, sections 6252 and 6253, Va. Code; Burks' Pleading and Practice, p. 523, where, as here, the order of the court which was signed by the judge, shows the motion was made, overruled, and excepted to by counsel, all that the bill or certificate could accomplish has been done, and we are of the opinion, therefore, that the grounds urged for a reversal of the court's judgment should be considered and disposed of on themerits, Trust Company of Norfolk v. Conimonwealth. (Va. March 1, 1928) 141 S. E. 826.

In considering the motion to set aside the verdict because the evidence Is insufficient to support same, it must be remembered that the instructions, however erroneous, are to be considered as embodying the law of the case (exceptions thereto not having been effectively preserved), and we are therefore to determine from the record whether or not the jury had before them suffered evidence to justify the verdict rendered, the law being declared in the instructions which binds them in the consideration of the case.

. [5] The principles of law applicable to cases of this character are well settled, and well stated in Piedmont Bank v. Hatcher, 94 Va. 229, 26 S. E. 505. It is there said:

"If the maker or party primarily liable for its payment, or any party bound by the original consideration, proves that it was obtained by fraud or illegality in its inception, or if the circumstances raise a strong suspicion of fraud or illegality, the burden of proof is shifted, and the holder of the note must show that he acquired it bona fide for value in the usual course of business while current, and under circumstances which create no presumption that he knew of the facts which impeach its validity."

The application of the principles to the facts of the particular case often presents difficulties. The importance of the question as it affects the ready transfer and negotiability of commercial paper, the basis of the business of the world, and without which industry would stagnate and industrial progress cease, is of transcendant importance.

The law withholds its aid from all known participants in deceit, fraud, crime; it is also reluctant in extending relief to those who, by their carelessness, neglect, or abandonment of common prudence, make it possible, even easy, for the public to suffer because of their negligence.

"Those who execute negotiable paper and set it afloat are chargeable with a much higher degree of diligence and caution than those who purchase such paper in due course of commercial transactions." Pleshman v. Bibb, 118 Va. 582, 587, 88 S. E. 64, 66.

The evidence leaves us without doubts as to the fraud in the procurement of the acceptances sued on, and as between the defendants and Otis Oil Burner Corporation there would be no difficulty in allowing the verdict of the jury and judgment of the court in favor of Rudd and Mahoney to stand affirmed. The cases before us involve different principles of law, the doctrine being that, where there is fraud or illegality in the inception, the holder of the security must show that he obtained it bona fide, in the usual course of business, before maturity, and under circumstances which create no presumption that he knew of the facts which impeached its validity. Duncan v. Carson, 127 Va. 306 321, 103 S. E. 665, 670, 105 S. E. 62; Virginia Code, § 5621.

The material evidence on this point is confined to two witnesses, the plaintiff in his own behalf, and Frankel introduced by the defendants.

The Virginia decisions In discussing the question, upon a cursory reading, are confusing in the conclusions reached in some of the cases, notably in Meshman v. Bibb, 118 Va. 582, 587, 88 S. E. 64; Duncan v. Carson, 127 Va. 306, 103 S. E. 665, 105 S. E. 62; Crum v. Hanna, 140 Va. 366, 125 S. E. 219; and Elkhart State Bank v. Bristol Broom Co., 143 Va. 1, 7, 129 S. E. 371. We believe, however, that the differences are more apparent than real, and are the result of a state of facts in the case of Duncan v. Carson and Elkhart Bank v. Bristol Broom Co., supra, which justified the statement by Burks, X, in both opinions that:

"The credibility of this testimony, though undisputed, was for the jury."

In the Carson Case, the two witnesses testifying were Marion Allen, manager sales department of Carson Manufacturing Company and in absolute control of same, and J. P. Carson, president of said company. Occupying these positions, Allen sold to E. P. Duncan stock in the company of the par value of $5,000, taking Duncan's note therefor, under such circumstances and misrepresentations as to render the transaction as between Allen, for the company, and Duncan fraudulent in its inception. Allen, being unable to realize the cash on Duncan's note, agreed with J. P. Carson for the purchase of the same in consideration of 250 shares of the company's stock which was issued and signed by Carson, president of the company. Carson, it will be remembered, is suing Duncan to recover on the said note. Allen and Carson had adjoining offices in the company's suite of rooms in Richmond.

Thus situated, Allen testified that he did not think he told Carson of the circumstances in connection with the inception of the...

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