Omaha Steel Works v. Martin

• Decision Date: 25 January 1926
• Docket Number: 11300.
• Citation: 243 P. 619,78 Colo. 560
• Parties: OMAHA STEEL WORKS v. MARTIN, and three other cases.
• Court: Colorado Supreme Court

243 P. 619

78 Colo. 560

OMAHA STEEL WORKS v. MARTIN, and three other cases.

No. 11300.

Supreme Court of Colorado

January 25, 1926

Rehearing Denied Feb. 15, 1926.

Department 2.

Error to District Court, Sedgwick County; H. E. Munson, Judge.

Four consolidated actions, each by the Omaha Steel Works Company as plaintiff against W. A. Martin in the first cause, against J. A. Theiss in the second cause, against Eber C. Newman in the third cause, and against Adolf Neugebauer in the fourth cause. Judgment in each case for defendant, and plaintiff brings error in each case.

Reversed and remanded, with directions to enter judgment for plaintiff.

Glenn N. Venrick, of Omaha, Neb., and H. N Marshall, of Julesburg, for plaintiff in error.

C. M Skiles, of Lincoln, Neb., and Rolfson & Hendricks, of Julesburg, for defendants in error.

ALLEN C.J.

This cause is a consolidation of four actions, each upon a promissory note. The verdicts and judgments were for defendants respectively. The Omaha Steel Works was the plaintiff in each case, and it brings the four cases consolidated, here for review.

Each note in question was made and executed by one of the defendants, in the fall on 1920, and delivered to the payee the Zonta Tire & Rubber Company, a concern which, according to the representations of its agents, intended to engage in the manufacture of automobile tires at Sioux City, Iowa. The business, however, was never established.

According to the pleadings, the evidence, and the verdict, the rubber company obtained the notes in question by fraud predicated upon false representations; the principal one relied upon being that the rubber company 'had rubber and fabric to operate its factory for a long time, and had on hand money sufficient to erect and equip its factory and for all machinery.' The controversy at present is with regard to whether plaintiff was a holder in due course.

The plaintiff was in the business of selling structural steel. It made a contract with the rubber company to deliver to it structural steel for the sum of $6,500, and to accept therefor that amount in notes held by the rubber company; said notes to be selected by an officer of the steel company from several hundred stock subscription notes then held by the rubber company. This contract was carried out, and the steel was manufactured into the form needed for the contemplated factory and delivered to the rubber company. From the evidence, it is an undisputed fact that the steel company paid an adequate consideration for the notes. In fact, the steel was a full payment for the notes.

Where the burden of showing due course is cast on the plaintiff, he sustains that burden by proof of payment of full value. Delaney v. Brownwood, 213 P. 578, 579, 73 Colo. 83, 86. In that case it was said:

'* * * Upon proof of full payment, a presumption of innocence prevails again, as before the proof of defective title, subject, of course, to refutation by further evidence. This is reasonable, for who, with knowledge that it was paid or invalid, would buy a note at full price?'

The plaintiff sustained the burden in the way above mentioned. The plaintiff also sustained the burden by showing the full details of the transaction,...