Kotzman v. Condit
| Decision Date | 16 October 1934 |
| Docket Number | Case Number: 22833 |
| Citation | 1934 OK 542,169 Okla. 422,37 P.2d 412 |
| Parties | KOTZMAN v. CONDIT et al. |
| Court | Oklahoma Supreme Court |
¶0 1. Bills and Notes--Rights of Bona Fide Purchaser and His Transferee.
A bona fide purchaser is not only entitled to protection for a title while it remains in him, but he may also transfer such title to any other person, and with it goes his superior equity as a bona fide purchaser. And, although the grantee of a bona fide purchaser may have notice of outstanding conflicting interests which are a defect upon the title, he may still claim the benefit of the superior equity acquired by his grantor as a bona fide purchaser.
2. Principal and Agent--Knowledge of Principal not Imputed to Agent.
Knowledge which a principal possesses will not, as a matter of legal conclusion, be imputed to an agent. An agent must have actual knowledge or such a personal connection with the transaction as would charge him with notice.
3. Bills and Notes--Discharge of Maker by Renunciation--Statutory Provision.
Renunciation, by which the maker of a negotiable instrument may be discharged, is controlled by section 11421 of the 1931 O. S. therefore, a party primarily liable thereon can be discharged only in the manner and form provided for therein.
Appeal from District Court, Mayes County; Ad V. Coppedge, Judge.
Action by August Kotzman against W. C. Condit et. al. Judgment for defendants, and plaintiff appeals. Reversed and remanded, with directions.
W. Otis Ridings, Norman E. Reynolds, and Paul C. Williams, for plaintiff in error.
Langley & Langley and Henry L. Burris, for defendants in error.
¶1 This action was brought by August Kotzman against W. C. Condit and Pigin Condit to recover on a negotiable promissory note and to foreclose a real estate mortgage securing it. From a judgment for the defendants, the plaintiff appeals.
¶2 There is no serious conflict in the material facts, which may be summarized as follows:
¶3 The Graves Farm Loan Investment Company, which will be referred to hereafter as "the Investment Company," had its principal office in Pittsburg, Kan., and was engaged in the business of making and negotiating mortgage securities. The plaintiff lived at Frontenac, Kan., and was engaged in the real estate and insurance business. He also acted as a local broker for the Investment Company, and sold its securities to his clients and received commissions for his services, but had no other contact or relationship with the Investment Company. August Marx lived at Radley, Kan., and was a coal miner. He appears to have had but little business experience and spoke the English language with difficulty. H. L. Burris was a lawyer living at Locust Grove in Mayes county, Okla., and acted as the local agent of the Investment Company, with rather general powers and duties. It appears that he took applications for loans, examined the titles, looked after the execution and recording of instruments and the closing of loans. The defendants, husband and wife, were farmers residing in Mayes county, Okla., on the land in controversy. For the purpose of procuring a loan of money the defendants executed a negotiable promissory note to the Investment Company on the 1st day of January, 1929, in the sum of $ 1,000, and secured it by a mortgage on their farm. The transaction was handled locally by Mr. Burris, who delivered the papers to the Investment Company, but the proceeds of this loan of money were never paid to the defendants, and, therefore, there was a total failure of consideration. August Marx, the coal miner, had $ 1,000 which he desired to invest. Through a mutual acquaintance he was introduced to the plaintiff, and on the 7th of December, 1929, he delivered his money to the plaintiff for the purpose of buying a security or a loan and the plaintiff gave him a receipt, for it. Kate Kotzman, the wife of the plaintiff, had $ 1,000 on deposit with the Investment Company, which was part of the proceeds of a paid-off loan held by her, and this money was left for reinvestment. The bank account of the plaintiff and his wife was carried in the name of Kate Kotzman, and the money received by the plaintiff from August Marx was deposited in this account on or about the same day it was received. On the 20th day of February, 1929, plaintiff went to the office of the Investment Company and procured the note and the mortgage which had previously been executed by the defendants. The Investment Company indorsed the note to August Marx and executed a formal assignment of the mortgage to him, and thereupon the plaintiff delivered the note, mortgage, and assignment to August Marx. About the 10th of March, 1929, an application was filed at Pittsburg, Kan., for the appointment of a receiver for the Investment Company, and on the 16th of April thereafter a receiver was appointed. On May 14, 1929, an involuntary petition in bankruptcy was filed against the Investment Company, and on the 4th day of November thereafter it was adjudged a bankrupt. The plaintiff learned of the receivership proceedings some time between the 16th and 18th of March, 1929, and some time between the 28th of March and the 6th of April thereafter the plaintiff and two interested friends of his made a trip to Mayes county, Okla., for the purpose of investigating the securities in which they were 'interested, and, upon their arrival, had an extended conference with Mr. Burris, in the course of which Mr. Burris told the plaintiff that the defendants had never received the proceeds of their loan, that the paper was without consideration. and that there would be trouble about it. When the plaintiff returned home he borrowed $ 1,000 from his father, which he paid to August Marx on the 8th day of April, 1929, and thereupon August Marx indorsed and delivered the note to the plaintiff with a formal assignment of the mortgage.
¶5 The defendants filed an answer in which they admitted the execution and delivery of the note and mortgage, and alleged affirmatively that there was a total failure of consideration for the execution and delivery thereof; they further alleged that both August Marx and the plaintiff knew and were informed of the fact that the note was without consideration at the time of the indorsement and delivery of the note to August Marx on the 20th day of February, 1929; that neither August Marx nor the plaintiff paid the Investment Company any consideration for the paper; that the plaintiff paid no money or other things of value to August Marx for the paper, and that the plaintiff caused the mortgage to be assigned to August Marx in the first instance in order that he might avoid having knowledge that the paper was without consideration' that August Marx and the plaintiff procured possession of the paper through deception, fraud or a loan thereof for inspection purposes.
¶6 Plaintiff replied by a general denial and realleged that August Marx and he had purchased the paper for a valuable consideration prior to maturity thereof and without any notice whatever of the defenses et forth In the answer, and that both the said August Marx and he were innocent purchasers.
¶7 At the trial plaintiff demurred to the defendants' evidence and moved for judgment at the close of the ease, both of which were overruled and exceptions saved.
¶8 The findings of the court are as follows:
"And the court, having heard the argument of counsel on the facts and law, doth find the issues generally in favor of the defendants, and against the plaintiff, and in addition to such general finding, doth specially find that the defendants executed and delivered the note involved in this suit. and doth specially find that the note involved in this suit was without consideration and that there was a total failure of consideration for the execution and delivery of said note, and doth find that the plaintiff failed to establish by evidence satisfactory to the mind of the court that he acquired the note involved herein in good faith, and the court finds that the prayer of the cross-petition of the defendants should be granted, and the note and mortgage involved herein canceled, set aside, and held for naught."
¶9 The plaintiff's contention is that there was no evidence, either competent or incompetent, tending to support the judgment.
¶10 On the authority of Beesley v. Nicholson Company, Inc., 148 Okla. 270, 298 P. 607, the defendants claim that the judgment should he affirmed on the theory that the evidence is of such a nature that men of ordinary intelligence might draw differ(mt conclusions therefrom.
¶11 It is obvious that the rights of the parties must be determined by applying the Uniform Negotiable Instruments Act, which has been in...
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