Nichols v. Sober

• Decision Date: 16 April 1878
• Citation: 38 Mich. 678
• Court: Michigan Supreme Court
• Parties: James M. Nichols v. Orson A. Sober

38 Mich. 678

James M. Nichols v. Orson A. Sober

Supreme Court of Michigan

April 16, 1878

Submitted April 11, 1878

Error to Washtenaw.

Assumpsit. Defendant brings error.

Judgment reversed with costs and a new trial ordered.

Albert Crane for plaintiff in error. The transferee of a note for value before maturity must be shown to have obtained it in bad faith, to defeat his recovery thereon, Murray v Lardner, 2 Wall. 110; Miller v. Finley, 26 Mich. 249; Hotchkiss v. Nat. Bank, 21 Wall. 354; Comstock v. Hannah, 76 Ill. 531; Howry v. Eppinger, 34 Mich. 29; Johnson v. Way, 27 Ohio St., 374: 4 Amer L. T. Rep., 58; Goodman v. Harvey, 4 Ad. & El 870; Smith v. Livingston, 111 Mass. 345.

Joslin & Whitman for defendant in error. The equities of the holder of negotiable paper are to be determined by the tests of honesty and good faith, Raphael v. Governor, 17 C. B., 161; Belmont Branch etc. v. Hoge, 35 N. Y., 68; Phelan v. Moss, 67 Penn. St., 59; Gould v. Stevens, 43 Vt. 125; Wheeler v. Guild, 20 Pick. 553; Benj. Sales, § 15, n. u; 1 Pars. Cont., 251-2, n. y; the holder of negotiable paper, fraudulently transferred to him, cannot have as good a title in law or equity as the true owner, unless he received it not only without notice, but in the course of business and for a fair and valuable consideration given or allowed for that paper, Bay v. Coddington, 5 Johns. Ch., 54; where there are facts to put a purchaser on inquiry, he cannot be considered a bona fide holder, Baker v. Bliss, 39 N. Y., 70; Birdsall v. Russell, 29 N. Y., 250; Anderson v. Nicholas, 28 N. Y., 600; Williamson v. Brown, 15 N. Y., 364; Cone v. Baldwin, 12 Pick. 545; Hosley v. Holmes, 27 Mich. 416; Greneaux v. Wheeler, 6 Tex. 515; Hall v. Hale, 8 Conn. 336; Roth v. Colvin, 32 Vt. 125; Merriam v. Granite Bank, 8 Gray 259; Safford v. Wyckoff, 4 Hill 442; Ely v. Norton, 2 Abb. 19: 3 Keyes 397; Mining etc. v. Windham, 44 Vt. 495; Avery v. Johann, 27 Wis. 250; Green v. Early, 39 Md. 223; Taylor v. Baker, 5 Price 306; Huff v. Wagner, 63 Barb. 215; Harger v. Wilson, 63 Barb. 237.

OPINION

Graves, J.

Sober sued on the common counts and added another framed as special; but this however was no more in effect than the count for money had and received, and in view of the state of facts he adduced, his right of action if any was maintainable only under that branch of his declaration claiming for money had and received.

He gave evidence tending to show that himself and one Orlin A. Peck owned as partners a quantity of whiskey in Peck's hands at Chicago, where the latter resided, and that Peck about October 19, 1872, sold the whiskey in accordance with a previous understanding between them; that the sale was on four months' time to one Davis, who made his promissory note for $ 400 payable to Peck individually or to his order at the end of such credit, and that Peck at once endorsed the note over to Nichols who in turn negotiated it to the bank at Ypsilanti for $ 390.

The evidence on the part of the defendant tended to show that the bank at Ypsilanti held two notes past due and made by Peck and endorsed by Nichols, and amounting to more than the note in question and that Peck delivered this latter note to Nichols at Chicago, at or about its date with instructions to have it applied on his notes so held by the bank; that Nichols took the note to the bank pursuant to this instruction, where it was applied as far as it would go in the way directed by Peck; that to accomplish the purpose he, Nichols, gave his own note for the balance against Peck and took up Peck's note, and that he had no knowledge or notice until afterwards that Sober had or claimed any interest in the note so sent by Peck.

It was made a question whether Nichols acquired the note in good faith, and whether he did or not was supposed to depend upon the sufficiency of the facts to connect him with Peck's disposal of it for his own debt in fraud of the rights claimed by Sober as Peck's partner.

If his acquisition of the note was in good faith it was virtually conceded that Sober ought not to recover. The judge charged on this as follows: "Upon this subject I have to state that if the defendant at the time he acquired the note had reason to believe and did believe or had notice or information that it was given for the whiskey which belonged to the plaintiff, then the plaintiff can recover. A mere naked suspicion on his part as to the consideration upon which the note had been given would not be enough: but if he had notice or knowledge of such facts or circumstances tending to show 681 that it was given for the whiskey, and that it belonged to the plaintiff, as would put a prudent and...