Hodges v. Black

• Decision Date: 24 February 1880
• Citation: 8 Mo.App. 389
• Parties: PRESTON H. HODGES, Respondent, v. WILLIAM L. BLACK, Appellant.
• Court: Missouri Court of Appeals

8 Mo.App. 389

PRESTON H. HODGES, Respondent,

v.WILLIAM L. BLACK, Appellant.

St. Louis Court of Appeals, Missouri.

Feb. 24, 1880.

1. Where the answer, after admitting the plaintiff's prima facie case, sets up a purely equitable defence, this converts the case wholly into an equitable proceeding.

2. The adjustment of partnership accounts is a matter of equitable jurisdiction.

3. Where there is substantial evidence to support a finding, appellate courts will not inquire as to its weight.

4. Semble that in Missouri, negotiable paper taken without notice, before maturity, as absolute payment of an antecedent debt and not merely as collateral, though the debt thus discharged is a simple contract debt, and no security is given up, places the holder in the position of an innocent holder for value, not affected by any equities between the original parties to the notes.

APPEAL from the St. Louis Circuit Court.

Affirmed.SILAS B. JONES, for the appellant: No action can be maintained at law by one partner against his copartner on account of the partnership concerns until a final settlement has been reached and a balance struck between them.-- Stothert v. Knox, 5 Mo. 112; Springer v. Cabell, 10 Mo. 640; McKnight v. McCutchen, 27 Mo. 436; Smith v. Smith, 33 Mo. 557; Scott v. Caruth, 50 Mo. 120; Bond v. Bemis, 55 Mo. 524; Leabo v. Renshaw, 61 Mo. 292; Ives v. Miller, 19 Barb. 196; Richardson v. Bank, 4 Myl. & Cr. 165; Stoddard v. Wood, 9 Gray, 90; Story on Part., sect. 219. “The balance against every partner on partnership account is, like every other debt to the partnership, a part of the stock or property of the partnership; all this is first bound to the debts of the firm, and after these are paid, it all belongs to the partners severally, in due proportion.”--Pars. on Part. 269; Story on Part., sects. 97, 326, et seq.; 1 Collyer on Part. (6th ed.) 186 et seq.; Flannigan v. Alexander, 50 Mo. 50; Ackley v. Staehlin, 56 Mo. 558; Price v. Hunt, 59 Mo. 258. The interposition of an equitable defence does not change the nature of the action, or give the court the right to try it without a jury.-- Wolff v. Schaeffer, 4 Mo. App. 367; Carter v. Prior, post, p.--; The State ex rel. v. Meagher, 44 Mo. 356, 362. Negotiable paper, payable to the order of the payee, may be transferred as well with as without indorsement. But whether transferred in the one or the other mode makes a very material difference as to the rights of the transferee.-- Patterson v. Cave, 61 Mo. 439. Mere possession by respondent of the notes did not prove their indorsement. The mere possession of negotiable paper by a person other than the payee to whose order it is payable is not evidence of ownership of the paper in such person.--1 Dan. Neg. Inst. (2d ed.), sect. 741; Hull v. Conover, 35 Ind. 372; Dorn v. Parsons, 56 Mo. 601. We assert the law to be, that under what circumstances the maker of a note can set up equities existing between himself and the payee of the note against an indorsee thereof is to be determined by the law of the place where the note is executed and is to be paid, and not by the law of the forum.--Story on Prom. Notes, sects. 168, 172; Story on Bills, sect. 163; Story on Confl., sects. 332, 346; 2 Pars. on Notes & Bills, 338; Ory v. Winter, 4 Mart. La. (N. S.) 277; Stacy v. Baker, 2 Ill. 217; Woodruff v. Hill, 116 Mass. 310. The mere taking of negotiable paper in payment of an antecedent debt renders the transferee a holder for value.-- Goodman v. Simonds, 19 Mo. 106.

GARESCHÉ & GARESCHÉ, for the respondent: It is no defence to this action that, at the time of the execution and delivery of the notes in suit, the defendant entered into an oral contemporaneous agreement whereby the notes were to be paid only on a contingency.--2 Pars. on Notes & Bills, 506; Jones v. Shaw, 66 Mo. 667; Carter v. Hamilton, 11 Barb. 147. And, à fortiori, not against an indorsee.--2 Pars. on Notes & Bills, 508; Smith's Administrator v. Thomas, 29 Mo. 307; Massman v. Holschner, 49 Mo. 86; Henshaw v. Dutton, 59 Mo. 139; Bradley v. Bentley, 8 Vt. 243. Possession of the notes in suit makes Hodges prima facie an innocent holder for value. Hence, prior to the introduction of any evidence in support of this defence, it was first necessary for defendant to prove that plaintiff was not an innocent holder for value.-- Greer v. Yosti, 56 Mo. 307; Bennett v. Torlina, 56 Mo. 309; Merrick v. Phillips, 58 Mo. 436. It was necessary that the indorsee have express notice, in order to defeat his right to recover.-- Hamilton v. Marks, 63 Mo. 167; Bank v. Stoneware Co., 4 Mo. App. 276; Edwards v. Thomas, 66 Mo. 466. But even if Hodges had taken these notes in payment and extinguishment of a preëxisting debt, without having given any actual cash for them at the time of the transfer, we would yet maintain that he is an innocent holder for value.-- Swift v. Tyson, 16 Pet.--; 1 Pars. on Notes & Bills, 221; Byles on Bills (6th ed.), 198; Logan v. Smith, 62 Mo. 455; Burns v. Rowland, 40 Barb. 368; Pratt v. Coman, 37 N. Y. 440; Lewis v. Rogers, 2 Johns. 64.

BAKEWELL, J., delivered the opinion of the court.

This is an action by the indorsee against the maker of two negotiable promissory notes, alleged to have been acquired by plaintiff before maturity for value.

The answer is a general denial, and sets up further, as a special defence, that in March, 1873, defendant (Black) and one Aspell were partners in business in New York, each equally interested; that the partnership was then dissolved, the firm being insolvent, and leaving no assets; that Aspell and Black then made a temporary casting up of the affairs of the firm, computing its indebtedness at $4,311; that this was an error, various amounts due by the firm, aggregating $2,550, having been overlooked; that at the same time it was found that Black had drawn out $1,764 more than Aspell, and that at Aspell's request Black executed and delivered to Aspell the notes in suit, to make this up; that Aspell then and there promised Black that he would furnish one-half of the money to pay the debts of the concern, which then amounted to over $6,000, and that the notes in suit were given as a mere memorandum to be used on final settlement, and that it was then agreed that any excess that Black should pay over and above his share of the debts should be deducted from these notes; that Black has paid all the debts of the concern; that no final settlement has been had; that such a settlement would sweep away these notes, and leave Aspell indebted to Black for more than $500; that Aspell has not repaid anything to Black, and that Aspell is insolvent, and cannot be found in Missouri; that the notes in suit were made and delivered to plaintiff in New York, and that plaintiff acquired them after maturity, and gave no value for them, and took them with full notice of the circumstances detailed in the answer; that Aspell is the owner of the notes, and that plaintiff holds them as agent of and in trust for Aspell; and that if defendant is compelled to pay the notes he will be irreparably injured.

When the pleadings were read at the trial, the court, against the objection of appellant, discharged the jury, regarding the proceeding as equitable in its nature. There was a finding and judgment for plaintiff.

Notwithstanding the general denial, the answer of defendant, on any fair construction, admits the prima facie case of plaintiff. It is said that it does not admit the indorsement of the note. It is true that the answer opens with a formal general denial. But most of the allegations in the petition thus traversed are, in the subsequent statements of the answer, admitted--at least by implication. It does not clearly and unequivocally appear what plaintiff intends really to deny by his general denial. There is nothing in the answer to give notice that an issue is to be made on the trial as...