Mee v. Carlson
| Decision Date | 16 October 1908 |
| Citation | 117 N.W. 1033,22 S.D. 365 |
| Parties | JAMES MEE, Plaintiff and appellant, v. E. O. CARLSON et al., Defendants and respondents. |
| Court | South Dakota Supreme Court |
E. O. CARLSON et al., Defendants and respondents. South Dakota Supreme Court Appeal from Circuit Court, Union County, SD Hon. Joseph W. Jones, Judge Affirmed Alan Bogue, Jr., H. M. Wallace Attorneys for appellant. Erickson & Stickney, Keith & Keith Attorneys for respondents. Opinion filed October 16, 1908
This action was instituted by the plaintiff as second indorsee of a promissory note, alleged to have been executed by the defendants to one Henry Lefebure, for the sum of $800, with interest at the rate of 6 per cent. per annum, payable July 1, 1906, to recover from them the amount due thereon. Verdict and judgment being in favor of the defendants, the plaintiff has appealed.
The complaint is in the usual form, and after alleging the execution of the note, and giving a copy of the same, the plaintiff alleges:
“That after the execution and delivery of the said note and before the maturity thereof, the said Henry Lefebure, the payee mentioned in the said note, for a good and valuable consideration, and in the usual course of business, duly sold, indorsed, and delivered to A. J. Struble the said note; that thereafter and before the maturity of said note, the said A. J, Struble, for a good and valuable consideration, and in the usual course of business, duly sold, indorsed, and delivered to this plaintiff the said note, and said plaintiff is now the legal owner and holder thereof.”
The defendants in their answer admit that they signed the promissory note in question, together with two other promissory notes, each in the sum of $800, payable, respectively, July 1, 1905, July 1, 1906, and July 1, 1907, but deny that any of said notes, including the note in suit, were ever delivered to Henry Lefebure, or to any other person for him, and deny upon information and belief that the note in this action was ever indorsed and transferred for value before maturity thereof, either to A. J. Struble or to the plaintiff before named, and deny that said note described in plaintiff’s complaint was acquired by said Struble, or by the plaintiff, in the ordinary course of business, and deny that the plaintiff is now the legal holder and owner thereof. And the defendants allege, in substance, that said notes were never delivered to said Lefebure, but were fraudulently obtained from the defendant CarIson, who had the possession of the same for these defendants, by one Headley, agent of the said Lefebure, and by him delivered to the said Lefebure without the consent of the said defendants. At the close of the evidence the plaintiff moved for the direction of a verdict in his favor and against the defendants upon the grounds: (1) That the evidence in the case shows that A. J. Struble, the first indorsee of the note, was a bona fide holder of the note in good faith and for value, in the usual course of business, without notice of any infirmity or any defense to the said note; (2) that the plaintiff is a bona fide holder and owner of said note, having received the same from said Struble, and having paid a valuable and fair consideration therefore in the usual course of business, and without notice or information of any infirmity or defense to the said note; (3) that the note in suit was given in part payment of the purchase price of a stallion; that the evidence shows that said stallion was delivered to one Bredall, one of the defendants in this action, at about the time the notes were executed to said Lefebure; that the said Bredall has continually kept the said horse on his premises, without any arrangement being made therefor between him and the said Lefebure; that the evidence in the case shows that neither of the defendants had in any way attempted to rescind the said contract and return said stallion to the said Lefebure, for which the note was given; that there is no evidence in the case to show that the defendants in this action have in any way been damaged by the purchase or sale of the said stallion, or by giving the said note in suit. This motion was denied by the trial court, and its ruling excepted to. It is contended by the plaintiff that the court erred in denying the motion for the direction of a verdict on the grounds stated, and this presents the principal question to be considered on this appeal.
Evidence was introduced by the defendants tending to prove that, in the fall of 1903, Henry Lefebure, who was named as the payee in the note, was engaged in the business of importing and selling horses, mostly Belgian stallions; that some time previous to December 15, 1903, he entered into a contract with 24 farmers in Union county to sell to them a Belgian stallion, known as “Bristol,” for the sum of $2,400; that on December 15th there was a meeting of a number of the signers of the contract, and three notes were executed by 19 of the persons who had signed the contract; that it was agreed between Lefebure and the parties who signed the notes that the notes should not be delivered until signed by 24 responsible farmers of said Union county, and that the notes should be left with the defendant Carlson, and should have no validity as notes, nor be delivered to Lefebure, until signed by the 24 persons designated; that one Headley, who was the agent of Lefebure, asked permission of Carlson to make a copy of the names upon the notes, for the purpose of ascertaining how many of the persons who had signed the contract had signed the notes; that he, after looking over the notes, and without the consent or permission of Carlson, placed them in his pocket, refusing to return them to Carlson when requested, and retained the notes, and immediately left Carlson’s house with the notes. It is quite clear that the jury was warranted by the evidence in finding that the notes were never delivered to Lefebure or his agent, Headley, and that they were fraudulently obtained from the possession of Carlson, The note in controversy, therefore, being fraudulent in its inception, the burden was upon the plaintiff to show that he was a purchaser in good faith for value, and without notice in the regular course of business. Landauer v. Sioux Falls Imp. Co.,(1897); McGill v. Young,(1902); Kirby v. Berguin,(1902); Bank v. Diefendorf, 123 NY 191, 10 LRA 676.
Plaintiff introduced evidence tending to prove that, some time before the note in controversy in this action became due, the same was purchased by said Struble of the said Lefebure, and that he paid the said Lefebure therefor the sum of $425 in cash, and a team of driving horses valued at about $350, the note being indorsed by said Lefebure “without recourse”; that subsequently to the delivery of the same to said Struble, but before the maturity of the note, said Struble indorsed the same to the plaintiff in this action, “without recourse,” he claiming that he paid the sum of $800 therefor, either in cash or by the canceling certain indebtedness of Struble to him, and that he took the same for himself individually, and not on account of his bank, of which he was president. It is contended by the defendants that both Struble and the plaintiff had notice of sufficient facts to put them upon inquiry, as prudent men, as to the validity of the said note. This was evidently the view taken by the trial court in denying plaintiff’s motion for the direction of a verdict in his favor, and the view evidently taken by the jury in finding a verdict in favor of the defendants, Upon a careful examination of the evidence we are inclined to take the view that the court was right in denying plaintiff’s motion, and that there was evidence from which the jury might reasonably draw the inference that neither Struble nor the plaintiff were purchasers in good faith, and without notice of the existence of any defense to the notes, but had knowledge of such facts as would have put prudent men upon inquiry as to whether or not there was any defense on the part of the makers to the note. The fact that Lefebure indorsed the note “without recourse” was a circumstance calculated to arouse suspicion in the mind of a prudent person, and the further facts disclosed by the evidence that Lefebure resided out of the state, that there were a number of banks in his vicinity, and in the vicinity of the defendants, and that he was comparatively a stranger in Centerville, were calculated to create doubts in the minds of ordinarily prudent persons as to the validity of this note. Mr. Struble and the plaintiff were witnesses on the trial, and the jury had full opportunity to observe their demeanor, manner of testifying, and were the proper judges of the weight to be given their testimony. The fact that no inquiries were made by either Struble or plaintiff and the manner in which they answered the questions propounded to them by the attorneys for the defendants, was not calculated to favorably impress a court or jury as to their good faith in taking the note. We have not deemed it necessary to reproduce the evidence on the part of the plaintiff, as no useful purpose would be served by the reproduction of the same in this opinion.
The law applicable to this case is thus stated in Kirby v. Berguin, supra, as follows:
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