Cox v. Cline

• Decision Date: 09 July 1908
• Parties: COX v. CLINE ET AL.
• Court: Iowa Supreme Court

139 Iowa 128

117 N.W. 48

COX

v.CLINE ET AL.

Supreme Court of Iowa.

July 9, 1908.

Appeal from District Court, Johnson County; R. P. Howell, Judge.

Action upon a promissory note. Judgment for defendants and plaintiff appeals. Reversed.Wade, Dutcher & Davis, for appellant.

Holbert & Kimball, for appellees.

WEAVER, J.

The note in suit was given for the purchase price of a stallion. The defendants resisted payment on the ground that the note was procured by fraud, and that plaintiff is not a bona fide holder. The cause was twice tried in the court below; a verdict for defendants being returned in each instance.

1. In its charge to the jury the trial court, after stating the issues, proceeded as follows: “Seventh. The burden is first upon the plaintiff to establish that he is now the owner of the note sued upon, that he acquired the same in the ordinary course of business and before the same was due, and, should you so find from a careful consideration of all the evidence in this case, you will then find for plaintiff, unless you find that the defendants have shown by a preponderance of the testimony that this note was secured through fraud; that is, that their signatures thereto were secured through false and fraudulent representations, and that the plaintiff at the time he acquired the paper had actual knowledge of such fraud, or that such facts and circumstances were brought to his knowledge before the purchase of the note as would require that he should in good faith inquire as to the validity of the note, and unless you should find that such failure to inquire amounted to actual bad faith.” In giving this paragraph the court omitted to note the well-established rule that the mere possession of the note by the plaintiff raises a presumption, without other evidence, that he is a holder in good faith, and it is not until it has been shown by appropriate evidence that the instrument was procured and put in circulation by fraud that any burden is cast upon him to explain his possession, and give affirmative evidence that he acquired title in due course of business and without notice of the fraud. Lathrop v. Donaldson, 22 Iowa, 234;Shaulis v. Buxton, 115 Iowa, 430, 88 N. W. 968. Counsel for appellee say that the instruction under consideration is not inconsistent with this rule; the burden being upon the plaintiff under the pleadings, though removable for the time being upon production of the note in evidence. But the trouble with this suggestion is that the court did not thus explain or qualify its statement. On the contrary, it told the jury that to make his case the plaintiff must first “establish that he is now the owner of the note sued upon, that he acquired the same in the ordinary course of business and before the same was due,” and, so far from telling the jury that any presumption of ownership or good faith arises in plaintiff's favor from the possession of the note, they were instructed to determine the question “from a careful consideration of all of the evidence in the case.” This placed upon the plaintiff a burden materially greater than the law warrants. It is probably true that the correct rule can be deduced from other instructions given, but this we think cannot serve to remove or neutralize the prejudice...