Farmer's Saving Bank v. Reed
| Decision Date | 28 January 1916 |
| Citation | 180 S.W. 1002,192 Mo.App. 344 |
| Parties | FARMER'S SAVING BANK, a Corporation, Respondent, v. J. A. REED, Appellant |
| Court | Missouri Court of Appeals |
Appeal from Butler County Circuit Court.--Hon. John A. Gloriod Special Judge.
AFFIRMED.
Judgment affirmed.
N. A Mozley and L. M. Henson for appellant.
Sheppard & Sheppard for respondent.
We practically adopt the statement of the case in appellant's brief.
This is a suit on a promissory note for five hundred dollars. On December 1, 1914, W. A. Smith owned a saloon in Poplar Bluff, Mo., but the dramshop license was in the name of Victor Davis. Smith sold the saloon to Elbert Johnson and Ed. Willis and as part payment for Johnson's half of the purchase price Smith took the note in question signed by Johnson with appellant Reed and others as sureties, all appearing, however, as makers. Smith indorsed and sold the note to respondent bank about February the first, according to the testimony, which was before maturity, and the evidence also tended to show that the bank had no notice or knowledge of the consideration for which the note was given and knew nothing about the sale or attempted sale of a saloon license entering into the consideration of the note.
Reed's answer pleads that the note was and is void for the reason that the saloon license formed a part of the consideration for the same, this being a transaction prohibited by law under section 7189, Revised Statutes 1909, which provides, among other things--"nor shall the license of a dramshop keeper be assignable or transferable."
The evidence tends to show that the saloon, including whiskey, beer, fixtures, and five months of unexpired license, were all sold for the lump sum of three thousand dollars, no separate price being placed on any one item, and that the note sued on was given for a part of the purchase price.
The trial court rendered judgment for plaintiff for the full amount sued for and defendant, Reed, has appealed.
Defendant's theory of the law is shown by the following declaration of law which he requested and the court refused to give: "The court declares the law to be that if it finds and believes from the evidence in this case that the note in suit was given as a part of the purchase price for the dramshop mentioned in the testimony and that the license to run said dramshop entered into and formed a part of the consideration therefor, then said note was and is absolutely void in the hands of the original payee, W. A. Smith, and is likewise void in the hands of the plaintiff bank, and the judgment will be for the defendant, J. A. Reed."
The only question presented by this record is as to whether or not the note is void in the hands of a holder in due course on account of the illegal transaction that furnished the consideration upon which it is based.
What may have been the law touching the right of a transferee of a negotiable instrument without notice of any defects or equities existing as between the original parties to the instrument prior to the adoption of the negotiable instruments act, is no longer controlling on questions arising within the purview of that act since it became the law of this State.
There is sufficient evidence in the record to support the judgment of the court finding that the plaintiff was a holder in due course of the note, as defined in section 10022, Revised Statutes 1909.
Turning to section 10025, Revised Statutes 1909, we find that "the title of the person who executes an instrument is defective . . . when he obtained the instrument, . . . for an illegal consideration, . . . ."
Section 10026, Revised Statutes 1909, provides: "To constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith."
The testimony clearly sustains a finding that the bank knew nothing whatever about this note having been given for the purchase price of the saloon license along with the other property sold.
The statute places negotiable instruments, in the hands of an innocent transferee, which have been given for an illegal consideration, in the voidable rather than in the void class, where the instrument is not made in a transaction the making of which is declared null and void by law, or where the instrument is not made in a transaction where there is a statute condemning it as illegal by necessary intendment or implication--such as the fixing of a penalty for violating the prohibited act.
Section 10027, Revised Statutes 1909, expressly provides that a holder in due course holds the instrument free from any defect of title of prior parties and free from defects available to prior parties among themselves.
The act seems to have covered, in section 9994, Revised Statutes 1909, instruments that shall be wholly inoperative and void in the hands of all parties, and does not include an instrument given for an illegal consideration.
The testimony clearly shows that plaintiff was a holder in due course, and that it knew nothing concerning the defect of title or infirmity set up in the answer, and therefore under the law governing this transaction it is manifestly entitled to recover.
None of the cases cited by appellant, decided since the adoption of the Negotiable Instruments Act, deal with this question where the instrument had found its way into the hands of a holder in due course. The case of Sawyer v. Sanderson & Thomas, 113 Mo.App. 233, 88 S.W. 151, cited and relied on by appellant, was a contest between the original parties, and, furthermore, it arose prior to the passage of the Negotiable Instruments Act.
It will be noted on turning to section 7189, Revised Statutes 1909 that it does not declare void a contract made for the sale of a dramshop license, nor does it fix any penalty for attempting to transfer or...
To continue reading
Request your trial