Currie-McGraw Co. v. Friedman

• Decision Date: 26 May 1924
• Docket Number: 24080
• Parties: CURRIE-MCGRAW CO. v. H. & J. FRIEDMAN. [*]
• Court: Mississippi Supreme Court

100 So. 273

135 Miss. 701

CURRIE-MCGRAW CO. v. H. & J. FRIEDMAN. ^[*]

No. 24080

Supreme Court of Mississippi

May 26, 1924

Division B

Suggestion of Error Overruled June 9, 1924.

APPEAL from circuit court of Lafayette county, HON. THOS.E. PEGRAM Judge.

Suit by the Currie-McGraw Company against H. & J. Friedman. Judgment for defendants, and plaintiff appeals. Judgment reversed demurrers to pleas sustained, and case remanded.

Judgment reversed, demurrers sustained and case remanded.

Montgomery & McClure, for appellant.

On inspection of the five pleas demurred to by the plaintiff it is observed that no reference is made therein that the plaintiff knew or had notice of the facts set out and relied on as a defense in this suit. This being true, the plaintiff in this case who sues the defendants as a bona-fide holder for value could not be defeated in his suit by defenses which he did not know about and which existed and were known exclusively between the payee, Cramer, and the drawer of the check, the defendants in this suit.

I. Can a party put in circulation a check bearing a legal date and as against an innocent holder for value without notice show that it was actually executed and delivered on Sunday?

There are three reasons why this defense cannot be maintained which are as follows: (1) The Negotiable Instruments Law itself denies it; (2) The Sunday Law has been impliedly repealed in so far as it conflicts with the Negotiable Instruments Law, and (3) The law of estoppel. Sections 52 and 57 of the Negotiable Instruments Law. Mitchell v. Campbell, 111 Miss. 806, was decided prior to the adoption of the Negotiable Instruments Law in Mississippi and hence not controlling.

The case of Elkin Henson Grain Company v. White, 98 So. 531, should be overruled only to the extent and in so far as this decision conflicts with section 57 of the Negotiable Instruments Law, and destroys the force and effect of same. A great number of the states of the Union have followed the doctrine that: "Illegality ceases to be a real defense under the Negotiable Instruments Law unless made so by a subsequent statute, and that the statutes previously in force declaring void, instruments given for gaming or upon usurious interests or other forbidden transactions are impliedly repealed by the Negotiable Instruments Law." These cases are as follows: Wirt v. Stubblefield, 17 App. D. C. 283; Schlesinger v. Kelly, 114 A.D. 546, 99 N.Y.S. 1083; Broadway Trust Company v. Manheim, 47 Misc. 415, 419, 95 N.Y.S. 63; Schlesinger v. Lehmaier, 191 N.Y. 69, 73, 83 N.E. 657, 658, 16 L. R. A. (N. S.) 626, 123 Am. St. Rep. 591; Klar v. Kostiuk, 65 Misc. 199, 119 N.Y.S. 683; Horowitz v. Hollowitz, 59 Misc. 520, 110 N.Y.S. 972; Olser & Company v. Behrend, 89 Misc. 391, 151 N.Y.S. 873; Wood v. Babbitt, 149 F. 818, 822. See, also, the opinion of WILLARD BARTLETT, J., in Schlesinger v. Gilhooly, 189 N.Y. 1, 81 N.E. 619. See Washer v. Smyer et al., 211 S.W. , 4 A. L. R. 1320.

We respectfully submit to this court, that the statutes in Mississippi, to-wit: Sections 1102, 1103 of Hemingway's Code, which make it a misdemeanor for merchants etc., to engage in work on Sunday or to sell merchandise, etc., do not in any manner or form declare that a note, contract, check or other paper which is given in payment of goods, wares or merchandise sold on Sunday shall be void; nor do these two sections in any manner or form suggest or imply that payment shall not be recovered for such goods or wares or merchandise sold so as to further suggest that a check given in payment for the same would be impliedly held void under the statutes.

Therefore, in view of the decision of the case of Elkin Henson Grain Company v. White, and in view of the great weight of authority of other states, we confidently assert that the defendants in this case cannot avail themselves of the plea that the check sued on in this case is void in the hands of a bona-fide purchaser for value without notice, because made on a Sunday, for the reason they cannot point to express declaration of the legislature that such unlawful act of the parties makes the check absolutely void.

II. Illegality of the Transaction.

3 R. C. L., page 1016, par. 224, says: "Illegality of consideration of a bill or note is a good defense in a suit between the original parties. It by no means follows, however, because a contract made in violation of law, common or statutory, is void between the original parties, that if given the form of negotiable paper it is void in the hands of a bona-fide holder." Citizens Nat. Bank v. Nore, 67 Neb. 69, 2 Ann. Cas. 604, 3 R. C. L., 1018, par. 226.

III. The Law of Estoppel.

The party who makes the check cannot set up his own illegal act as a defense to a suit of an innocent party. This law is founded upon justice. The great weight of authority of other states is in accord with this principle. Cranson v. Goss, 107 Mass. 439, 9 Am. Rep. 45, held that a promissory note bearing the date of a secular day is valid in the hands of a bona-fide holder for value, although in fact made and delivered on the Lord's Day, and therefore invalid as between the original parties. This view is sustained by the following courts: Saltmarsh v. Tuthill, 13 Ala. 390, 406; Bank of Cumberland v. Mayberry, 48 Me. 198; Vinton v. Peck, 14 Mich. 287; State Capital Bank v. Thompson, 42 N.H. 369; Leightman v. Kadetsky, 58 Iowa 676, 46 Am. Rep. 129; Meyers v. Kesslin, 142 F. 730, 74 C. C. A. 62; Trieber v. Commercial Bank, 31 Ark. 128; Clinton National Bank v. Graves, 48 Iowa 288; Clark v. Barthold, 87. N. J. L. 255; Know v. Clifford, 38 Wis. 651, 20 Am. Rep. 28; Waverly First National Bank v. Furman, 4 Pa.Super. 415, 5 R. C. L. 535, par. 57; Gordon v. Leveine, 197 Mass. 263, 83 N.E. 861, 125 A. S. R. 361, 15 L. R. A. (N. S.) 243; Mosely v. Selma National Bank, 57 So. 91. "The great weight of authorities seem to hold that one who gives to an instrument a legal date, thereby authorizing innocent parties to deal with it as such, cannot be heard to deny the legality of date in a suit against him as an innocent holder who comes in possession as a bona-fide purchaser for value without notice. It would seem that this rule is essentially just and based on sound reason and applicable to commercial paper." Knox v. Clifford, 38 Wis. 651, 20 Am. Rep. 28; Leightman v. Kadetsky, 58 Iowa 676, 43 Am. Rep. 129; Vinton v. Peck, 14 Mich. 287; Love v. Wells, 25 Ind. 503, 87 Am. Dec. 375.

While this question has been decided in most of the states in the union, there has not been a single decision directly in point decided by our own court since the adoption of this act. The case of Despres, Bridge & Noel v. Hough Drug Co., 123 Miss. 598, where a defense was made to the payment of a note that the payee, a corporation, had not filed its charter in this state as required by law, has a bearing however.

Our own court has held in the case of Land v. Lacoste, 5 Howard 471, that if the maker of a note says to a purchaser that he has no defense to the payment thereof, and that the note will be paid, he will be estopped to set up a defense in a suit for payment then existing but unknown to him. Again, in the case of Montgomery v. Dillingham, 3 S. & M. 647, and in Ayers v. Mitchell, 3 S. & M. 683, if the maker of a note says that the note is just, that he considers it good against him, and that he expects to make satisfactory arrangement with the holder when it falls due, he is estopped in a suit for payment to set up a defense to the same.

IV. Can a Failure of Consideration of a Check Between the Drawer and the Payee Therein Be Interposed as a Defense to Payment of the Check in the Hands of an Innocent Holder for Value Without Notice?

Section 57 of the Negotiable Instruments Law expressly declares that a holder for value without notice takes the instrument free from every defense available to prior parties among themselves. See, too, Despres, Bridge & Noel v. Hough Drug Company, 123 Miss. 598; Johnson County Savings Bank v. Yarbrough, 106 Miss. 79; First National Bank Iowa City v. John McGrath Sons, 111 Miss. 782; Huddleston v. McMillan Bros., 112 Miss. 168.

V. Breach of Trust and Fraudulent Indorsement by the Payee of the Check.

The authorities of several states are agreed that the drawer of a check, who places the same in the hands of the payee, and the same is indorsed by the payee to an innocent holder for value, cannot defeat payment by showing that the payee put the same in circulation in breach of a trust or in breach of an agreement and in fraud of his rights. 3 R. C. L. 1013, par. 221; 3 R. C. L. 298, par. 208, as well as par. 209 at 999 and 1000. Our own court so holds in Despres, et al., v. Drug Co., 123 Miss. 598; Huddleston v. McMillan, 112 Miss. 168; First National Bank v. John McGrath & Sons, 111 Miss. 782. See likewise the cases reported in Brannan Negotiable Instruments Law, 64.

VI. Will the Fact that a Post-Dated Check is Not Stamped in Accordance with the Acts of Congress, Carry Notice on its Face to an Innocent Holder for Value, That There are Equities Existing Between Prior Parties to the Instrument?

See Sowell v. Rankin, et al., 120 Miss. 458; Sections 12, 56, of the Negotiable Instruments Law.

VII. Does a Post-Dated Check Carry Notice, Ipso Jure, to the World of All Defects and Equities Available to Prior Parties Among Themselves?

See section 12 of the Negotiable Instruments Law; Royal Bank v. Tottenham (1894), 2 Q. B. 715; Union Bank v Tattersal (1920), 15 Alberta L. R. 350. In the United States: Wilson v. Mid-West State Bank, 21 A. L. R. (Iowa) 229, is the only case which has come to our attention which is in conflict with the decisions in England as well as with those in this country and for this reason we especially...