Hill v. Dillon
| Decision Date | 11 December 1913 |
| Citation | 161 S.W. 881,176 Mo. App. 192 |
| Parties | HILL v. DILLON et al. |
| Court | Missouri Court of Appeals |
Negotiable Instruments Law (Rev. St. 1909, § 10022) defines a holder in due course, and section 10025 provides that the title of a person who negotiates an instrument is defective when he has obtained it, or any signature thereto, by fraud, duress, force, fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith or under circumstances amounting to fraud. Section 10029 declares that every holder is deemed prima facie a holder in due course, but, when it is shown that the title of any person who has negotiated the instrument is defective, the burden is on the holder to prove that he or some one under whom he claims acquired title as a holder in due course. Held that, when, in an action by an indorsee of a note, it is shown that the title of the payee was defective because the instrument was obtained by fraud, the burden is then shifted to the plaintiff to prove that he acquired the title as to the holder in due course.
2. BILLS AND NOTES (§ 537)—ACTION BY INDORSEE—BONA FIDE HOLDER—QUESTION FOR JURY.
Where, in an action on a note by an indorsee, defendants introduced evidence that the execution of the note was obtained by fraud, and plaintiff offered uncontradicted evidence that he was a holder in due course, such evidence created an issue of fact which was exclusively for the jury, notwithstanding the only evidence on the question whether plaintiff was a holder in due course was that introduced by plaintiff, and all of it tended to establish the affirmative of the issue, subject to the right of the court to set aside the verdict, if clearly against the weight of the evidence.
3. CORPORATIONS (§ 116)—EXECUTION—FAILURE OF CONSIDERATION.
Where defendants executed a note for the price of corporate stock, purchased from plaintiff's assignor, and it appeared that the corporation owned title in fee to ten acres of land, together with a mining lease on a much larger tract and a mining plant, all of which were subject to incumbrances of a deed of trust, but defendants knew just what property the corporation owned and knew of the incumbrances and did not exact or receive any warranty in connection with the deal, the fact that the properties owned by the corporation did not prove to be as valuable as defendants expected, and that the company's operations were unprofitable, did not show a failure of consideration for the notes.
4. BILLS AND NOTES (§ 497)—NEGOTIATION— HOLDER IN DUE COURSE—NEGOTIABLE INSTRUMENTS—BURDEN OF PROOF—FAILURE OF CONSIDERATION.
Rev. St. 1909, § 10029, provides that every holder is deemed prima facie a holder in due course, and, when it is shown that the title of any person who has negotiated the instrument is defective, the burden is on the holder to prove that he or some one under whom he claims acquired title as holder in due course. Held, that mere want or failure of consideration, not coupled with a negotiation of the note in breach of faith, or under such circumstances as will amount to fraud, does not constitute a defective title and is therefore insufficient to change the burden of proof in such section.
5. TRIAL (§ 252)—INSTRUCTIONS—APPLICABILITY TO EVIDENCE.
Where, in an action on a note by an indorsee, the answer charged fraudulent representations by the payee "in conjunction with other parties" not named, but did not charge that plaintiff made any of such representations, and there was no evidence that plaintiff acted in conjunction with the payee or any one else in inducing defendants to execute the notes, or in any wise assisted in making the deal, the notes were not given in such a manner as to connect plaintiff with the fraud, and an instruction that if the jury found for defendants on the question of fraudulent representation, and believed that plaintiff, before the assignment of the note to him, knew of the fraud "or" acted in conjunction with the payee and others in inducing defendants to execute the notes, they should find for defendants was erroneous as unsupported by the proof.
6. TRIAL (§ 252)—INSTRUCTIONS—APPLICABILITY TO EVIDENCE.
An instruction not justified by any evidence in the case should be refused.
7. CORPORATIONS (§ 121)—SALE OF STOCK—PURCHASE-MONEY NOTE — ACTION BY INDORSEE—EVIDENCE—RELEVANCY.
In an action by an indorsee on a note given by defendants for the price of stock in a mining corporation, evidence of a third person that he bought some stock in the company through the influence of two persons, one of whom represented to him that the mine was a paying one, in connection with other evidence that such person was connected with the payee of the note sued on, but not tending to show that plaintiff had any connection therewith or knowledge of any alleged fraud on defendants in the sale of the stock to them, was inadmissible.
Appeal from Circuit Court, Greene County; Guy D. Kirby, Judge.
Action by Edward C. Hill against T. J. Dillon and another. Judgment for defendants, and plaintiff appeals. Reversed and remanded.
Edgar P. Mann, of Springfield, and William B. Skinner, of Mt. Vernon, for appellant. J. B. McGuffin, of Aurora, George Pepperdine, of Springfield, and H. H. Bloss, of Aurora, for respondents.
This is the second appeal of this case. The opinion on the former appeal is reported in 151 Mo. App. 86, 131 S. W. 728. The action is on a negotiable promissory note and brought by an indorsee against the makers. The petition is in the usual form. The answer consists: First. Of a general denial. Second. Of an admission of the execution of the note and of the indorsement, with a specific denial that the plaintiff is a purchaser for value before maturity, it being alleged that the assignment of the note to plaintiff was without consideration and to enable the payee to recover the amount of the note and prevent defendants from setting up the defenses later mentioned; that the note is held in secret trust by plaintiff for the payee, who is charged to be the real party in interest. The charge that the assignment was colorable, and that plaintiff holds the note in secret trust for the payee, is not supported by any evidence. Third. It is alleged that the execution of the note was procured by certain fraudulent representations and acts by the payee, Hart, and others who are not named. These representations and acts are set out in detail. They are discussed in the former opinion and need not be repeated here. Fourth. The answer charges that the consideration of the note was certain mining stock in a corporation; that the value of the stock was dependent on the value of a mining lease belonging to the corporation and alleged to be its sole and only asset; and that the payee in the note, to induce the purchase of the stock by defendants, falsely and fraudulently represented that the stock was dividend paying stock and extremely valuable, when in fact the stock had no value at all and had never paid a cent of dividend, and the consideration for the giving of the note had utterly failed. For reply plaintiff alleges that he is the holder of the note in due course, stating the facts essential to this relation. The reply then states facts on which it is sought to base a plea of estoppel as against defendants as to the defenses set up in their answer. It was held in the former opinion that the matters pleaded and shown in evidence do not estop defendants from setting up fraud in the procurement of the note as a defense against payment. This ruling was correct, and it is not necessary to reiterate here the reasons therefor.
The opinion on the former appeal gives somewhat in detail the facts tending to sustain the answer that the execution of the note was procured by fraudulent representations and acts. Reference is made to that opinion for these facts. The evidence on this question was substantially the same at each trial. It was held on the former appeal that the evidence on this question was sufficient to entitle defendants to go to the jury on the question of the note having been procured by fraud. In this opinion we concur.
Appellant contends for the application in this case of the rule that the possession of a negotiable instrument indorsed in blank imports prima facie that the holder acquired it bona fide, for value, in the usual course of business, before maturity, and without notice of any circumstances impeaching its validity; also that plaintiff's evidence tended to prove this situation; and that, as there was no evidence to the contrary, plaintiff was entitled to a peremptory instruction directing a verdict in his favor. In this connection it is urged that the court erred in refusing instruction No. 4, asked by plaintiff, which is as follows: "The court instructs the jury that the instrument sued on in this case is a negotiable promissory note, and the defendants admit in their answer that they executed the same and that it has been assigned to the plaintiff, and in law it is presumed that such note was negotiated with plaintiff before maturity, for value, and without notice of any defense thereto."
The cases cited by appellant on this point arose before the enactment of our Negotiable Instruments Law, while this question must be determined by the provisions of that law. Section 10022, R. S. Mo. 1909, defines a holder in due course as follows: "A holder in due course is a holder who has taken the instrument under the following conditions: (1) That it is complete and regular upon its face; (2) that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; (3) that he took it in good faith and for value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the...
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