Hill v. Ward
Decision Date | 08 March 1910 |
Docket Number | No. 6,755.,6,755. |
Citation | 91 N.E. 38,45 Ind.App. 458 |
Parties | HILL v. WARD. |
Court | Indiana Appellate Court |
OPINION TEXT STARTS HERE
Appeal from Circuit Court, Noble County; J. W. Adair, Judge.
Action by Frank R. Hill against James B. Ward. From a judgment for defendant, plaintiff appeals. Reversed and remanded.L. W. Welker and Blacklidge & Wolf, for appellant. Weir D. Carver, for appellee.
Appellant sued appellee on a promissory note, averring that said note was executed by appellee payable to one Doremus at the Noble County Bank, Kendallville, Ind.; that before maturity, Doremus assigned the same by indorsement to Freeman, who, before maturity, assigned by indorsement to appellant. To this complaint appellee answered in four paragraphs: First, general denial; second, plea of no consideration with knowledge of appellant; third, failure of consideration and assignment to appellant after maturity; fourth, fraud in the procurement of the note and knowledge of appellant of the same. Demurrers were overruled to the second, third, and fourth paragraphs of answer. These rulings are assigned as error. It is urged that the second paragraph of answer is insufficient for the reason that it does not aver that the first indorsee was not a bona fide holder of the paper.
It is a well-settled rule of law that, under a plea of no consideration, or failure of consideration, to the suit by an indorsee on a negotiable note, the burden is upon the defendant to show that the indorsee was not a “bona fide holder” in all that that term implies. First Nat. Bank, etc., v. Ruhl, 122 Ind. 279, 23 N. E. 766;Hinkley v. Fourth Nat. Bank, 77 Ind. 475;Shirk et al. v. Mitchell et al., 137 Ind. 185, 36 N. E. 850, and cases there cited.
In the case of First Nat. Bank, etc., v. Ruhl, supra, the court say:
The paragraph of answer in question does aver that appellant had notice of the defense alleged, but this is not sufficient. Appellant was a second indorsee, and the law is that he has the same rights and his claim is subject only to the same defenses that might be interposed as against his indorser, even though, at the time he purchased, he had notice or such defense as against the maker. Hereth et al. v. Merchants' Nat. Bank, 34 Ind. 380;Riley v. Schawacker, 50 Ind. 592;Peckham v. Hendren, 76 Ind. 47;McCardle v. Barricklow, 68 Ind. 356; Hinkley v. Fourth Nat. Bank, supra; Bassett v. Avery, 15 Ohio St. 299;New v. Walker, 108 Ind. 365, 9 N. E. 386, 58 Am. Rep. 40;Peabody v. Rees, 18 Iowa, 571; Fairclough v. Pavia, 9 Exch. 689; Eckhert v. Ellis, 26 Hun (N. Y.) 663; Woodman v. Churchill, 52 Me. 58; Wilson v. Mechanics' Savings Bank, 45 Pa. 488;Lewis v. Long, 102 N. C. 206, 9 S. E. 637, 11 Am. St. Rep. 725; Smith v. Hiscock, 14 Me. 449; Daniel on Neg. Inst. (4th Ed.) § 726a.
In Hinkley v. Fourth Nat. Bank, supra, the court uses this language:
The reason for the rule is well stated in Bassett v. Avery, supra. In that case Bassett was a second indorsee, one Barrett being his immediate indorser, and it was contended that, notwithstanding Barrett had no notice of the defense, since Bassett had, the defense was available. The court held to the contrary, and in passing upon the question said:
In Hereth et al. v. Merchants' Nat. Bank, supra, the court say: “Again, it is well settled that the purchaser of commercial paper from one who is an innocent holder for value may recover on it, notwithstanding he knew that there were defenses against the note, at the time he took it.”
The second paragraph of answer, to be sufficient as a defense, should aver not only that appellant was not a good-faith purchaser, but that his indorser was likewise in mala fides. The third paragraph of answer for the same reason is insufficient. It is said by the learned author in Daniel on Neg. Inst. (4th Ed.) § 726a: “A transferee can generally get as good a title as his transferrer possesses, and it is, therefore, a settled principle that if the party who transferred the instrument to the holder acquired the note before maturity, and was himself unaffected by any infirmity in it, the holder acquires as good a title as he held, although it were overdue and dishonored at the time of transfer.” And in Cromwell v. County of Sac, 96 U. S. 59 (24 L. Ed. 681), Field, J., says: ...
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