Miller v. Ottaway

• Decision Date: 06 June 1890
• Court: Michigan Supreme Court
• Parties: MILLER v. OTTAWAY et al.

45 N.W. 665

81 Mich. 196

MILLER v. OTTAWAY et al.

Supreme Court of Michigan

June 6, 1890

Error to circuit court, Genesee county.

Howard & Gold, for appellants.

Durand & Carton, for appellee.

CHAMPLIN C.J.

This suit was brought to recover the amount of a promissory note dated November 15, 1887, due in one year, payable to Archibald Carmichael or bearer, for $407. The consideration for which the note was given was one span of mares and two colts, purchased by James Ottaway at an auction sale. Ottaway bid off the span of mares for $285, and the colts for $152 and gave his note for the amount. Defendants claim that at the time of sale the mares were warranted to be with foal and, if they proved to be so, then he was to pay the further sum of $16 for the service of the horse. Plaintiff purchased the note of the payee on December 3, 1887, and paid full value for it. It turned out that the mares were not with foal. The plaintiff was present at the auction sale, and acted as clerk for Mr. Carmichael, who was confined to his house by sickness, and had general control of the auction. If the warranty was made as claimed by the defendants, plaintiff was fully aware of it at the time. No question is made that the mares were not served with the horse in the proper season. Defendants claim to have become satisfied that the mares were not with foal in the spring or summer following. The plaintiff denied that the sale was with the warranty claimed by defendants.

The first question to be decided is whether, conceding there was a warranty, it can be set up in recoupment of damages against the notes in plaintiff's hand? Restating the facts for the purposes of this question, it presents a case where no fact exists which impugns the title of the holder, nor the honesty, good faith, or validity of the original transaction of which the note was a part. There was simply a warranty on the sale that the mares were with foal, and if they proved to be so, the purchaser was to pay $16 more for the service of the horse. The purchase of the note was for full value, with a knowledge of the warranty, but without knowledge of its breach before the note matured, and before it was known that there would be a breach. The promise of the defendants was not conditioned; neither was there fraud nor imposition connected with the inception of the note. The plaintiff, having paid value before maturity, held the note by an independent title. It was said by this court in Nichols v. Sober, 38 Mich. 681, that "the law has always been solicitous to exclude any rules calculated to hinder the free circulation of mercantile paper having legitimate inception, as in this case, and it is settled in this state that a transferee cannot be deprived of his right as a bona fide holder in this class of cases, except upon evidence sufficient to show his participation in the fraud, or equivalent misconduct of the party who transfers to him." It is laid down by Parsons on Bills and Notes (volume 1, p. 261) that "knowledge on the part of the holder, at the time he took the note, that it was not to be paid on a specified contingency, is not sufficient to defeat his right to recover, although the contingency had then happened, if he was ignorant of this fact;" citing Adams v. Smith, 35 Me. 324; Ferdon v. Jones, 2 E. D. Smith, 106; Davis v. McCready, 4 E. D Smith, 565. See, also, Kelso v. Frye, 4 Bibb. 493; Dow v. Tuttle, 4 Mass. 414; Bank v. Cason, 39 La. Ann. 865, 2 South. Rep. 881; Patten v. Gleason, 106 Mass. 439; Davis v. McCready, 17 N.Y. 230; Craig v. Sibbett, ...