Lehman v. Press

• Decision Date: 15 October 1898
• Citation: 76 N.W. 818,106 Iowa 389
• Parties: LEHMAN v. PRESS.
• Court: Iowa Supreme Court

106 Iowa 389

76 N.W. 818

LEHMAN

v.PRESS.

Supreme Court of Iowa.

Oct. 15, 1898.

Appeal from district court, Lucas county; M. A. Roberts, Judge.

Action on six promissory notes. Trial to jury, verdict and judgment for defendant, and plaintiff appeals. Reversed.J. C. Mitchell and G. G. Fancher, for appellant.

Stuart & Bartholomew, for appellee.

LADD, J.

The six notes sued on were executed by the defendant to Mayer, Engle & Co., March 15, 1895, and are for the payment of $1,050. The defense interposed was want of consideration, of which plaintiff had notice, and that he was not the real party in interest. The first note became due April 29, 1895, and is indorsed, “Without recourse. Mayer, Engle & Co.” The other five notes fell due a month apart, beginning with May 29, 1895, and upon each are the following indorsements: “Without recourse. Mayer, Engle & Co.;” “For collection, acct. of Gage, Downs & Co.;” “For collection, and return to Nat'l Bank of Republic, Chicago. W. T. Fenton, Cashier.” The plaintiff testified that he purchased these notes of Mayer, Engle & Co., April 30, 1895, and paid therefor by check of $1,000, afterwards cashed by Gage, Downs & Co., of which firm he was a member. The eighth instruction is based on this evidence, and is as follows: “If you find from the evidence that on the 30th day of April, 1895, the plaintiff, as the agent of Gage, Downs & Co., purchased the notes in controversy for said Gage, Downs & Co., and paid for them with the money and means of said Gage, Downs & Co., and afterwards said Gage, Downs & Co. indorsed said notes and delivered them to a bank, and afterwards said Gage, Downs & Co. delivered said notes to the plaintiff for collection for their benefit only, then you are instructed that, under such findings and facts, the plaintiff would not be a purchaser of said notes for value, and defendant would have the right to interpose any defense she had thereto, the same as if suit had been brought thereon by Mayer, Engle & Co., the original payees of said notes.”

It will be observed that the evidence tended to show the purchase of the notes the day after the first was due, but before the expiration of the three days of grace, and therefore before maturity. Crosby v. Grant, 36 N. H. 273. As to this note, there was no evidence whatever of any transfer except by Mayer, Engle & Co., and, as applied to it, the instruction is unquestionably erroneous. As to the other notes, it can rest on inference only, to be drawn from the indorsements, that the notes were purchased by giving the check of Gage, Downs & Co., instead of his own, and the indorsements were circumstances to be considered in determining whether the plaintiff was owner; but such indorsements had no tendency to show that Gage, Downs & Co. had delivered the notes to plaintiff for collection or for any other purpose. Besides, there is no such issue in the pleadings. The defendant expressly alleges that they were transferred by Mayer, Engle & Co. to plaintiff, and that he instituted suit thereon at their request, to aid them in cheating the defendant. But suppose that the plaintiff was acting for Gage, Downs & Co., and that the notes were purchased by that firm, the rule announced cannot be sustained. One to whom a note is indorsed for collection may maintain an action thereon. Bond Co. v. Hurd, 85 Iowa, 559, 52 N. W. 488;Cottle v. Cole, 20 Iowa, 481. While the note is subject to defenses interposed by the payor against the principal, such defenses must be made in order to defeat recovery. If the plaintiff purchased the note for Gage, Downs & Co., and brought this action for their benefit, and value was paid without notice of note's infirmities and in good faith, the defense must fail. Farwell v. Tyler, 5 Iowa, 535. As affecting the rights of the payor, it is immaterial whether the principal or agent brings the action.

Exception was taken to the seventh instruction: “In order to sustain defendant's claim, it is not necessary that the evidence show that plaintiff had express, actual notice that said notes were without consideration. It will be sufficient if the...