Limerick Nat. Bank v. Adams

Decision Date08 January 1898
Citation40 A. 166,70 Vt. 132
CourtVermont Supreme Court

Exceptions from Orange county court.

General and special assumpsit by the Limerick National Bank against J. B. Adams and another. Plea, the general issue, with notice. Verdict and judgment for the defendants. The plaintiff excepted. Affirmed.

There was a special count upon a promissory note for $1,000, dated October 9, 1894, payable to H. P. Reynolds or bearer in one year from date, signed by the defendants, and delivered and assigned by Reynolds to the plaintiff, for value, before maturity. The note in suit is one of three of similar amount, payable in one, two, and three years, respectively. These notes were left with the plaintiff for discount the latter part of October, 1894, by the payee. On November 1st, the plaintiff's cashier, of his own motion, wrote to the president of the Randolph (Vermont) National Bank, in vicinity of which the maker resided, and at which the notes were payable, inquiring as to the financial responsibility of the signers. On Saturday, November 3, 1894, the plaintiff's discount committee, consisting of its president, vice president, and another director, in the presence of the cashier, voted and directed the cashier to discount the notes. At the commencement of business on Monday, November 5th, the notes were discounted, by deducting from the face of each the sum of $100.44, although the notes bore interest from their date, and cashier's checks were given for the avails thereof, to wit, $2,517.10. On November 6th a reply came in answer to the letter of inquiry, stating that the signers were not financially responsible. The plaintiff is located at Limerick, Me. Concerning the testimony of Folsom, the exceptions show that the agents of Reynolds knew that he was financially irresponsible when he signed the note.

Darling & Darling and W. A. Lord, for plaintiff.

Boyden & Denison and R. M. Harvey, for defendants.

THOMPSON, J. The plaintiff claimed to recover as the bona fide purchaser, for value, of the note in suit, before it was due. On the part of the defendants, the evidence tended to show that, as between the original parties to the note, it was void for want of consideration, and by reason of the payee's fraud in obtaining it in its opening, the plaintiff introduced evidence tending to show that it was a bona fide holder of the note, for value. The law presumed this without other evidence than the production of the note by the plaintiff, the contrary not appearing. The case standing thus, the ordinary course of such a trial was not thereby changed, nor was it affected by the fact that the plaintiff alleged in its declaration that it gave value for the note. Notwithstanding this aspect of the case, when the plaintiff rested, it was competent for the defendants to show that the note was without consideration and void for fraud as between the original parties; and their evidence tending to show such to be the fact was properly admitted as a step in their defense, and for the purpose of casting the burden upon the plaintiff of showing that it was not chargeable with knowledge of the fraud, if the fraud alleged was established; nor were the defendants held to any particular line of proof by the allegations in their notice, for, under the general issue, they could show that the note was void for the causes alleged, and that the plaintiff was chargeable with notice thereof when it purchased it. V. S. § 1150, requiring a defense to be set forth by way of plea or notice, does not apply where the defense is of such a character as to show that no cause of action ever existed. Gregory v. Tomlinson, 68 Vt. 413, 35 Atl. 350.

From the evidence of the defendants it appeared that H. P. Reynolds, the payee of the notes, by his agent, one Wolcott, came to certain of the defendants with a horse, which he claimed to be an imported German coach stallion, representing to them that he was organizing a stock company to which to sell the horse. In his interviews with such of the defendants as he saw, he was accompanied and assisted by one Griswold, who lived in the vicinity of, and was well known to, all the defendants. Griswold and Wolcott represented, in substance, that, in order to make a sale of the horse, 30 good, responsible men must take shares in him, at $100 each (the price of the horse being $3,000), and that all of the 30 must sign the note, and that, unless 30 shares were so taken, there was to be no sale. Each person taking stock was obliged to sign what was termed a "stock book," which was, in substance, an agreement to take said shares in the horse. After several signers to the stock book had been procured, Wolcott left, and one Niece and one Schoonmaker appeared, who, in connection with Griswold, went on with the work of procuring signers to the stock book, upon representations substantially similar to those formerly made by Wolcott and Griswold. Later, Niece, Schoonmaker, and Griswold came to the defendants with the notes in question, representing to each one, in substance, that all of the 30 shares had been taken, and demanding that the defendants sign the notes. It was then represented to them that the notes were not to be valid or complete, and not to be considered as delivered, until 30 financially responsible men had signed them, and until a meeting of all the signers thereto should be had, at which meeting Niece was to be present with the notes for the examination and approval of all the signers, and a company was to be organized, and the horse turned over to the company. Under these representations and conditions, each of the defendants signed...

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