McCullam v. Mermod, Jaccard & King Jewelry Co.

• Decision Date: 03 February 1920
• Docket Number: No. 15853.,15853.
• Court: Missouri Court of Appeals
• Parties: McCULLAM v. MERMOD, JACCARD & KING JEWELRY CO.

218 S.W. 345

McCULLAM v. MERMOD, JACCARD & KING JEWELRY CO.

No. 15853.

St. Louis Court of Appeals. Missouri.

February 3, 1920.

Appeal from St. Louis Circuit Court; Thomas C. Hennings, Judge.

"Not to be officially published."

Action by Fontaine McCullam, trustee in bankruptcy of the Masters Lumber Company, against the Mermod, Jaccard & King Jewelry Company. From a judgment for plaintiff, defendant appeals. Affirmed.

McLaran & Garesche and E. H. Wayman, both of St. Louis, for appellant.

Frumberg & Russell, of St. Louis, for respondent.

BECKER, J.

On January 21, 1913, S. M. Masters, as president of the Masters Lumber Company, a corporation, being indebted to the appellant in the sum of $162, made out a check in the name of the Masters Lumber Company, which check was signed by him as president of said company, and made payable to himself individually, in the sum of $162, indorsed said check individually, and tendered it in payment to the appellant of his said individual indebtedness to it. The appellant accepted the check so indorsed, and in consideration thereof canceled the individual debt of the said S. M. Masters. The Masters Lumber Company later went into bankruptcy, and the respondent, as trustee, brought suit to recover of the appellant the amount of the said check. The case was tried to the court without the intervention of a jury upon an agreed statement of facts. From a judgment in favor of plaintiff, after an unavailing motion for new trial, the defendant appeals.

From the agreed statement of facts, in addition to what we have already set out above, it appears that, on the date that Masters gave the defendant the check of the corporation, the said corporation was not indebted to the defendant in any sum, and further that the defendant—

"had no actual knowledge as to the solvency or insolvency of the Masters Lumber Company, or of the state of the account between S. M. Masters and the Masters Lumber Company on the 21st day of January, 1913, and did not know the manner in which the Masters Lumber Company paid the salary of S. M. Masters, and accepted said check in payment of the individual indebtedness of said Masters, without any actual notice of the want of authority of said S. M. Masters to sign, indorse, or deliver said check, except as appeared upon the face of said check and indorsements." (Italics ours.)

Appellant's sole contention is that the judgment should be reversed on the ground that it appears from the statement of facts that it was a bona fide holder in due course for value of the check in controversy, and that, short of actual notice on the part of the defendant being shown of facts which would be sufficient to impeach the validity of the paper, plaintiff is not entitled to recover.

Learned counsel for appellant, in support of this contention, argues that inasmuch as the check involved in this case was payable to S. M. Masters individually, and not to the defendant, therefore, when the said Masters came to the defendant with this check, the latter had a right to assume that the check had been given him for a valuable consideration by the Masters Lumber Company, and that—

"the parties whose names appeared thereon had become parties thereto for value (section 9995, Revised Statutes of Missouri 1909), and the Mermod, Jaccard & King Jewelry Company, when it canceled the debt of S. M. Masters in consideration of the indorsement of the check to it, gave value for the check (section 9996, Revised Statutes of Missouri 1909), and became holder for value as to all parties to the check who became such prior to that time (section 9997, Revised Statutes of Missouri 1909)," and that, even if "there was no consideration for the issuance of this check to S. M. Masters, the only burden which the law casts upon the defendant is to show that it became the holder in due course for value (section 10029, Revised Statutes of Missouri 1909), and this burden is clearly discharged by the agreement of the parties upon the facts in the case," and "having become a holder in due course for value, whether or not there was any consideration for the check between the original parties is immaterial; in fact, the door to inquiry as to consideration or lack of it is absolutely closed."

In light of the authorities in this state we are unable to accede to this view of the law as contended for by appellant. Section 10022, Revised Statutes of Missouri 1909, relating to negotiable instruments, defines a holder in due course as follows:

"Holder in Due Course. —A holder in due course is a holder who has taken the instrument under the following conditions: (1) That it is complete and regular upon its face; (2) that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; (3) that he took it in good faith and for value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it." (Italics ours.)

Under a long line of authorities in this state the check in question is not "regular upon its face," and the instrument itself, namely, the check, bears upon its face facts which of themselves impart notice of an infirmity therein, for the check shows on its face that it was drawn by S. M. Masters acting on behalf of the corporation to S. M. Masters as an individual. It thus appears that the execution of the check, its indorsement and delivery, were all the work of S. M. Masters who was profiting by the transaction. The check therefor shows...