Hodge v. Smith

• Decision Date: 08 January 1907
• Citation: 110 N.W. 192,130 Wis. 326
• Parties: HODGE ET AL. v. SMITH ET AL.
• Court: Wisconsin Supreme Court

130 Wis. 326

110 N.W. 192

HODGE ET AL.

v.SMITH ET AL.

Supreme Court of Wisconsin.

Jan. 8, 1907.

Syllabus by the Judge.

In determining on appeal whether the trial court erred in holding that any particular issuable fact or facts were established without room for reasonable minds to reasonably differ in respect thereto the decision below should not be disturbed unless it clearly appears to be wrong.

If a material allegation of the complaint is not established in the exact detail of the charge but is as to the substance thereof the variance is not material.

If a person secures signatures to a note under a promise that the paper shall not be regarded delivered as a binding obligation till others, specified by name or as to numbers, shall have signed and then secures the unconditional signatures of part only of such others, keeping silent as to the conditional character of the former signatures, the latter are to be regarded as having been obtained by fraud.

If a promissory note, in form, is delivered by the maker to the payee, the act being accompanied by a verbal agreement that the instrument shall not take effect till some specified condition shall have been performed, as that other persons specified by name or number shall have signed, the paper, as between the original parties, will have no validity till the condition shall have been satisfied.

In the circumstances last stated, proof of the contemporaneous verbal agreement does not violate the rule that a written instrument cannot be varied by proof of a verbal promise, since such proof only goes to the question of whether the paper ever had vitality as a contract.

In the circumstances above stated, if the condition is that certain other signatures shall be obtained, only part of which are thereafter secured, they signing unconditionally and without being informed of their co-makers having signed conditionally and they are prejudiced thereby, in that the paper does not take effect as to such conditional makers, they may defend on the ground of fraud while such co-makers may defend on the ground of the paper never having been delivered, so long as the same remains in the hands of the original holder or any subsequent holder not having obtained the same in due course.

A holder of commercial paper in due course is one who takes the same when (a) it is complete and regular upon its face; (b) he became the holder of the paper before it was overdue and without notice that it had been previously dishonored, if such was the fact; (c) he took it in good faith and for value; (d) 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 person negotiating it; and (e) he took it in the usual course of business.

The transferee of commercial paper is not the holder thereof in due course, unless he has paid the full amount agreed to be paid therefor without notice of any infirmity in the instrument or in the title of the transferer--except to the amount thereof so paid.

The title of a person who negotiates commercial paper is defective when he shall have obtained the instrument or any signature thereto by fraud or negotiated it in breach of faith or fraudulently.

The holder of commercial paper is prima facie presumed to be a holder in due course but in case of its appearing that the title of any person who negotiated the paper was defective then the holder in order to recover must show that he or some person under whom he claims acquired the title as a holder in due course.

In the circumstances last stated, proof that a full consideration was paid for the paper prima facie establishes that it was taken in due course.

Proof that when the paper was taken the consideration was placed to the credit of the seller on the books of the purchaser subject to the former's order, does not constitute payment.

Ordinarily in the circumstances stated in the last paragraph the burden of proof is on the defendant to show that the debt represented by the credit was not paid, but in the circumstances stated in number 10 the burden is on the purchaser.

Appeal from Circuit Court, Pepin County; E. W. Helms, Judge.

Action by George O. Hodge and John W. Hodge against John Smith and others. Judgment for defendants, and plaintiffs appeal. Affirmed.

Action to recover on three promissory notes dated February 18th, 1903, one for $934.00, and two for $933.00, each, made by the defendants, payable to the order of Robert Burgess & Son with 6 per cent. interest per annum payable annually, the first one being made payable July 1st, 1904, the second July 1st, 1905, and the third July 1st, 1906. Each note provided that in case of any delinquency to meet it as to principal or interest the whole should become immediately due. The complaint contained a cause of action stated in the usual form as to each note, the two causes of action as to the notes not due on their face containing sufficient allegations to show that they were due under the condition before mentioned. Defendants Smith, White, Andrew Lark, Strandberg, Anderson and A. P. Lark answered jointly. Defendants Dunn, Engel, Heitman and V. Brownlee answered jointly. Defendants Smith, Andrew Lark and A. P. Lark joined in an amended answer, defendant Frank answered separately and the defendant Strandberg interposed an amended answer. By these several answers, as to all defendants, issue was taken on the allegations of the complaint as to plaintiffs having become owners of the notes for value in due course before due, and as to whether the second and third notes became due before the commencement of the action. A defense was pleaded as to all defendants, that the notes were given for a stallion sold with certain specified warranties and representations, among them being one that the animal was but three years of age, and that such representations were false. Further defense was pleaded that each and all defendants signed the notes under an agreement that they were to be signed by Otto Jahnkee and R. J. Hall and were not to take effect till so signed, and that neither of such persons did so. Defendants Dunn, Engel, Heitman and Brownlee pleaded that they signed the notes with the understanding that they should not be held liable; that their signatures were wanted only to make it appear that they were actual purchasers of shares in the horse. Defendant Frank answered specially that he never executed the note. Defendant Strandberg answered specially that he was induced to sign through threats, fraud and duress practiced upon him by the agent for the sellers of the horse; that he signed a book agreeing to take a share in the animal and to sign the note, but that he did not recollect it when asked to sign the note; that his name was placed on the book when he was so intoxicated that he did not know what he was doing; that his signature was subsequently exhibited to him and he was threatened with being sent to state's prison if he did not sign the notes, and that being thereby frightened and through his inexperience, being ignorant of his rights, he signed the notes.

At the close of the evidence the court directed a verdict in favor of the plaintiffs against defendants Smith, Andrew Lark and A. P. Lark as to the first note, and a verdict in the latter's favor as to the other notes, and otherwise submitted the cause to the jury resulting in a verdict in plaintiffs' favor for the full amount claimed. Thereafter upon due application the verdict directed in plaintiffs' favor was set aside and the verdict otherwise rendered in plaintiffs' favor was also set aside, as said by the court, “for errors of the court in so directing a verdict and in submitting certain issues to the jury and instructions thereon.” Thereupon, on motion of the defendants, judgment was ordered in their favor and was accordingly rendered.Barnes & Magoon (C. A. Ingram, of counsel), for appellants.

W. C. Owen and W. E. Plummer, for respondents.

MARSHALL, J. (after stating the facts).

If the grounds upon which the learned circuit court rendered judgment in favor of respondents were legitimate, then, manifestly, error of law was committed in submitting the cause to the jury, and in the instructions. Therefore, we will not give consideration to the subject of whether error was committed in setting aside the verdict, unless it shall appear that the subsequent action complained of was erroneous.

The bases of the order for judgment, notwithstanding the verdict, so far as need to be noticed, appear to be: (a) The evidence is undisputed that the vendors of the horse, by their agent, falsely represented the animal's age; (b) The evidence is likewise conclusive that such vendors obtained the signatures of all of the respondents to the notes upon condition that in addition to such signatures Otto Jahnke and R. J. Hall should sign, making the full number of share-takers in the enterprise fourteen, so that each holder of a share would contribute in the ultimate $200.00, only, and that the papers were not so signed; (c) The evidence is likewise undisputed that while the notes were sold to appellants before due they were bankers and instead of parting with the agreed consideration at the time of the purchase it was placed to the credit of the sellers in an account at such bank subject to check, and there was no proof that the amount thereof, or any of it, was checked out before the commencement of the action.

The first ground requires but a passing notice. There was no claim in the complaint that the contract of purchase was rescinded for misrepresentation or otherwise. The defense was not based on rescission, nor was any claim made for damages because of the horse not being as represented, nor were any damages proved. So no feature of the complaint on that score should have been treated as of importance in submitting the cause to the jury, or in determining after verdict the proper judgment to be rendered.

In deciding the question...