Farnsworth v. Burdick

• Decision Date: 10 April 1915
• Docket Number: 19,136
• Citation: 147 P. 863,94 Kan. 749
• Parties: E. H. FARNSWORTH, Appellee, v. WM. S. BURDICK et al., Appellants
• Court: Kansas Supreme Court

147 P. 863

94 Kan. 749

E. H. FARNSWORTH, Appellee, v. WM. S. BURDICK et al., Appellants

No. 19,136

Supreme Court of Kansas

April 10, 1915

Decided. January, 1915.

Appeal from Allen district court; OSCAR FOUST, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

PROMISSORY NOTE--Form of Indorsement--Indorsee Became Holder in Due Course. Under the negotiable instruments law (Gen. Stat 1909, §§ 5247-5446), a writing in these words, "I Hear By assine this note over to E. H. Farnsworth this the Nov. 1st, 1910," signed by the payee, on the back of a negotiable promissory note, complete and regular on its face, accompanied by delivery to the person named in the writing, is an indorsement of the note; and one who takes the note in good faith, for value, before it is due, without notice that it had been previously dishonored, and who, at the time he takes it, has no notice of any infirmity in the note or defect in the title of the person negotiating it, becomes the holder thereof in due course, and holds it free from any defect of title of the payee, and free from defenses available to the maker against the payee, and may enforce payment of the note for the full amount thereof, against the maker.

H. A. Ewing, S. A. Gard, and G. R. Gard, all of Iola, for the appellants.

R. H. Bennett, and R. E. Cullison, both of Iola, for the appellee.

OPINION

MARSHALL, J.:

This is an action to recover on a promissory note. Judgment was rendered in favor of the plaintiff. The defendants appeal.

The defendants, Wm. S. Burdick and A. M. Ewing, in consideration for a tract of land in Mercer county, Missouri, gave a stock of goods in Iola, Kan., a negotiable promissory note for the sum of $ 500, signed by all the defendants, and assumed an encumbrance on the land for the sum of $ 890. The trade was made with, and the note given to, J. A. Wheeler, who negotiated the note to the plaintiff by writing on the back thereof: "I Hear By assine this note over to E. H. Farnsworth this the Nov. 1st, 1910," signed it, and delivered it to the plaintiff. The plaintiff became the holder of the note before it was due, without any notice that it had been previously dishonored. He took it in good faith, and for value. At the time it was negotiated to him he had no notice of any infirmity in the note or defect in the title of J. A. Wheeler. The note is complete and regular on its face. The defense is, failure of consideration for the note. Is this defense good?

Prior to the passage of the negotiable instruments law (Gen. Stat. 1909, §§ 5247-5446), this court, in Hatch v. Barrett, 34 Kan. 223, 8 P. 129, said:

"A writing upon the back of a promissory note, transferred before maturity, in these words: 'State of Arkansas, County of Washington, ss.: I, James C. Rogers, do hereby assign the within note to Charles B. Hatch, of Osage county, Kansas. Said assignment is made without recourse on me, either in law or equity. [94 Kan. 751] --J. C. Rogers. Signed in the presence of H. F. Raymond, clerk county court, Washington county, Arkansas,' is not an indorsement in a commercial sense, and will not cut off the defenses of the maker." (Syl.)

This principle was followed in McCrum v. Corby, 11 Kan. 464; Hadden v. Rodkey, 17 Kan. 429; and Briggs v. Latham, 36 Kan. 205, 13 P. 393. At the time these decisions were rendered, the weight of authority in this country was that such a writing on the back of a note was an indorsement which cut off the equities and defenses of the maker available against the payee.

The negotiable-instruments law reduces to a certainty many things that prior to that date were in confusion. This law contains several definitions. One is, that "'delivery' means transfer of possession, actual or constructive, from one person to another." Another is, "'holder' means the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof." Still another is, "'indorsement' means an indorsement completed by delivery." (Gen. Stat. 1909, § 5248.)

Section 5283 reads in part:

" An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof."

The note sued on was negotiated within the meaning of this section. It was transferred from Wheeler to Farnsworth, and he became the holder thereof.

Section 5284 reads:

" The indorsement must be written on the instrument itself or upon a paper attached thereto. The signature of the indorser, without additional words, is a sufficient indorsement."

This indorsement, if it is an indorsement, was written on the note itself.

Other sections of the statute are as follows:

" An indorsement may be either special or in blank; and it may also be either restrictive or qualified, or conditional.

" A special indorsement specifies the person to whom or to whose order the instrument is to be payable and the indorsement of such indorsee is necessary to the further negotiation of the instrument. An indorsement in blank specifies no indorsee, and an instrument so indorsed is payable to bearer, and may be negotiated by delivery.

" An indorsement is restrictive which either: (1) Prohibits the further negotiation of the instrument; or (2) constitutes the indorsee the agent of the indorser; or (3) vests the title in the indorsee in trust for...