First N. Bank of Central City v. Utterback, Exor.

• Decision Date: 09 October 1917
• Citation: 177 Ky. 76
• Parties: First National Bank of Central City v. Utterback, Executor, et al.
• Court: Kentucky Court of Appeals

177 Ky. 76

First National Bank of Central City v. Utterback, Executor, et al.

Court of Appeals of Kentucky.

Decided October 9, 1917.

Appeal from Franklin Circuit Court.

WALKER WILKINS and T. B. McGREGOR for appellant.

LESLIE W. MORRIS for appellees.

OPINION OF THE COURT BY JUDGE CLARKE — Reversing.

The only question raised on this appeal is, whether or not the failure of a payee in a negotiable promissory note to comply with sections 571 and 199b, Kentucky Statutes, without which it could not do business in the state, before the execution of the note, renders it uncollectible in the hands of an owner in due course.

Granting, for the purposes of this opinion only, but expressing no opinion upon the question, because it is not here, that such failure would have been a complete defense against an original payee, who is amenable to either section 571 or 199b, which is the most that could be inferred from the case of Oliver Co. v. Louisville Realty Co., 156 Ky. 637, relied upon by appellees, the question remains, which is not involved in the Oliver case, whether or not it is a defense against an owner in due course; and that question is clearly controlled by the Negotiable Instruments Act, section 3720b, Kentucky Statutes, which became a law in this state July 13, 1904.

The scope of this law has been defined by this court in two recent opinions, as follows:

"The Negotiable Instruments Act was adopted by the several states for the purpose of establishing uniformity in the law regulating negotiable instruments. The act was intended to embody in a code a particular branch of the law. Where the act speaks, its contents and its meaning should be ascertained by interpreting the language used, and not by assuming that the former law on the subject should remain unaltered." First State Bank of Nortonville v. Williams, 164 Ky. 143.

"The act, however, covers the entire subject of negotiable instruments, and must be treated as a complete body of the law upon that subject, and controlling in all cases in which it is applicable." Elsey v. Peoples Bank of Bardwell, 168 Ky. 701.

Sub-section 60 of the act provides:

"The maker of a negotiable instrument by making it engages that he will pay it according to its tenor, and admits the existence of the payee, and his then capacity to endorse."

And in sub-section 57 we find:

"A holder in due course holds the instrument free from any defect of title of prior parties and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon."

Clearly, under these provisions, the defendant could not deny either the existence of the original payee or its capacity to endorse, as against a holder in due course, and the trial court erred in overruling the demurrer...