Mass. Loan & Trust Co. v. Twichell

• Decision Date: 10 May 1898
• Citation: 7 N.D. 440,75 N.W. 786
• Court: North Dakota Supreme Court
• Parties: MASSACHUSETTS LOAN & TRUST CO. v. TWICHELL et al.

7 N.D. 440

75 N.W. 786

MASSACHUSETTS LOAN & TRUST CO.

v.TWICHELL et al.

Supreme Court of North Dakota.

May 10, 1898.

Syllabus by the Court.

1. This action is upon a negotiable note, and plaintiff claims to be a good-faith purchaser thereof, for value, in due course, before maturity. Under the issues the plaintiff had the burden of showing that it was such. At the trial the note was put in evidence, and the same purported to be indorsed by the payee, by an attorney in fact of the payee. But no evidence was offered tending to show that the payee ever had an attorney in fact, or that the note was actually indorsed either by the purported attorney in fact, or by the payee, or at all. Held, that the note was not shown to have been indorsed by the payee at the time it was transferred to the plaintiff's vendor, or at any time, and, consequently, that the note came to the plaintiff as nonnegotiable paper, and as such subject to equities between the original parties. In view of the evidence, the plaintiff received the paper as unindorsed paper.

2. The action was against the makers of the note, and by their answer they pleaded failure of consideration, and also claimed damages for an alleged breach of warranty. Against objection, the trial court admitted testimony to sustain the defense set up in the answer. Held, that the evidence was properly admitted.

Appeal from district court. Cass county; William B. McConnell, Judge.

Action by the Massachusetts Loan & Trust Company against Treadwell Twichell and E. E. Redmon on a promissory note. Defendants had judgment, and plaintiff appeals. Affirmed.Ball, Watson & Maclay, for appellant. Newman & Spalding, for respondents.

WALLIN, J.

This action is founded upon a promissory note. As a defense to the action, the answer alleges that the note was given without consideration, and that the defendants had suffered damages by the breach of a certain contract of warranty set out in the answer. Against plaintiff's objection, the defendants were permitted to introduce evidence at the trial tending to support the defense pleaded in the answer. The defendants' evidence was not contradicted by any evidence offered in plaintiff's behalf on the merits, and the result was that a judgment in favor of the defendants, dismissing the action, was entered in the court below.

The action is here for trial anew, and the principal question before this court is whether the evidence offered in support of the defense alleged in the answer is admissible under the rules of evidence. It is admitted that defendants executed the note in question, and delivered the same to the payee. The note is made payable to the order of one E. S. Brown, as receiver of the Northwestern Manufacturing & Car Company, a corporation organized under the laws of the state of Minnesota. The complaint alleges that before the maturity of the note said note, for a valuable consideration, was duly “sold, assigned, transferred, and set over” to another corporation organized under the laws of said state, viz. to the Minnesota Thresher Manufacturing Company. The plaintiff is a corporation organized under the laws of the state of Massachusetts, and the complaint avers that at a date prior to the maturity of the note the said Minnesota Thresher Manufacturing Company assigned, transferred, and set over said note to the plaintiff in trust for certain purposes set out in the complaint. Plaintiff's contention is that under the law merchant it occupies the position of a good-faith purchaser of the note, in due course, for value, and consequently that it was entitled to recover upon the note, regardless of the defense pleaded in the answer. For the purposes of the decision, we shall concede what the defendants' attorney strenuously denies,-that the contract between the plaintiff and its immediate vendor was of such a character as would, if the original transfer had been in due course, enable the plaintiff to occupy the relation of a purchaser in due course. After this concession, we will consider the plaintiff's legal status with reference to the original transfer of the note from the payee thereof to the first purchaser.

The answer, after referring to the allegation of the complaint which states that the said note was “sold, assigned, transferred, and set over” to the first indorsee, viz. the Minnesota Thresher Manufacturing Company, proceeds to state that the “defendants have no information sufficient to form a belief, and therefore deny the same.” This form of denial is not authorized by any provision of the Code, and...