First Nat. Bank of Central City v. Utterback

• Decision Date: 09 October 1917
• Citation: 197 S.W. 534,177 Ky. 76
• Parties: FIRST NAT. BANK OF CENTRAL CITY v. UTTERBACK ET AL.
• Court: Kentucky Court of Appeals

197 S.W. 534

177 Ky. 76

FIRST NAT. BANK OF CENTRAL CITY v. UTTERBACK ET AL.

Court of Appeals of Kentucky.

October 9, 1917

Appeal from Circuit Court, Franklin County.

Action on a note by the First National Bank of Central City against Alice M. Utterback, executrix, and others. Demurrer to amended answer overruled, petition dismissed, and plaintiff appeals. Reversed.

Walker Wilkins, of Central City, and T. B. McGregor, of Frankfort for appellant.

Leslie W. Morris, of Frankfort, for appellees.

CLARKE J.

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 199b and 571, Kentucky Statutes, without which it could not do business in the state, before the execution of the note, renders it uncollectable 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, 161 S.W. 570, 51 L. R. A. (N S.) 293, Ann. Cas. 1915C, 565, 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, it controls, 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, 175 S.W. 10.

"The act, however, covers the entire subject of negotiable instruments, and must be treated as a complete body of law upon that subject, and controlling in all cases to which it is applicable." Elsey v. People's Bank of Bardwell, 168 Ky. 701, 182 S.W. 873.

Subsection 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 indorse."

And in subsection 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

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