Goodman v. Simonds

• Citation: 19 Mo. 106
• Parties: GOODMAN, Respondent, v. SIMONDS, Appellant.
• Decision Date: 31 October 1853
• Court: Missouri Supreme Court

19 Mo. 106

GOODMAN, Respondent,

v.SIMONDS, Appellant.

Supreme Court of Missouri.

October Term, 1853.

1. A party to whom negotiable paper is transferred merely as collateral security for an antecedent debt, will hold it subject to all the equities existing between the original parties.

2. A. delivered to B. his acceptance, payable four months after its date, for which a blank was left, with authority to negotiate the same. At the time of negotiating the bill, B. filled the blank with an anterior date. Held, the bill was void in the hands of the party receiving it, with knowledge that it was ante-dated.

Appeal from St. Louis Circuit Court.

This was an action of assumpsit, commenced in February, 1849, by Timothy S. Goodman against John Simonds, on a bill of exchange, dated September 12th, 1847, drawn by Wallace Sigerson, of Cincinnati, Ohio, on John Simonds, in favor of John Sigerson, for $5000, four months after date. The declaration averred the acceptance of the bill by John Simonds, and the indorsement thereof by John Sigerson to T. S. Goodman & Co., who endorsed the same to W. Nesbit & Co., who endorsed the same to the defendant. At the April term, 1849, the defendant filed the statutory plea, “defending the demand of the plaintiff.”

At the trial, which took place at the April term, 1853, the plaintiff introduced the bill of exchange, and proved the endorsements thereon, as stated in the declaration. William Nesbit, a witness for the plaintiff, stated that the bill was sent by the house of T. S. Goodman & Co., of Cincinnati, Ohio, to the house of W. Nesbit & Co., of St. Louis, for collection, a short time before its maturity. At maturity, the bill was presented to the defendant and payment demanded and refused, whereupon it was protested for non-payment. W. Nesbit & Co. only held the bill for collection, and after the protest they endorsed it without recourse, and handed it to an attorney for collection. The endorsement was made to T. S. Goodman by request of the attorney, to facilitate collection.

The evidence for the defendant was substantially as follows: On the 21st of June, 1847, John Simonds, of St. Louis, wrote to Wallace Sigerson, of Cincinnati, stating that John Sigerson and himself were going to deal in pork another season, and desired the assistance of W. S. in procuring facilities in Ohio, as the bank of Missouri furnished no accommodations. Inclosed in this letter was the bill of exchange sued upon, together with another for the same amount, both perfect, with the exception of blanks for the name of the drawer and the date. The letter instructed W. S. to negotiate one of the bills on receipt and remit the proceeds, and hold the other until further instructions.

On the 12th of July, 1847, W. S. procured one of the bills to be discounted in the Trust Company Bank, and remitted part of the proceeds to the defendant. The other bill, being the one sued upon, he left in the hands of T. S. Goodman & Co., on the 18th of October, 1847, as collateral security for two notes given by him, dated October 12th, 1847, one for $2,832.64 and the other for $2,830.45, having respectively sixty and seventy-five days to run. These notes were given to take up other notes of W. S., then lying over. No money was advanced by T. S. G. &. Co. to W. S., nor was any new indebtedness created upon the faith of the defendant's acceptance. When T. S. G. & Co. received the bill sued upon, they promised that they would not send the same to St. Louis for collection until the maturity of the notes. On the 20th of November, 1847, T. S. G. & Co, wrote to E. W. Clark & Bros., of St. Louis, inclosing to them the bill, and instructing them to sell it at the best rates, not exceeding a discount of twelve per cent. They stated in their letter that they did not endorse the bill, as they were selling it for another The evidence of brokers was offered, to show that this language did not imply that Goodman & Co. were not the owners of the bill. E. W. Clark & Bros, offered it to the defendant for sale, who notified them not to negotiate it, as W. S. had no authority to use it. Thereupon, they returned it to Goodman & Co. When Goodman was asked by Wallace Sigerson why he had sent the bill to St. Louis before the maturity of the notes, he hesitated a moment, and then replied that he wanted to see whether it was worth any thing or not, or something to that effect. When W. S. delivered the bill to T. S. G. & Co., the blank for the date was not filled, but he gave them a writing authorizing them to fill it.

McDonald, a book-keeper of Goodman & Co., testified that from June until October, 1847, he frequently saw W. Sigerson conversing with Mr. Goodman about notes he had got discounted, and which were not paid; that before taking the two notes dated October 12th, Mr. Goodman used every exertion to get W. S. to give collateral security, and it was only on his being able to give such satisfactory security as Mr. Simonds' accept ance that the notes were taken, W. S. being at the time insolvent. The bill was entered on the discount book of T. S. G. & Co., as collateral security. Previous to taking the acceptance, Goodman enquired of the Trust Company as to the responsibility of Simonds, and received a favorable answer.

The notes, as collateral security for which the bill sued upon was delivered to Goodman & Co., were never paid. The court instructed the jury that, if T. S. Goodman & Co. acquired the bill sued upon from Wallace Sigerson, as collateral security for an indebtedness of his own to them of equal or larger amount, without notice of his want of anthority so to appropriate the same, the plaintiff was unaffected by such abuse of trust or improper conduct, and the defendant could not set the same up as a defense in this suit. The court of its own motion also gave the two following instructions:

3. If the bill was received by the said T. S. Goodman & Co. in the manner and for the consideration already stated, it lies upon the defendant to prove said knowledge or notice on the part of the said T. S. Goodman & Co., or of some member of said firm. It is not necessary that the parties, at the time of the transfer, should have had certain and positive knowledge of the abuse of power on the part of the said Wallace--such as if they had been told by him that he had no authority so to pass the bill to them, or as would have been derived from having been shown the instructions from his principal; but proof of such facts and circumstances, from which notice or knowledge may be satisfactorily inferred, or upon which men usually act in such cases, is sufficient.

4. But if, when the said bill was sent to the said Wallace by the parties interested, it was incomplete, having blanks for the date and the signature of the drawer, and he, the said Wallace, was authorized to fill up and negotiate the same, such knowledge or notice cannot fairly be deduced from the facts alone that the bill was not dated till at or about the time of its transfer; and that the said firm were then acquainted with the pecuniary condition and affairs of the said Wallace, and were urging him to give them collateral security for his indebtedness to them; that the said parties, at no time, made inquiry into his title or authority to transfer the bill; and that the said Wallace did not wish the bill sent to St. Louis for collection, and so told the parties at the time.

The court refused to instruct the jury that the plaintiff could not recover on the bill, if it was delivered to the firm of which he was a member as collateral security for a previous indebtedness. An instruction that the ante-dating of the bill, with the knowledge of Goodman & Co., rendered the same void, was also refused.

There was a verdict and judgment for the plaintiff, from which the defendant appealed.

Glover & Richardson, for appellant.

1. That the holder of negotiable paper, who has taken it merely as collateral security for a pre-existing debt, and without notice of any objections, will be protected in his title, and that he will not be protected in such case, are propositions of law equally well supported by authority. The latter, we insist, is best supported by reason. The object of the rule which makes the holder of such paper safe, is to prevent losses to persons who might otherwise suffer from a confidence reposed in it. The rule implies that the holder has some way risked something through the confidence, which he is about to lose but for its beneficial interposition. When money or property is actually advanced on the faith of the paper, such a case exists, and the party ought to be secure on principle. When the paper is received in payment of a debt pre-existing or otherwise, and the evidence of the debt is surrendered, or the liability destroyed, the rule may be applied with reason and justice. But when the case is one merely of collateral security, it is difficult to perceive what the holder risks, how his confidence betrays him, or what injury he can sustain. A man may well hesitate to purchase a bill in the market by parting with his money or his property, or surrendering his debt, while, if the same bill was tendered him as collateral security, he would be glad to take it. It can do him no harm; he absolutely hazards nothing.

2. The court erred in giving the fourth instruction. Whether T. S. Goodman & Co. purchased the bill in good faith, in the usual course of trade, for a valuable consideration and without notice, was a question of fact for the jury. The appellant had a right to their verdict upon the evidence. 8 Cow. 340; 12 J. R. 306; 4 Mass. 270; 3 Carr. & P. 325; 6 Iredell, 199; 8 Ohio, 528; 12 Pick. 545; 7 Ala. 259; 4 B. & C. 330; 4 Binney, 471; 12 Mo. 381; 11 Mo. 116, 402.

3. The court erred in refusing to instruct the jury that if the plaintiff took the bill, knowing that it was ante-dated, he could not recover.

Haight and Shepley, for respondent.

1. Negotiable paper, taken before maturity in the...