First Nat. Bank of Springfield v. Skeen

• Decision Date: 06 February 1888
• Citation: 29 Mo.App. 115
• Parties: FIRST NATIONAL BANK OF SPRINGFIELD, OHIO, Respondent, v. WILLIAM A. SKEEN, Appellant.
• Court: Kansas Court of Appeals

29 Mo.App. 115

FIRST NATIONAL BANK OF SPRINGFIELD, OHIO, Respondent, v. WILLIAM A. SKEEN, Appellant.

Court of Appeals of Missouri, Kansas City.

February 6, 1888

APPEAL from Johnson Circuit Court, HON. CHARLES W. SLOAN, Judge.

Affirmed.

JUDGE HALL, being of opinion that the first paragraph of this opinion is in conflict with the holding of the Supreme Court in Chouteau v. Allen, the cause is certified to the Supreme Court.

The case and facts are stated in the opinion of the court.

J. P ORR and SAMUEL P. SPARKS, for the appellant.

I. The court erred in taking the case from the jury; a demurrer to the evidence admits every reasonable inference which a jury might make from the facts adduced. People v. Roe, 1 Hill (N. Y.) 471; Fowler v. Alexandria, 11 Wheat 320; Dickey v. Schrader, 3 Serg. & Rawl. 413 416; Williamson v. Fisher, 50 Mo. 198; Brown v. Kimmel, 67 Mo. 430; Keeley v. Railroad, 70 Mo. 604; Bank v. Smith, 11 Wheat. 171; Thornton v. Bank, 3 Pet. 36; Baum v. Fryrear, 85 Mo. 151; Moody v. Deutsch, 85 Mo. 238; Sage v. Reeves, 17 Mo.App. 57. The granting of such an instruction is held to be erroneous when there is a scintilla of testimony. Alexander v. Harrison, 38 Mo. 266; Routsong v. Railroad, 45 Mo. 236; Hays v. Bell, 16 Mo. 496; Emerson v. Sturgeon, 18 Mo. 170; Rippey v. Friede, 26 Mo. 523; Bowen v. Lazarle, 44 Mo. 383; McFarland v. Bellows, 49 Mo. 311.

II. The option given the appellant to pay the note on or before the date named rendered it non-negotiable. Chouteau v. Allen, 70 Mo. 290.

III. The plaintiff averred it was a purchaser for value before maturity of the paper. This the answer denied specially. Incumbit qui dicet non qui negat finds application. 1 Greenl. Evid. sec. 74; State ex rel. v. Schar, 50 Mo. 393.

IV. The answer charged, and the proof tended to establish, fraud in the inception of the paper, and a fraudulent combination respecting its transfer. This cast the burden on the plaintiff to show that it had acquired it before maturity, without notice of facts impeaching its validity. Johnson v. McMurry, 72 Mo. 278; Carson v. Porter, 82 Mo. 179; Hamilton v. Marks, 63 Mo. 167; 1 Dan. Neg. Inst., sec. 815.

V. The court erred in overruling the objections of defendant to the introduction of any evidence by plaintiff, under the pleadings. Frost v. Beekman, 1 Johns. Ch. (N. W.) 288; Murray v. Ballou, 1 Johns. Ch. 565; Murry v. Finster, 2 Johns. Ch. 155; Jewel v. Palmer, 7 Johns. Ch. 65; Halsea v. Halsea, 8 Mo. 303, 309.

VI. Actual knowledge on the part of the cashier of impeaching facts at the time of taking the paper, notwithstanding value may have been paid, was sufficient to charge plaintiff with notice. Maitland v. Bank, 40 Md. 542. The bank was chargeable not only with the knowledge of its cashier acquired in the transaction itself, but also that which he had acquired so shortly prior thereto as to give rise to the inference that it remained fixed in his mind at the time of taking the paper. Chouteau v. Allen, 70 Mo. 290, 340-1; Wade on Notice, sec. 687; Hayward v. Ins. Co., 52 Mo. 181; 1 Daniel Neg. Inst., sec. 802, p. 655. The jury might reasonably have inferred, from the facts and circumstances detailed in evidence, the knowledge of the machine company of the failure of the warranty in every respect at the time of the endorsement to plaintiff; the fact that Phelps, the cashier of plaintiff, was during all these times a stockholder, one of the board of managing directors, and vice-president of the indorser, that he was conversant with the condition of the note at the time of taking same, and of the infirmity existing in it, notwithstanding his denial of such knowledge. Daniel Neg. Inst., sec. 799, p. 654.

VII. By the rejection of the offer of testimony by defendant, that there had been a complete failure of the warranty, the court thereby excluded all evidence tending to support the allegations of fraud and deceit in the inception of the paper practiced by the indorser in delivering a machine of a different manufacture than that contracted for. Had such testimony been admitted it would have shifted the burden to plaintiff of showing that it was an innocent purchaser, bona fide, for value, before maturity and without notice. Authorities under par. III.

J. W. SUDDATH and O. L. HOUTS, for the respondent.

I. The note is negotiable. The case of Chouteau v. Allen, 70 Mo. 290, relied on by appellant, does not construe an instrument like the one in question. Mattison v. Marks, 31 Mich. 421; Helmer v. Krolick, 36 Mich. 371; Bates v. Laclair, 49 Vt. 229; Jordan v. Tate, 19 Ohio St. 586; Curtis v. Horn, 58 N.H. 504; Stillwell v. Craig, 58 Mo. 24.

II. Plaintiff as the holder is presumed by the law to have purchased the same for value, in the ordinary course of business, before maturity and in good faith, and the burden rested upon appellant to rebut these presumptions. Hamilton v. Marks, 63 Mo. 167; Johnson v. McMurry, 72 Mo. 278; Merrick v. Phillips. 58 Mo. 436; Greer v. Yosti, 56 Mo. 307; Corby v. Butler, 56 Mo. 398; Johnson v. Way, 27 Ohio St. 374.

III. The evidence introduced by appellant, instead of tending to rebut these presumptions, made them conclusive in this case, and thus relieved respondent from the necessity of making further proof. Johnson v. McMurry, 72 Mo. 278.

IV. The mere fact that the cashier of plaintiff, at the time plaintiff purchased the note, was an officer in both corporations, was not constructive notice to plaintiff of any equities existing against the note, especially when there is no evidence tending to show that he had any actual knowledge of such equities, but positive evidence introduced by appellant to show that he had no actual knowledge. The doctrine of constructive notice does not apply. Actual notice of bad faith must be shown. Hamilton v. Marks, 63 Mo. 167; Johnson v. McMurry, 72 Mo. 282; Highstown v. Christopher, 40 N.J.L. 435; Bank v. Lewis, 39 Mass. 24; Bank v. Cornen, 37 N.Y. 320; Bank v. Tinsley, 11 Mo.App. 498; Bank v. Schaumburg, 38 Mo. 228-244; State Savings Ass'n v. Nixon-Jones Printing Co., 25 Mo.App. 642.

V. The reply was sufficient. Rev. Stat., p. 604, sec. 3524.

VI. The presumption of law in favor of respondent as the holder of this note, supported by the evidence introduced by appellant, taken in connection with his announcement " that he had no other or further evidence tending to prove that plaintiff received or had any notice, at or prior to the time it purchased said note, of the existence of any warranty, or contract, or failure of consideration," made it the plain duty of the court to exclude further evidence and take the case from the jury. Jackson v. Hardin, 83 Mo. 175, 186; Powell v. Railroad, 76 Mo. 80, 84-85; Landis v. Hamilton, 77 Mo. 554.

PHILIPS P. J.

This is an action on the following instrument of writing:

" $417.00. Holden, Mo., July 7, 1884.

For value received, on or before the first day of September, 1885, the undersigned promise to pay to the order of Springfield Engine and Thresher Company, four hundred and seventeen dollars, payable at Farmers' and Commercial Bank, Holden, Mo., with interest at eight per cent. from date until due, and ten per cent. after due.

J. T. FANCHER,

W. A. SKEEN."

The petition, after alleging that the payee was a corporation in the state of Ohio, averred that plaintiff, a banking corporation, was the owner and holder of said note for value, and that it acquired the same before maturity.

The answer admitted the allegations respecting the incorporation of the payee and the plaintiff. It then pleaded failure of consideration; that the consideration was a certain machine bought of the payee, with a warranty; that the warranty had been broken, and the consideration failed, and that plaintiff took the note before maturity, with notice, etc.

The reply was a general denial of the new matter set up in the answer.

At the trial, after the reading of the note in evidence by the plaintiff, with indorsements thereon showing transfer to plaintiff, the defendant introduced several depositions of the cashier of the plaintiff bank, and the secretary of the Springfield Engine and Thresher Company, which clearly established the fact that plaintiff had purchased said note before the maturity thereof, in the usual course of trade, and for value; and that the plaintiff had no notice at the time of the consideration, or the warranty relied upon by the defendant, or of any breach thereof. The court thereupon inquired of the counsel for defendant, what other or further evidence he had or desired to offer, tending to prove that plaintiff received or had any notice, at or prior to the time it purchased said note, of the existence of any warranty, or contract, or failure of consideration. To which the defendant's counsel answered, that he had none further than that contained in the depositions read in evidence. Thereupon the defendant proposed to read in evidence what purported to be a contract, with warranties, between the agent of the machine company, who made the sale of the machinery, and the defendant, and to make proof of the breach of the contract, the failure of the machine to come up to the requirements of the contract, and consequent failure of consideration. On objection of plaintiff the court excluded this evidence. The court then gave an instruction which, in effect, told the jury that on the evidence they should find for the plaintiff. The jury so found.

I. The defendant raises the question that the instrument of writing sued on is not a promissory note, or at least that it is not a negotiable instrument, so as to enable plaintiff to protect itself as an innocent holder. This claim is predicated of the fact that the note is made payable " on or before the first day of September,...