Hattrem v. Burdick

• Decision Date: 15 December 1931
• Citation: 6 P.2d 18,138 Or. 660
• Parties: HATTREM v. BURDICK et al. [*]
• Court: Oregon Supreme Court

6 P.2d 18

138 Or. 660

HATTREM v. BURDICK et al. ^[*]

Supreme Court of Oregon

December 15, 1931

In Banc.

Appeal from Circuit Court, Jefferson County; T. E. J. Duffy, Judge.

Suit by J. R. Hattrem against Denton G. Burdick and others. From a decree allowing defendants credit on note and mortgage and foreclosing the mortgage for the remainder, both parties appeal.

Affirmed.

George H. Brewster, of Redmond, for plaintiff.

Elton Watkins, of Portland (Nelson A. Burdick, of Redmond, on the brief), for defendants.

RAND J.

J. R Hattrem brought this suit against the defendants to foreclose a mortgage of real property given by Denton G. Burdick and Zoa M. Burdick, his wife, to the Municipal Reserve & Bond Company to secure their joint note to said company for $5,000. The company assigned and transferred the note and mortgage to W. A. Hattrem, and he in turn to his wife, the plaintiff herein. Subsequent to the execution of the mortgage, Burdick and wife conveyed the mortgaged premises to the defendants Blanchard and wife. The answer alleges that after the transfer to W. A. Hattrem of the note and mortgage he and his wife employed Denton G. Burdick to perform legal services and promised and agreed to credit the note with the reasonable value of the services so to be performed, that the services were performed as agreed and were of the reasonable value of $2,750, and that the same had not been paid or credited as agreed. Later and during the trial of the cause the answer was amended, claiming $5,000 to be the reasonable value of the services so performed. The amount prayed for in the complaint was for the full amount of the note less a small cash credit that had been paid thereon, but no credit was given for the reasonable value of the services nor for any part thereof. After the trial of the cause in the court below, a decree was entered allowing defendants a credit upon the note and mortgage in the sum of $2,000 and foreclosing the mortgage for the remainder. From this decree both plaintiff and the defendants have appealed. The answer was challenged by a motion to strike and by demurrer, both of which were overruled, and plaintiff assigns the rulings thereon as erroneous, and defendants assign as error the refusal of the court to credit the note and mortgage with the amount claimed in the amended answer.

There was an allegation in the answer that the note and mortgage were assigned by Hattrem to his wife without consideration and after maturity, and that the assignment "is null void and of no force and effect." This was the allegation against which the motion was directed. The transfer of a note and mortgage after maturity of the note without any consideration being paid therefor would not render the transfer void, nor would the same be voidable unless the transaction was tainted with fraud. "A gift of a negotiable instrument of a third party inter vivos may be evidenced by the circumstances which usually attend gifts of personal property, as that it must be voluntary and absolute, and take effect at once, and must be accompanied by a delivery to the donee or to someone for his use and benefit. Such a gift, however, is not such a negotiation of it in the usual course of business as to give the donee the full protection which is extended a bona fide holder for value. *** But as to all prior parties having no defense against the donor, the donee can himself recover the whole amount." 1 Daniel on Negotiable Instruments (6th Ed.) § 181.

To constitute plaintiff a holder in due course, the transfer must have been based upon a legal consideration sufficient to support a contract. She must have parted with "either money or money's worth." Ames, Bills and Notes, p. 867; Norton, Bills and Notes (2d Ed.) p. 294. Hence, since defendants alleged a defense which would have been good against plaintiff unless she was a holder in due course, defendants have the right to allege that plaintiff was not such holder. Although the answer alleged Burdick's employment by both plaintiff and her husband and their joint promise to credit the reasonable value of his services as payment on the note, yet it was entirely possible that defendants would be able to prove an employment and promise by W. A. Hattrem and not by plaintiff. Still the defense would be good as against plaintiff if the services were performed under such promise while Hattrem was the holder of the note unless the note was transferred to plaintiff before maturity and for a valuable consideration. For these reasons, we think the motion was properly overruled.

In support of the demurrer, it is contended that defendants' claim for the reasonable value of the services performed is not such a counterclaim as may be interposed in a suit in equity. Ou...