Ensign v. Crandall

• Decision Date: 03 May 1921
• Docket Number: No. 16372.,16372.
• Citation: 207 Mo. App. 211,231 S.W. 675
• Parties: ENSIGN v. CRANDALL.
• Court: Missouri Court of Appeals

231 S.W. 675

207 Mo. App. 211

ENSIGN v. CRANDALL.

No. 16372.

St. Louis Court of Appeals. Missouri.

May 3, 1921.

Appeal from Circuit Court, Clark County; N. M. Pettingill, Judge.

Action by Charles B. Ensign, doing business as C. B. Ensign & Co., against Edgar Crandall. From a judgment for defendant, plaintiff appeals. Reversed, and cause remanded.

W. L. Berkheimer and John M. Dawson, both of Kahoka, for appellant.

Chas. Hiller and T. L. Montgomery, both of Kahoka, for respondent.

ALLEN, P. J.

This is an action upon two promissory notes, each for the sum of $375, executed by the defendant on April 4, 1913, payable to the order of the Night Commander Lighting Company, a corporation, two years after the date thereof, with interest from maturity at the rate of 6 per cent. per annum. Plaintiff sues as the holder in due course of said notes. The trial below before the court and a jury, resulted in a verdict and judgment for the defendant, and the plaintiff has brought the case here by appeal.

The petition is in two counts, one upon each of the notes. In each count, after alleging the execution and delivery of the note therein mentioned to the said payee named therein, it is alleged that the payee indorsed and delivered the same to the Jackson Brokerage Company; that the latter, for valuable consideration paid to it by plaintiff, indorsed the note in blank and delivered it to plaintiff, who thereby became the owner and holder thereof prior to the commencement of the suit; that plaintiff is an innocent purchaser thereof, "without notice whatever of any infirmity in the title thereto of his immediate indorser." Each count concludes with the usual prayer.

The answer admits the execution of the notes in suit and their delivery to the Night Commander Lighting Company, but denies each and every other allegation in the petition. Further answering, the defendant alleges that at and prior to the execution of these notes one Rickey was an agent of the Night Commander Lighting Company, and local manager of its business conducted at Quincy, Ill.; that prior to the execution of these notes the defendant became a surety upon a bond executed by Rickey to said company, conditioned on the faithful performance by Rickey of his duties as such agent and manager; and that, at the time of the execution and delivery of the notes sued upon, one Jones, president and manager of said company, falsely and fraudulently represented to defendant that Rickey was short in his accounts with the company, and owed the company a large sum of money; all of which was false and untrue, and known so to be by said Jones. And it is averred that the defendant, relying upon said false and fraudulent statements, and in order to discharge his supposed obligation as surety on the bond, did, on said April 4, 1913, execute three promissory notes to the said Night Commander Lighting Company, each for the sum of $375, due respectively in one, two, and three years from said date, and delivered the same to said company. And it is alleged that Rickey was not then, nor has he ever been, short in his accounts with said Night Commander Lighting Company, but has faithfully performed all of his duties as the agent and manager of said company, and that defendant was in no wise liable on said bond. And it is further averred that the Night Commander Lighting Company and the Jackson Brokerage Company are one and the same, and owned by the same individuals; and that plaintiff, when the notes in suit were assigned to him, knew all of said facts, and participated in the fraudulent purpose of said indorser, and is not in good faith the owner of the notes in suit, in due course, for value before maturity, and that the same are void.

Other allegations touching the alleged fraud are made which need not be noticed. And the answer alleges that of the three notes so executed and delivered by defendant, one thereof, viz., that due one year after said date, was, at its maturity, presented by the Jackson Brokerage Company to a bank in Wyaconda, Mo., where the notes are made payable, for payment, purporting to have been indorsed by the Night Commander Lighting Company and by the Jackson Brokerage Company; that said brokerage company was organized for the purpose of taking and holding notes payable to the Night Commander Lighting Company, so that said brokerage company might pose as an innocent purchaser thereof for value in due course of business. And it is averred that when said note, payable one year after date, became due, it was protested for nonpayment, and has never been paid—

"because of the facts in this answer set forth, all of which was known to this plaintiff when the notes sued on were assigned to plaintiff for collection, and are held by him with the knowledge of the fraudulent acts of the indorsers of said notes sued on, and he is not in good faith the owner and holder for value in due course, and should not recover."

The reply puts in issue the new matter of the answer.

At the trial the notes were introduced in evidence, bearing indorsements purporting to be those of the Night Commander Lighting Company and the Jackson Brokerage Company, each indorsement being made "per G. W. Mayes." Plaintiff, by deposition, testified that he purchased the notes in suit on November 9, 1914, from the Jackson Brokerage Company, the latter being represented by G. W. Mayes, who brought the notes to plaintiff's office; that the notes bore the indorsement of the Night Commander Lighting Company, known to him to be the genuine and authorized indorsement of the company, and were indorsed by the Jackson Brokerage Company, through Mayes, "one of the proprietors and chief owner of the Jackson Brokerage Company, a partnership," in his presence, in his office in Chicago.

Plaintiff's further testimony is that, in the transaction in question, he purchased the two notes in suit, together with six other notes, aggregating a total face value of $2,335, for which eight notes he paid $1,940. And he introduced in evidence two canceled checks, both dated November 9, 1914, drawn by him on the Continental Commercial Bank of Chicago, one for the sum of $1,000, and the other for the sum of $940, the former being payable to the Night Commander Lighting Company and the latter to the order of the Jackson Brokerage Company. Plaintiff testified that these checks were thus made payable, one to the Night Commander Lighting Company and the other to the Jackson Brokerage Company, at the request of Mayes, from whom he purchased the notes. Each of the checks is stamped paid, and, in addition to the indorsement of the payee, bears the indorsement of the Jackson City Bank, of Jackson, Mich., to the order of the Corn Exchange National Bank, of Chicago, and bears the "clearing house stamp," purporting to show that it was "paid through the Chicago Clearing House" on November 10, 1914, at 10 a. m. And plaintiff testified that both checks were paid by the Continental Commercial Bank, upon which they were drawn, and charged to his account.

When asked if he knew of any infirmities or other defenses in favor of the maker of these notes when he purchased them, he said that he did not; that, on the contrary, he was informed that they had been given in settlement of an account between the maker and the Night Commander Lighting Company; and that he purchased the notes before maturity in the usual course of business. He further testified that on said November 9, 1914, he wrote to defendant a letter, a copy of which appears in the deposition, and which purports to be a letter notifying the defendant of plaintiff's acquisition of the notes in suit, and requesting defendant to mail to plaintiff a check or draft for each note when the same should become due.

With this deposition, and exhibits attached thereto, in evidence, plaintiff rested.

As a witness in his own behalf, defendant testified that he was a resident of Wyaconda, where he was engaged in the implement business; that he knew J. E. Jones, who was president of the Night Commander Company, and that, in the course of his business, he bought goods from that company through its "branch house" in Quincy, Ill., which was in charge of one Rickey, mentioned in the answer as manager thereof. And defendant's evidence shows that he became surety on a bond for Rickey, as alleged in the answer, and that, at the time of the execution of the notes in suit, Jones, as president of the Night Commander Lighting Company, falsely represented to him that Rickey was short in his accounts with said company, and thus obtained the two notes sued upon, together with another note for $375 due one year after said date, in settlement of the alleged shortage, and purporting to be in discharge of defendant's obligation as surety on said bond. It is unnecessary to set out the evidence relating to this matter in detail. It is sufficient to say that testimony both of defendant and of Rickey, the latter testifying as defendant's witness, tends to show that the notes in suit were in fact procured by fraud on the part of the Night Commander Lighting Company, through its president, Jones. And this testimony stands uncontradicted in the record.

Defendant's own testimony shows nothing tending to show any knowledge by plaintiff of the fraud said to be practiced upon defendant in procuring "these notes. Rickey testified that the Night Commander Lighting Company had its principal place of business in Jackson, Mich., 209 miles from Chicago; that Jones was president and general manager of that company, and president and general manager also of the Jackson Brokerage Company, and that Mayes was secretary and...