Iowa City State Bank v. Biggadike

• Decision Date: 17 December 1917
• Docket Number: 49
• Citation: 199 S.W. 539,131 Ark. 514
• Parties: IOWA CITY STATE BANK v. BIGGADIKE
• Court: Arkansas Supreme Court

199 S.W. 539

131 Ark. 514

IOWA CITY STATE BANK v. BIGGADIKE

No. 49

Supreme Court of Arkansas

December 17, 1917

Appeal from Pulaski Circuit Court, Third Division; G. W. Hendricks Judge; affirmed.

Judgment affirmed.

Carmichael Brooks & Rector, for appellant.

1. The note is negotiable. 121 Ark. 59; 42 Id. 167; 96 Id. 105; Kirby & Castle's Digest, §§ 6942-4; 143 P. 159; 108 Mich. 184; 33 Id. 32; 129 Wis. 84; 81 Wash. 442; 163 Iowa 205; 35 L. R. A. (N. S.) 330; 184 Ill. 158; 61 Kans. 526; 134 F. 538; 143 N.W. 556; 136 Id. 204; 61 Iowa 166; 170 F. 313; 188 S.W. 61, and others.

2. Plaintiff was a bona fide holder of the note. 63 Ark. 604; 94 Id. 387; 96 Id. 105.

3. There was no fraud nor misrepresentation in the sale. 73 Ark 470; 48 Id. 325; 53 Id. 155; 72 Id. 343.

See also, 39 P. 566; 48 Id. 341; 98 N.W. 923; 49 N.Y. 390; 56 N.W. 669; 60 La. 710; 41 Ill.App. 642; 158 Mass. 194; 57 Ga 50; 115 N.Y. 539; 77 Wis. 44; 5 F. 83; 32 Neb. 723; 54 N.W. 311; 77 Mich. 540.

Marshall & Coffman, for appellee.

1. The note was not negotiable, because of the provision for a discount of 6 per cent on the entire amount if paid at maturity of first installment. The Iowa law is the same as ours. Acts 1913, p. 269; 155 P. 1152; 40 L. R. A. (N. S.) 177; 2 Tenn. C. C. A. 366; 55 Am. Dec. 56; 8 N.W. 87; 18 Id. 248; 46 L. R. A. 732; 111 Mass. 525; 40 L. R. A. (N. S.) 177; 21 Am. Rep. 209; 11 Bush (Ky.) 180; 165 P. 508, and many others.

2. Plaintiff was not an innocent holder of the note and the jury so found. 121 Ark. 250; 79 Id. 94, 426; 136 P. 460; 117 Id. 1003; 91 Id. 382; 29 L. R. A. (N. S.) 351, 638; 125 S.W. 224; 79 S.E. 498.

3. There was fraud and misrepresentation, as well as an implied warranty of merchantability and reasonable fitness. 35 Cyc. 397; 73 Ark. 470; 72 Id. 343; 83 Id. 15; 90 Id. 78; 77 Id. 546. See also, 74 Me. 475; 44 P. 544; 23 W.Va. 760.

STATEMENT OF FACTS.

This is an action by the Iowa City State Bank against W. S. Biggadike to recover the sum of $ 148 and interest alleged to be due upon a promissory note. The Donald-Richard Company is a corporation engaged in the manufacture and sale to merchants of toilet articles at Iowa City, Iowa. On February 2, 1914, one of its traveling salesmen sold a bill of goods consisting of perfume and other toilet articles to the amount of $ 148 to W. S. Biggadike in the City of Little Rock, Arkansas. In payment therefor Biggadike executed the following note:

"Iowa City, Iowa, February 2, 1914.

"For value received, the undersigned promises to pay at Iowa City, Iowa, to the order of Donald-Richard Company, one hundred forty-eight and no/100 dollars as follows:

"A discount of 6 per cent. will be given if the full amount of this instrument is paid at maturity of first installment. Non-payment of any installment for more than 30 days after maturity renders remaining installments due at holder's option.

"$ 37.00 three months after date.

"$ 37.00 five months after date.

"$ 37.00 seven months after date.

"$ 37.00 nine months after date.

"(Signed)

W. S. Biggadike."

The note bore the following endorsement:

"Mar. 12, 1914. Pay Iowa City State Bank, Iowa City, Iowa, or order.

"Donald-Richard Co., by M. H. Taylor."

Biggadike testified that at the time of the sale he had been engaged in the general merchandise business in the City of Little Rock for about eight years. He stated that the salesman did not show him any samples of the articles sold, that he had a small sample case but that it was nothing like large enough to hold samples of the articles sold; that the agent said the goods sold were as good as the best and that the articles offered for sale were merchantable; that he had the articles on display in his store and used every effort to sell them and that he only disposed of $ 11.71 worth; that he paid freight on the goods amounting to $ 8.40; that most of the goods he did sell were returned by customers on the ground that they were worthless; that the goods were practically worthless and that the salesman had misrepresented them in selling them to him. Eight or nine other merchants in the cities of Little Rock and Argenta, who also bought goods from the company at about the same time, corroborated the testimony of Biggadike.

One of these merchants testified that he had been in the mercantile business in Little Rock for about fifteen years when he bought the perfume and toilet articles from the company; that he kept the goods on display from February 6, 1914, until March 11, 1916; that the goods were invoiced at $ 121.90 and that he had only sold $ 26 worth of the goods; that he had displayed the goods in a case in front of his store and did everything possible to sell them; that the goods were not merchantable and were not fit for the purposes for which they were intended.

Another witness testified that he had been in the grocery business in Little Rock for about twenty-five years; that he had also bought perfumes and toilet articles from this same company; that he displayed the goods and made every effort to sell them but had only sold a very small amount of them; that the people to whom he sold them complained of the goods; that the goods were not fit for the purposes for which they were intended and did not come up to the representations of them made by the salesman of the company.

On the other hand the chemist of the company testified that he had purchased from wholesale houses the materials that were used in the manufacture of the goods for the company and had mixed all the ingredients himself; that the materials purchased by him, of which he manufactured the goods, were first class in quality and that the articles sold to Biggadike and the other merchants by the company were of the very best quality, price considered. It was shown by the defendant that he offered to return the goods after he found they were not as represented by the salesman of the company.

When the case was submitted to the jury a special interrogatory for a finding of fact was submitted to it. At the time the jury returned its general verdict it also returned the special verdict. The general verdict of the jury was for the defendant. The special interrogatory submitted and the answer thereto is as follows:

"An innocent purchaser of a note is one who obtains it in the due course of business, for value, before maturity, in good faith, without notice of any defenses the maker may have to it.

Is the Iowa City State Bank an innocent purchaser? Ans. No."

Judgment was rendered in favor of the defendant and the plaintiff has appealed.

OPINION

HART, J., (after stating the facts).

The note in question was transferred to the plaintiff bank for value before its maturity.

It is earnestly insisted by counsel for the plaintiff that the note sued on was negotiable in form under our Negotiable Instrument Law (Acts of 1913, p. 270), and that the court erred in not so stating to the jury. But the views we shall hereinafter express make it unnecessary for us to decide this question. The trial court was evidently of the opinion that the note was not negotiable; for in its general instructions to the jury it refused to submit the question of whether or not the plaintiff was an innocent holder before maturity for value and in the usual course of business. The court submitted the case to the jury on the question of the false representations of the salesman of Donald-Richard Company.

Among other instructions at the request of the defendant it gave the following:

"If you find from the evidence that defendant was induced to buy the goods by reason of false and fraudulent representations of the salesman of Donald-Richard Company, and if you further find that defendant offered to return the goods within a reasonably fit time after discovering such fraud, then your verdict will be for the defendant."

The plaintiff asked the court to give the following instructions:

"No. 3. Fraud is a material false representation, made with a knowledge of its falsity, or a reckless disregard of whether it is true or false, intending that the party to whom it is made shall rely upon it, and the party to whom it is made must have the right to rely upon such statements, and he must rely upon them, and so relying act upon them to his injury."

"No. 4. By material misrepresentation is meant a false statement about existing or past facts, as distinguished from expressions of opinion of what could be done in the future; statements that goods were salable or would increase sales, and bring business are mere matters of opinion and do not constitute fraud."

The court gave instruction No. 3 but modified instruction No. 4, by striking therefrom the words "were salable or." The court did not err in giving the instruction on this phase of the case asked by the defendant nor in striking from the instruction No. 4 as asked by the plaintiff the words "were salable or." The company manufactured the goods which it offered for sale. Its place of business was in another State. The buyer had no opportunity to inspect the goods before he purchased them and had a right to rely upon the representations made by the seller of goods of his own manufacture. In such cases the law implies a warranty that the articles shall be merchantable and reasonably fit for the purposes for which they were intended. Main v. Dearing, 73 Ark. 470, 84 S.W. 640; Main v. El Dorado Dry Goods Co., 83 Ark. 15, 102 S.W. 681; American Standard Jewelry Co. v. Hill, 90 Ark. 78, 117 S.W. 781; and Metropolitan Discount Co. v. Fondren, 121 Ark. 250, 180 S.W. 975.

Tested by the principles of law laid down in these cases it is perfectly evident from the testimony recited in the statement of facts of the witnesses for the defendant (and which need not be...