Merch.S' & Mech.S' Sa v. Bank

• Decision Date: 11 November 1924
• Docket Number: (No. 4950.)
• Citation: 125 S.E. 362
• Court: West Virginia Supreme Court
• Parties: MERCHANTS' & MECHANICS' SAV. BANK. v. HADDIX.

125 S.E. 362

MERCHANTS' & MECHANICS' SAV. BANK.

v.HADDIX.

(No. 4950.)

Supreme Court of Appeals of West Virginia.

Nov. 11, 1924.

(Syllabus by the Court.)

Error to Circuit Court, Taylor County.

Action by Merchants' & Mechanics' Savings Bank against John R. Haddix. Judgment for defendant, and plaintiff brings error. Reversed, verdict set aside, and new trial awarded.

John L. Hechmer, of Grafton, for plaintiff in error.

O. E. Wyckoff, of Grafton, for defendant in error.

MEREDITH, P. This is a writ of error to a judgment for the defendant rendered by the circuit court of Taylor county March 5, 1923. Plaintiff brought its action by way of notice of motion to recover the unpaid balance of a negotiable promissory note signed by defendant as maker and payable 365 days after its date, November 28, 1921, to Roy W. Hauser. The note was for $400 and bore interest at 6 per cent. The due date was shown on the face of the note to be November 28, 1922.

Plaintiff in its notice admits a payment of $122.13 as of November 28, 1922, but seeks to recover $307.28, balance of principal, interest, and protest fees. It offered as evidence the note itself, indorsed by the payee, and the testimony of its cashier and assistant cashier, and attempts to make out a case for recovery on the ground that it is a holder in due course. Defendant refuses to pay on the ground that he has already satisfied the note in full, having paid $150 to Hauser by check dated September 26, 1922, and an additional $150 by check dated November 1, 1922, as well as the $122.13 admitted in plaintiff's notice. The note does not bear any indorsements evidencing the two payments of $150 each, but defendant denies that plaintiff is a holder in due course. On the contrary, he asserts that at the time he paid the final payment of $122.13, the plaintiff merely held the note for collection for Hauser, wherefore the defense of payment would be available. By exhibiting his canceled checks and receipts signed by Hauser, defendant amply proved his payments to Hauser totaling $300; the sole issue is as to the nature of plaintiff's holding of the note. If it was a holder in due course it of course had no notice of the payments made by defendant to Hauser and would not be bound by them.

"A holder in due course holds the instrument free from any defect of title of prior parties, and free from defenses available to prior parties among themselves and may enforce payment of the instrument for the full amount thereof against all parties liable thereon." Code, ch. 98-A, § 57.

See, also, Manchester v. Parsons, 75 W. Va. 793, 84 S. E. 885.

As stated, the payments were not indorsed on the note, nor was there any evidence of actual notice thereof to the plaintiff, and plaintiff says the statutory presumption that every holder is a holder in due course (sec. 59. ch. 98-A, Code) has not been rebutted.

We must consider the scope of this presumption, whether it covers plaintiff's case. In order to understand plaintiff's case so as to determine what principles are applicable, we must also briefly review the evidence.

Plaintiff's assistant cashier testified first. He identified and exhibited the note, and stated that it was discounted and placed to Hauser's credit December 12, 1921. This was evidenced by the witness' introduction into the record of a credit memorandum in favor of Hauser for $393.30. It, however, bore no date. He then testified that the only payment received by plaintiff was $122.13, paid by defendant November 28, 1922, while plaintiff was the holder of the note. By a second memorandum it was shown that this payment was noted, "By B. R. No. 279, " November 28, 1922. The check for $122.13, signed by defendant, was drawn upon the First National Bank of Grafton and was payable to Hauser. It bore the notation, "In full of all accounts, " and Hauser's name was indorsed thereon by the bank.

In his own behalf defendant admitted the execution of the note and its delivery to Hauser. He then testified to the two $150 payments as aforesaid, stating that Hauser did not have the note with him when the first payment was made, but that it was supposed to be in his possession. He testified that he delivered his check for $122.13, dated November 28, 1922, payable to Roy W. Hauser, to the assistant cashier of plaintiff at the plaintiff bank; that upon his showing to the assistant cashier that he had paid $300, that officer remarked, "You don't owe Mr. Hauser much on this note, " and accepted the check for $122.13, making allowance in computing the interest for the former payments. Upon defendant's request that the note be delivered to him, the assistant cashier stated that as Hauser had "skipped out" he would have to protest the note, and would check the difference between Hauser's account in the bank and the note. Defendant says that he was later advised that the account lacked $175 or $1S0 of covering it, and that he was notified that plaintiff would hold him (the defendant) liable for what he had paid Hauser. Defendant says he did not know that the note was in the plaintiff bank until the 22d or 23d of November.

The assistant cashier, having been recalled as witness, admitted the reduction of the interest because of the former payments, explaining that as he did not know that Hauser had left the country he anticipated no difficulty in recovering the balance from him. He says he explained that the note could not be turned over to defendant until the balance was collected from Hauser. As to the check for $122.13 being in full of all accounts, the witness testified that the amount so paid was credited on the back of the note for the actual amount received.

The cashier, father of the assistant cashier, was then called. Testifying from a memorandum he stated that the note was discounted at the plaintiff bank on November 28, 1921, the day of its execution, and that it had been in the bank's possession since that time.

Recalled to the stand, defendant testified that he executed the note between 6 and 7 o'clock in the afternoon of November 28, 1921, in Hauser's garage. He denied hearing the assistant cashier make any statement that it would be necessary to collect the balance of the note from Hauser before delivering it to defendant.

The court instructed the jury that if they should find from the evidence that plaintiff was a holder in due course, the payments made by defendant could not be applied to the note and plaintiff should recover the amount thereof with interest from its date, less the credit of $122.13 as of November 28, 1922.

Two instructions were given on defendant's behalf, that if the jury should believe that plaintiff was not a holder in due course, or should believe that the note was the property of Hauser when defendant made his payment of $122.13, they should find for the defendant.

As the verdict was for defendant, the jury evidently found that plaintiff was not a holder in due course. The question for us is: Resolving all conflicts of fact in the testimony in defendant's favor, was the verdict a justifiable one from a legal standpoint?

Plaintiff's case rests upon three circumstances:

(1) It was the holder of the negotiable note, sufficient on its face to constitute plaintiff a holder in due course;

(2) It proved from its banking records that the note was discounted by it, and the proceeds credited to Hauser; and

(3) The statements of the assistant cashier that he refused to deliver the note to defendant until satisfaction had been made by Hauser.

The case for the defendant must stand upon whatever weakness there is in plaintiff's position, and upon his version of his transactions with the assistant cashier. We have outlined both defendant's and the assistant cashier's stories of those transactions and have shown wherein they disagree.

Defendant points out that the assistant cashier and the cashier did not agree as to the date of the discounting of the note, one said November 28, 1921, the other December 12, 1921. That is, however, of little impor-tance. It is easy to err in reading figures from such records, and either date would suffice for plaintiff's purposes. It is shown by the introduction of a memorandum on file in the bank's records that the proceeds, $393.30, were deposited to Hauser's credit, and whether it was on November 28th or December 12, 1921, seems unimportant.

We stated above that plaintiff contends that the verdict violates the legal presumption in its favor. That presumption is founded upon the section of our Negotiable Instruments Law, section 59, ch. 98-A Code, which reads:

"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 or some person under whom he claims acquired the title as a holder in due course; but the last mentioned rule does not apply in favor of the party who became bound on the instrument prior to the acquisition of such defective title."

There is no contention here that Hauser's title was defective, so plaintiff says the presumption that it was a holder in due course applies with full force. Defendant in his brief admits that plaintiff made out a prima facie case by the introduction of the note, but claims that it has been sufficiently rebutted to warrant the verdict.

It is well at this point to recall the definition of a "holder in due course":

"A holder in due course is a holder who has taken the instrument under the following conditions: (1) That the instrument 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." Section 52, ch. 98-A, Barnes' Code 1923.

In the light...