Levy v. Artophone Co.

• Decision Date: 06 February 1923
• Docket Number: No. 17089.,17089.
• Citation: 249 S.W. 158
• Parties: LEVY v. ARTOPHONE CO.
• Court: Missouri Court of Appeals

249 S.W. 158

LEVY v. ARTOPHONE CO.

No. 17089.

St. Louis Court of Appeals. Missouri.

February 6, 1923.

Rehearing Denied March 2, 1923.

Appeal from St. Louis Circuit Court; J. Hugo Grimm, Judge.

"Not to be officially published."

Action by Joseph Levy against the Artophone Company. Judgment for defendant, and plaintiff appeals. Reversed and remanded, with directions.

H. A. & Harry S. Gleick, of St. Louis, for appellant.

Eugene Hale, of St. Louis, for respondent.

BRUERE, C.

This action is based on five trade acceptances, executed by the defendant to one Leonard Markels, and which Markels discounted before maturity with the plaintiff. The suit was began in a justice court, where a separate action was brought upon each trade acceptance. In the justice court judgment was rendered in favor of the plaintiff in each case. Defendant appealed to the circuit court of the city of St. Louis, where the five suits were consolidated and tried as one case before the court and a jury, resulting in a verdict and judgment in favor of defendant, from which plaintiff has appealed.

The defendant filed no answer, but disclaimed liability under the acceptances on the ground that Markels' title to them was defective, and that the plaintiff was not a holder in due course. At the close of the testimony the plaintiff requested the court to give a peremptory instruction, directing a verdict for the plaintiff, which the court released to give, and now complains that error was committed in the denial of his offer.

The facts in the case, as developed by the evidence, are these: In the latter part of October, 1918, one Leonard Markels, of New York City, sold to the defendant, a corporation engaged in selling talking machines in the city of St. Louis, Mo., $2,700 worth of motors. The terms of sale provided that 9 weekly deliveries of 50 motors each, were to be made, commencing on the 25th day of December, 1918. In payment of the merchandise purchased the defendant, on November 11, 1918, executed and delivered to Markels nine acceptances, each for $300, all dated November 9, 1918, and payable in 7, 8, 9, 10, al, 12, 13, 14, and 15 weeks after date respectively. Since these acceptances are all alike, except as to the date of maturity, we will describe but one. It reads:

"No. ____. New York City, November 8, 1918, $300.00. Eleven weeks after date pay to no order of ourselves three hundred and no/100 dollars, in settlement of the purchase of goods as billed in our invoice, No. ____ dated ____, to the Artophone Company, 1113 Olive Street, St. Louis, Mo., by Leonard Markels, 165 Williams St., N. Y. City."

Indorsed:

"Leonard Markels. The Corn Exchange Sank of New York. St. Louis Union Bank. Joseph Levy. Accepted: November 11, 1918, Payable to the Mercantile Bank of St. Louis, Missouri. The Artophone Company, Robt. H. Cone, Jr."

It appears from the testimony of Robert H. Cone, Jr., defendant's president, that Markels agreed not to negotiate these acceptances until the first one became due, December 25, 1918.

It further appears that Markels made only four deliveries of the motors purchased, totaling $472.25. The first delivery was made on November 9, 1918, and the last on December 6, 1918. In January, 1919, an involuntary petition in bankruptcy was filed against Markels, and, being thrown into bankruptcy, he became unable to make further shipments of motors to defendant.

On November 18, 1918, Markels negotiated five of said acceptances (being those sued on herein and due in 11, 12, 13, 14, and 15 weeks after date, respectively) to the plaintiff. Regarding the facts and circumstances surrounding the purchase of these acceptances, the plaintiff testified that a few days prior to November 16, 1918, Mr. Secular, a note broker, met him in the city of New York, and asked him if he wanted to discount some trade acceptances; that he made an appointment with Mr. Secular to meet him at the office of Mr. Steinberg, plaintiff's attorney, on Saturday afternoon, November 18, 1918, and told him he would then discuss the matter with him; that on said latter date he met Mr. Secular and Mr. Markels at said attorney's office, and was shown the five acceptances of the defendant company, and which Mr. Markels wanted him to discount; that he inquired of Mr. Markels as to the consideration of the acceptances, and was informed by him that they were given for merchandise shipped to the defendant; that he refused to discount the paper without making inquiry into the financial standing of the makers thereof, and told Mr. Markels he would make this inquiry and let him know the following Monday, November 18, 1918, whether he would purchase the acceptances; that thereafter he obtained Bradstreet's and Dun's commercial reports, showing that the financial condition of the defendant and Mr. Markels was good, and that on November 18, 1918, he purchased the five acceptances for the sum of $1,500, less a discount of 6 per cent.

The plaintiff further introduced in evidence two checks drawn by the plaintiff on the Corn Exchange Bank of New York City, dated November 18, 1918, payable to Mr. Markels and indorsed by him. It was shown that Mr. Markels cashed these checks, and that the amount he received corresponded with the purchase price paid for the acceptances as testified to by plaintiff.

The testimony of the plaintiff, regarding the facts and circumstances surrounding the purchase of the acceptances in question stands unimpeached and uncontradicted, save only by the following testimony given by Mr. Markels:

"Q. Did Mr. Levy ask you what the trade acceptances ware for? A. Mr. Levy asked me naturally who are they from.

"Q. Did he ask you what they were for? A. I believe he did.

"Q. Do you believe so, or do you know so, or do you only think so? A. Yes; he asked me. "Q. What did he say? A. `What is the trade acceptances for?' I told him for merchandise. "Q. Is that all you said? A. I told him some al them being shipped and some of them were clipped.

"Q. Are you sure you told him some of them being shipped and some of them were shipped? A. Yes, sir.

"Q. Did he ask you whether they had already been shipped or if they hadn't been shipped? A. couldn't recollect."

There was no other evidence adduced in support of defendant's contention that the Plaintiff had knowledge, at the time of the transfer, of the defect in Markels' title to the acceptances.

The question arises whether on the facts Presented the plaintiff must be held, as a matter of law, to be a holder in due course as defined by section 838, Revised Statutes of 1919. The Negotiable Instrument Law provides that—

"To constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is negotiated must have actual knowledge of the...