M. Yenney v. Central City Bank

• Decision Date: 03 April 1895
• Docket Number: 5939
• Citation: 62 N.W. 872,44 Neb. 402
• Parties: M. YENNEY ET AL. v. CENTRAL CITY BANK
• Court: Nebraska Supreme Court

62 N.W. 872

44 Neb. 402

M. YENNEY ET AL. v. CENTRAL CITY BANK

No. 5939

Supreme Court of Nebraska

April 3, 1895

ERROR from the district court of Merrick county. Tried below before MARSHALL, J.

AFFIRMED.

J. W Sparks, for plaintiffs in error.

W. T Thompson, contra.

OPINION

IRVINE, C.

The defendant in error sued the plaintiffs in error on a promissory note made by the plaintiffs in error to the order of the Central City Bank, a partnership formerly existing, and which, before the maturity of the note, indorsed it to the defendant in error, a corporation which purchased the assets of the partnership of the same name. The Yenneys answered the petition, pleading that the partnership had held as collateral security to the note three notes of other persons which, prior to the transfer to the corporation, had been paid and their proceeds applied to the satisfaction of the note sued on, and that the corporation had notice of these facts at the time of its purchase. There was a verdict and judgment for the bank and the Yenneys prosecute error.

The first point made on behalf of plaintiffs in error is that under the pleadings they were entitled to judgment. This argument is based upon the proposition that either by the petition or the reply it must be alleged that the bank was an innocent holder before maturity and had actually paid the consideration before notice of the defense. We have before had occasion to advert to the unfortunate distinctions which have been drawn as to the burden of proof of bona fides when defenses are pleaded which would be sufficient against the original parties to a negotiable instrument. (Violet v. Rose, 39 Neb. 660, 58 N.W 216.) The legislature has, however, freed the present case from difficulty on that ground. Chapter 41, section 5, Compiled Statutes, is as follows: "If any such bond, note, or bill of exchange shall be indorsed on or before the day on which the same is made payable, and the indorsee shall institute an action thereon, the defendant may give in evidence at the trial any money actually paid on said bond, note, or bill of exchange before the same was indorsed or assigned to the plaintiff, on proving that the plaintiff had notice of such payment before such indorsement was made and accepted." The statute, therefore, requires as a part of the defense that the defendants establish notice on the part of the plaintiff. The petition alleged an indorsement to the plaintiff for value before maturity. The answer, after pleading the payment, proceeded as follows: "And these defendants allege that the plaintiff had knowledge before the assignment of said note set forth in said petition to it that said Merriam and Persinger held said...