Mulberger v. Morgan

• Decision Date: 12 October 1898
• Citation: 47 S.W. 379
• Court: Texas Court of Appeals
• Parties: MULBERGER v. MORGAN et al.<SMALL><SUP>1</SUP></SMALL>

47 S.W. 379

MULBERGER v. MORGAN et al.¹

Court of Civil Appeals of Texas.

October 12, 1898.

Appeal from district court, McLennan county; John G. Winter, Judge.

Action by H. Mulberger against W. W. Morgan and others. Judgment for defendants. Plaintiff appeals. Reversed.

D. A. Kelley, for appellant. Eugene Williams, for appellees.

KEY, J.

This is the second appeal in this case. The nature of the suit is fully stated in the former opinion. 34 S. W. 148. H. Mulberger was the plaintiff, suing as assignee of the notes sued on, which are negotiable instruments, and purport to have been assigned to him before maturity. The defendants claimed that they were induced to execute the notes by certain false representations made by the original payee; and one of the principal questions in the case is whether or not Mulberger was an innocent purchaser of the notes, before maturity, for value, and without notice. The written indorsement transferring the notes to him purports to have been made before the notes fell due. The charge of the court, in effect, told the jury that, if they found that the notes were procured by fraud on the part of the original payee, then, in order for Mulberger to claim protection as a bona fide holder, he must have acquired them without actual notice of the fraud, "and without notice of facts sufficient to put a man of ordinary prudence upon inquiry as to whether or not the notes were fraudulently obtained." The rule announced does not apply to negotiable instruments. If the purchaser of commercial paper has no direct knowledge or trustworthy information of the defense which the maker may have against the original payee, and acquires it before maturity, and for a valuable and sufficient consideration, he is entitled to protection as an innocent holder. Of course, if inadequacy of the consideration paid, or any other fact, shows that the purchase was not made in good faith, then the purchaser will not be protected. Buchanan v. Wren (Tex. Civ. App.) 30 S. W. 1077, 1082, 1083; Hynes v. Winston (Tex. Civ. App.) 40 S. W. 1025; Wilson v. Denton, 82 Tex. 535, 18 S. W. 620; Turner v. Grobe (Tex. Civ. App.) 44 S. W. 898; Cromwell v. Sac Co., 96 U. S. 58; 1 Daniel, Neg. Inst. §§ 775, 776. There are expressions in the former opinion of this court in this case that tend to sustain the charge in this respect, but they were not necessary to a decision of the questions then under consideration; and the doctrine adhered to in this opinion has been...