Link v. Jackson

• Decision Date: 12 June 1911
• Citation: 158 Mo. App. 63,139 S.W. 588
• Parties: LINK v. JACKSON et al.
• Court: Missouri Court of Appeals

139 S.W. 588

158 Mo. A. 63

LINK v. JACKSON et al.

Springfield Court of Appeals. Missouri.

June 12, 1911.

Rehearing Denied August 2, 1911.

1. BILLS AND NOTES (§ 332) — BONA FIDE PURCHASER — NOTICE.

Rev. St. 1909, § 10,026, relating to negotiable instruments, and providing that the person to whom it is negotiated must have had actual knowledge of infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith, is but the rule of the common law as previously interpreted, and the holder's right cannot be defeated without proof of actual notice, and though he may have been negligent or omitted precautions which a prudent man would have taken unless he acted in bad faith, his title is good.

2. BILLS AND NOTES (§ 332) — BONA FIDE PURCHASER — "NOTICE."

The word "notice," used in negotiable instrument law, must be understood as meaning actual knowledge as distinguished from implied or constructive notice which arises when a person is put on inquiry, and knowledge is presumed.

3. BILLS AND NOTES (§ 509) — BONA FIDE PURCHASERS — EVIDENCE.

While negligence and knowledge of suspicious circumstances, and failure to inquire into the consideration does not constitute bad faith in the purchaser of a negotiable instrument, such facts may be considered by a jury on the question of bad faith.

4. BILLS AND NOTES (§ 538) — INSTRUCTIONS — BONA FIDE PURCHASERS.

An instruction that though plaintiff may have known, when he bought the note, facts that would put a prudent man on inquiry, and circumstances that would excite suspicion in the mind of a prudent person, that the note was tainted with fraud, or that there was failure of consideration, these facts would not defeat recovery, and if plaintiff bought before maturity, before a finding for defendant would be warranted, the jury must find that plaintiff had actual knowledge either of fraud or the failure of consideration, was properly refused as casting the burden of proof on the defendant, when it should have been on plaintiff, but plaintiff was entitled to an instruction that such knowledge of facts as would excite suspicion would not defeat recovery, provided plaintiff had shown by the greater weight of the testimony that at the time he purchased the note he had no actual knowledge of its fraudulent inception.

5. BILLS AND NOTES (§ 497) — GOOD FAITH — NOTICE — "BURDEN OF PROOF" — "BURDEN OF EVIDENCE."

Under Rev. St. 1909, § 10,029, providing that every holder is deemed prima facie to be a holder in due course, but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he acquired title as holder in due course, the "burden of proof" is used in its strict sense as distinguished from "burden of evidence." Plaintiff by showing that he received the note before maturity in good faith and for valuable consideration did not shift the burden of proof on defendant; the "burden of proof" is the burden of producing a preponderance of evidence, while the "burden of evidence" means the burden that rests on a party to meet a prima facie case of fraud in the inception of a note.

6. BILLS AND NOTES (§ 332) — BONA FIDE PURCHASERS — KNOWLEDGE CONSTITUTING BAD FAITH.

It is not necessary in order to charge the holder of a note with actual knowledge constituting bad faith that he should have specific knowledge of the infirmity of the note.

7. BILLS AND NOTES (§ 497) — BAD FAITH — FRAUD — BURDEN OF PROOF.

When proof of fraud in inception of a note is made by the defendant, proof by the holder that he purchased without actual notice is an essential part of his case, and he is not relieved from this burden on the ground that it requires proof of a negative fact.

8. TRIAL (§ 140) — "DEMURRER TO EVIDENCE" — "DIRECTED VERDICT."

There is a distinction between a demurrer to the plaintiff's evidence and a directed verdict by the court in plaintiff's favor. To sustain a demurrer to the evidence it is not necessary for the court to pass on the credibility of plaintiff's witnesses. Their credibility is assumed and the probative facts given every reasonable intendment, but a verdict for plaintiff in cases where the burden is on him is not often to be given, even on undisputed testimony, as the jury may not believe the witnesses, and might reach a different conclusion from the inference.

9. TRIAL (§ 140) — DIRECTION OF VERDICT.

Where the petition is denied, and plaintiff has the burden of proof, and has made out a prima facie case by oral evidence, the court has no authority to sustain a demurrer to the evidence, but plaintiff has the right to go to the jury on the credibility of the witnesses and though plaintiff's witnesses are uncontradicted, and defendant offers no evidence at all, the court has no right to direct a verdict, but defendant is entitled to have the jury pass on the credibility of the witnesses.

10. APPEAL AND ERROR (§ 882) — PARTY ENTITLED TO COMPLAIN — ESTOPPEL.

Plaintiff could not complain that the instructions for defendant on good faith in the purchase of a note did not define "good faith" or "bad faith," where the same error was committed in his own instructions.

11. BILLS AND NOTES (§ 538) — BONA FIDE PURCHASERS — INSTRUCTIONS.

Where, in an action on a note, on the ground that plaintiff was not a bona fide purchaser, the only evidence tending to impeach plaintiff's good faith was offered to show that he purchased the same with actual knowledge of the original fraud in the notes, an instruction on good faith should have been confined to such actual knowledge, and an additional clause, "or had knowledge of such facts that his action in taking such notes amounted to bad faith," should have been omitted.

Appeal from Circuit Court, Texas County; L. B. Woodside, Judge.

Action by Ivan Link against J. W. Jackson and another. From a judgment for defendants, plaintiff appeals. Reversed and remanded.

This is an action on a promissory note given to A. H. Willard and indorsed "without recourse." The petition, in addition to the usual allegations, avers that plaintiff is a holder of the note in due course. The answer raises the issue of good faith, and sets up fraud and failure of consideration. A trial below resulted in a verdict and judgment for defendants, and plaintiff has appealed. The answer is in substance as follows:

"Defendants deny that before the maturity of said note the payee therein, A. H. Willard, for a valuable consideration sold, indorsed, or delivered said note to the plaintiff herein who then or there in good faith became in due course the owner or holder of said note or entitled to receive the amount due thereon, nor is plaintiff now the owner or holder of said note.

"Defendants further say that J. L. Harrison is an accommodation maker of said note and that he signed the same at the request and for the accommodation of J. W. Jackson, the principal therein.

"For further answer, defendants say that on the 12th day of December, 1907, there was a certain corporation, known as the `Standard Horse Company,' engaged in the business of buying and selling stallions and horses under the laws of the state of Missouri, and that its principal office and place of business was then and is now in the city of Springfield, Missouri; that one A. H. Willard was then and is now a stockholder in said corporation, a member of its board of directors, and also general manager; that on or about the 12th day of December, 1907, the said A. H. Willard came to the city of Cabool, in Texas county, Missouri, and represented to divers men of business, wealth, and influence in that vicinity that the Standard Horse Company, the aforesaid corporation, was the owner of a standard-bred stallion named and known as `Cambridge Boy'; that the said Standard Horse Company was desirous of selling the said horse to the farmers of Cabool and vicinity; that the Standard Horse Company, in order to negotiate the sale of said horse to said farmers, needed the assistance of some men of business, wealth, and influence in that neighborhood to assist it in selling said horse to said farmers and represented to them that the plan and scheme of said company to sell said horse was to sell shares or interest in the horse of the value of $200 each and of the number of 20; and offered if they, the aforesaid men of business, wealth and influence, would assist in making said sale and for the purpose of inducing the said farmers of Cabool and vicinity to buy said horse would pretend to buy shares in said horse, and would execute and deliver to the said A. H. Willard their checks for eight shares of said horse so that he, the said A. H. Willard, could have said checks to show to said farmers as proof and tell them that the aforesaid men of business, wealth, and influence had bought and paid for eight shares of said horse, the said Standard Horse Company would return them their checks unpaid and give them 8 out of the 20 shares for which said horse should be sold, which proposition of the aforesaid A. H. Willard and the Standard Horse Company was accepted, and they executed and delivered to the said A. H. Willard their divers and sundry checks for the aggregate sum of $1,600.

"That the said A. H. Willard, after being armed with the pretended checks went out to interview the farmers and try to induce them to buy the remaining shares of said horse; that A. H. Willard afterwards called upon J. W. Jackson, the principal defendant herein, a farmer residing in the vicinity of Cabool, and represented to the said J. W. Jackson that the corporation aforesaid was the owner of a standard-bred stallion named and known as `Cambridge Boy,' and that said corporation was desirous of selling said horse to the farmers of Cabool and vicinity for the price and sum of $4,000, and that a plan had been adopted for the purchase of said horse, and that the plan adopted was to sell interest or shares in said horse...