Fowle v. Outcalt

• Decision Date: 08 February 1902
• Docket Number: 12,368
• Citation: 67 P. 889,64 Kan. 352
• Parties: E. H. FOWLE v. O. O. OUTCALT
• Court: Kansas Supreme Court

67 P. 889

64 Kan. 352

E. H. FOWLE v. O. O. OUTCALT

No. 12,368

Supreme Court of Kansas

February 8, 1902

Decided January, 1902.

Error fro Coffey district court; W. A. RANDOLPH, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. PROMISSORY NOTE -- Payment to Payee -- Knowledge and Conduct of Indorsee. Where the holder of a promissory note has for years authorized and ratified the reception of interest payments thereon by the payee named in the note without having the coupons representing such interest in his possession at the time of receiving the money; and where such holder is chargeable with knowledge that during the period covered by such interest payments such payee had held himself out as the owner of said note to those obligated to pay the same, and is still so holding himself out to such interested parties, who are deceived thereby; and where such holder has notice that at the maturity of the note such payee will, pursuant to his usual course of business, without revealing the facts as to ownership, receive the amount of principal due on such note, it is the duty of such holder, if he desires a change in the methods which have been theretofore and are thereafter likely to be pursued, to notify those who are bound to pay it that he is the owner of the note and that future payments may not be made to such payee, and if such holder fails so to do he will be held bound by a payment made in good faith of such note at the place of payment designated therein and to such payee.

2. PROMISSORY NOTE -- General Rule as to Payment -- Exceptions. Ordinarily one bound to pay a negotiable promissory note is not protected if he pay it to the payee thereof and at the place of payment named in the note without the production of the paper by the person receiving the money, but to this rule there are exceptions, and under the facts in this case the decision of the trial court that the rights of the owner of the note in controversy in this action are concluded by such a payment will not be disturbed.

Keller & Dean, for plaintiff in error.

E. N. Connal, and John G. Egan, for defendant in error.

ELLIS, J. JOHNSTON, CUNNINGHAM, GREENE, JJ., concurring.

OPINION

ELLIS, J.:

This action was brought in the district court of Coffey county by plaintiff in error to foreclose a mortgage given on the 3d day of February, 1890, by Mary E. Houston and James J. Houston, her husband, to the Globe Investment Company, of Boston, Mass., and payable at its office. The note which said mortgage was given to secure follows:

"KANSAS CITY, Mo., February 3, 1890. $ 1500.00.

"On the first day of February, A. D. eighteen hundred and ninety-five, without grace, for value received, we promise to pay to the order of the Globe Investment Company, at its office in Boston, Massachusetts, the sum of fifteen hundred dollars, in gold or its equivalent in United States money, with interest until maturity at the rate of six per cent. per annum, payable semiannually, according to the terms of ten coupons hereto attached. If said sum is not paid at maturity, the amount unpaid shall bear interest at the rate of ten per cent. per annum, payable semiannually; and if any interest remains unpaid ten days after it becomes due, the principal shall at once become due, at the option of the holder, without notice.

MARY E. HOUSTON.

JAMES J. HOUSTON."

Shortly after the execution and delivery of said note it was sold to John Stuart & Company, Limited, of Manchester, England, and indorsed in blank as follows: "Pay to the order of , without recourse. GLOBE INVESTMENT COMPANY, by J. LOWELL MOORE, Treasurer."

The following guaranty was also indorsed on said note:

"In consideration of value received, the Globe Investment Company hereby guarantees the payment of each coupon hereto attached at maturity, and the payment of this principal note within two years after maturity, with interest after maturity at six per cent. per annum, payable semiannually; provided, said company shall have the right to purchase this note at its face value and accrued interest at the date of payment; and the neglect of said holder to accept such payment and assign and deliver to said company this note and the mortgage given to secure it shall release said company from all further liability hereon.

"In witness whereof, the said Globe Investment Company has caused its corporate seal to be hereto affixed and this guaranty to be signed in its name and behalf by its treasurer, this 10th day of June, 1890.

GLOBE INVESTMENT COMPANY.

By J. LOWELL MOORE, Treasurer."

No indorsements were made upon any of the coupons attached to said note. Soon after obtaining them, the securities were sold by Stuart & Company, without further indorsement, to the plaintiff, a resident of England, but no assignment of the mortgage was placed of record in the office of the register of deeds of Coffey county, Kansas, until a brief period before the bringing of this action.

Prior to January 1, 1894, the defendant, O. O. Outcalt, purchased the lands covered by the mortgage, subject thereto, and thereafter paid each instalment of interest represented by coupons attached to said note at or before the maturity thereof, and received such coupons stamped or marked "Paid," by the Globe Investment Company, in due course. Shortly before the maturity of the principal note he paid the same to the Globe Investment Company, but did not receive the note. The evidence clearly shows that the Globe Investment Company had a branch office at Kansas City, Mo., and that it required all payments upon its Western loans to be made at that office. All the payments of Outcalt were thus made, and were remitted and accounted for without delay to the Boston office of the Globe Investment Company.

The facts undoubtedly are that at the time of the payment of the principal note by Outcalt, as aforesaid, the same was not in the possession of the Globe Investment Company, but was in the hands of John Stuart & Company, Limited, although there is evidence in the record sufficient to support a finding that the Globe Investment Company had the note in its possession at the time of such payment. Upon the trial evidence was adduced tending to show that John Stuart & Company,...