Johnson County Sav. Bank v. Walker

• Decision Date: 18 December 1906
• Court: Connecticut Supreme Court
• Parties: JOHNSON COUNTY SAVINGS BANK v. WALKER.

65 A. 132

79 Conn. 348

JOHNSON COUNTY SAVINGS BANK

v. WALKER.

Supreme Court of Errors of Connecticut.

Dec. 18, 1906.

Appeal from District Court of Waterbury; Frederick M. Peasley, Judge.

Action by the Johnson County Savings Bank against A. C. Walker on acceptances of bills of exchange, of which plaintiff was the Indorsee. From a judgment on a verdict for plaintiff, motion to set aside the verdict having been denied, defendant appeals. Affirmed.

John J. O'Neill, for appellant. Lucien F. Burpee and Terrence F. Carmody, for appellee.

BALDWIN, J. Under Gen. St. 1902, §§ 4222, 4225, 4226, 4229, when it is shown in an action by a transferee of negotiable paper against the maker or acceptor that the party who negotiated it to the plaintiff obtained it by fraud or for an illegal consideration, the burden is upon the plaintiff to prove that he took it in good faith, for value, and without either actual knowledge of any infirmity in it or defect in the title of the person from whom it was transferred to him, or knowledge of such facts that his action in taking the paper amounted to bad faith. The bills in question in the case at bar were drawn in favor of an Iowa manufacturing corporation, which had indorsed them to the plaintiff, an Iowa banking corporation. The defendant offered evidence tending to show that the acceptances were procured by the fraud of the manufacturing corporation, and were given for an illegal consideration. The plaintiff, to show that it was a holder in due course, offered no other evidence than the deposition of William A. Foy. He testified that it had been for many years in the banking business; that he had been its cashier for 16 years; that, as such, he discounted the acceptances before their maturity, for the manufacturing corporation, on its offering them as paper obtained from one of their customers; and that he had at the time no knowledge of any offset, counterclaim or defense, or of the consideration for which they were given except from the face of the bills which stated that they were drawn for value received.

The court, after instructing the jury that should they find that the acceptances were procured by fraud or for an illegal consideration, the burden would be upon the plaintiff to prove that it had no actual knowledge of this nor of such facts that its action in taking the drafts amounted to fraud or bad faith, proceeded thus: "It will not be sufficient to discharge that burden for the plaintiff to prove merely that its cashier had no such knowledge, because the plaintiff is a corporation, and like all corporations doubtless had other officers, like a president, secretary, treasurer, board of directors, or board of trustees, and if all of these officers had the required knowledge of the fraud or illegal consideration, the fact that its cashier had no such knowledge would make no difference, and the plaintiff in that event could not recover in this action. It might also be that the president or any other of the officers of the bank might have authority to lawfully represent the bank and bind it with knowledge of fraud or illegality...