Old National Bank of Fort Wayne v. Marcy

• Decision Date: 28 May 1906
• Citation: 95 S.W. 145,79 Ark. 149
• Parties: OLD NATIONAL BANK OF FORT WAYNE v. MARCY
• Court: Arkansas Supreme Court

95 S.W. 145

79 Ark. 149

OLD NATIONAL BANK OF FORT WAYNE v. MARCY

Supreme Court of Arkansas

May 28, 1906

Appeal from Crittenden Circuit Court; Allen Hughes, Judge; affirmed.

Judgment affirmed.

L. P Berry and A. B. Shafer, for appellant.

1. The notes were executed, indorsed and payable in Indiana. The contractual rights of the parties are governed by the laws of Indiana. Rorer on Interstate Law (2 Ed.), p. 85; 14 Ark. 189; 125 Ind. 375; 25 N.E. 452; 13 Pet. 65. Our courts take judicial notice of the laws of Indiana. Kirby's Digest § 7823. There being no statute governing the question in Indiana, the general law merchant applies. 118 Ind. 586; 21 N.E. 316; 61 Ark. 81; 32 S.W. 65.

2. The burden was on appellees to show that appellant had actual or constructive notice that the notes were given for a single consideration or that a valid defense existed to said notes. The fact that appellant had actual notice of the dishonor of the first two notes before it purchased the remaining three did not charge it with notice of all defenses, or that the consideration had failed, or that all the notes were given for a single consideration. 52 F. 98; 2 C. C. A. 637; 2 U. S App. 282; 18 L. R. A. 201; 91 Tex. 294; 42 S.W. 1055; 19 Tex. Civ. App. 620; 15 Wis. 260; 45 Id. 110; 30 Am. Rep. 697; 64 Wis. 289; 25 N.W. 10; 59 Vt. 569; 10 A. 342; 29 Mich. 249. There is only one case to the contrary, 78 Ga. 129, 3 S.E. 5. Fraud is never presumed, but must be established by clear and satisfactory evidence. 22 Ark. 184; 68 Id. 391; 120 Ill. 403. Mere circumstances of suspicion not sufficient. 59 S.W. 41. When the evidence tends equally to sustain either of two inconsistent propositions, a verdict in favor of the party bound to maintain one of them against the other is necessarily wrong. 99 Mass. 605; 97 Am. Dec. 59; 57 Ark. 402.

3. It was error to give the fourth instruction. 4 Mass. 370; 3 Am. Dec. 232.

Frank Smith, for appellees.

All the instructions asked by appellant were given, except to find for plaintiff. They were based on 61 Ark. 81, and as favorable as the law warranted. No 4 was based on 4 Mass. 370, and was applicable. Fraud may be shown from concurrent acts, surrounding circumstances and subsequent conduct of parties. All the facts tend to prove notice to appellant that a valid defense existed to the notes, and that they were given for a single consideration. The case was properly submitted to the jury, and their verdict should be affirmed.

OPINION

HILL, C. J.

Appellee executed five promissory notes to Noble Machine Company, of Fort Wayne, Indiana, each for the sum of $ 300. The first one was due 97 days after date, and one fell due each month thereafter. The notes were plainly numbered on their face, No. 1, No. 2, etc. The notes were payable at appellant bank. They were assigned to the bank, and suit was brought by it upon them. The bank alleged that it was an innocent purchaser for value before maturity, and that was the only issue in the case. The evidence is uncontradicted that there was a partial failure of consideration, and the Noble Machine Company could not have recovered on the notes. The court directed a verdict as to the first two notes, and that action is not complained of. The jury returned a verdict in favor of the makers as to the last three notes.

1. The chief contention is that there was no evidence to show that the bank had notice, and was not an innocent purchaser. The bank cashier testified positively and circumstantially to the purchase of each of the notes, which was for full value. Noble (who did business as Noble Machine Company) testified also to the sale of the notes in due course of business to the bank, and that the bank was without knowledge of the defense to them.

These facts were developed: All the notes were sold for face value and accrued interest, and indorsed by Noble, and by the bank credited to his account. The first two notes were sold November 24, 1903 (the notes were dated October 6, 1903), the third was sold March 3, 1904, the fourth April 1, 1904, and the fifth April 7, 1904. On January 15, the bank at appellee's home, the Bank of Crittenden, received from appellant bank for collection the first note, and returned it to appellant on January 16, stating that payment was refused. On February 20, this bank again received this note together with note No. 2, for collection, and returned them to appellant bank, stating payment was refused. On March 8 the Bank of Crittenden received from appellant bank note No. 1 again, this time with directions to turn it over to lawyers for suit; notes 2 and 3 were received with similar instructions on March 17; note No. 4 was received from the appellant bank April 4, and returned April 14.

The cashier of appellant bank evidently saw the serial figures on the notes, and he says he thought the consideration for the notes was a sale of machinery. It will be noted that, after the purchase of the first two notes, and before the purchase of the third note, payment on No. 1 had been twice refused, and on No. 2 had been once refused. Before the fourth note was purchased suit had been directed on Nos. 1, 2 and 3. All of these matters were conducted through appellant bank, and of all of them it had notice of course, and this notice was certainly sufficient evidence to sustain a verdict that the appellant bank was not an innocent purchaser. These facts are strengthened by the conduct of appellant bank. Noble, the indorser, was one of its stockholders, a customer and a man of large means, and naturally would make good his indorsement on demand; and if he did not do so, the bank could have its lawsuit in its home court, instead of going into another State to pursue its remedy. Of course, it was within its rights to elect which party it would sue, but when it elected to leave home to do its suing when it had full and complete redress at home, the jury had a right to take that fact into consideration in weighing its claim of innocent purchase.

2. Was the jury correctly instructed? These were the instructions given:

"1. You will find for the plaintiff the amount of the first two notes.

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