Park v. Brandt

• Decision Date: 25 November 1911
• Citation: 20 Idaho 660,119 P. 877
• Parties: HOWARD C. PARK, Appellant, v. AXEL J. BRANDT et al., Respondents
• Court: Idaho Supreme Court

119 P. 877

20 Idaho 660

HOWARD C. PARK, Appellant, v. AXEL J. BRANDT et al., Respondents

Supreme Court of Idaho

November 25, 1911

PROMISSORY NOTE-PURCHASE BEFORE MATURITY-EVIDENCE OF GOOD FAITH OF PURCHASER-INSTRUCTIONS CONSIDERED.

(Syllabus by the court.)

1. Evidence in this case examined and held to be sufficient to support the verdict of the jury, and approving Park v Johnson, 20 Idaho 548, 119 P. 52, decided by this court.

2. In an action upon a promissory note given in payment for the purchase of a stallion, where it appears that the sale of such stallion is made by an agent of the principal, it is proper to show the representations and statements made by such agent where fraud and misrepresentations and breach of warranty are plead as a defense, and the principal is bound by such representations and warranties made by such agent and such evidence may be considered by the jury in determining the good faith in the purchase of such note from such principal, where such purchaser took such note with knowledge of such facts or knowledge of circumstances which would lead a reasonable and prudent man to know such facts at the time such purchase was made.

3. In an action upon a promissory note, where fraud and breach of warranty are plead as a defense, it is error for the trial court to incorporate as a part of an instruction the following language: "The court charges you as a matter of law that a wilful ignorance of facts is as much evidence of bad faith as actual knowledge of the same"; by use of this language the court invades the rights and privileges of the jury in determining the weight of the evidence, inasmuch as the court advises the jury that wilful ignorance of facts has as much weight as actual knowledge of the same.

4. The instructions in this case examined, and some are erroneous yet taken as a whole no prejudicial error was committed.

APPEAL from the District Court of the Eighth Judicial District for Kootenai County. Hon. Robert N. Dunn, Judge.

Action upon a promissory note. Judgment for defendants; plaintiff appealed. Affirmed.

Judgment affirmed. Costs awarded to respondents.

Elder & Elder, for Appellant.

Evidence of transactions wholly disconnected with the transaction under consideration is entirely incompetent, and will not be admitted, as such testimony could only have the effect of prejudicing the rights of the plaintiff in this action. (Elliott v. Lyman, 85 Mass. 110; Sutter v. Lackman, 39 Mo. 91; Canon v. National Bank, 3 Neb. (Unof.) 348, 91 N.W. 585.)

In order to impute notice to the plaintiff, the circumstances must be so pointed and emphatic as to amount to proof of mala fides in abstinence of inquiry or such as to be prima facie inconsistent with any other view than that there is something wrong in the title, and thus amount to the constructive notice. (1 Daniel on Neg. Inst., 799; Horton v. Bayne, 52 Mo. 533; Lee v. Whitney, 149 Mass. 447, 21 N.E. 948.)

There is no connection whatever between the facts surrounding the making of the note which was sued on in this action and the facts brought out on cross-examination of the witness Park, in regard to his knowledge of other notes; the evidence was irrelevant, incompetent and immaterial and not proper cross-examination. (Otillie v. Waechter, 33 Wis. 252; Elliot v. Lyman, 85 Mass. 110; McGuire v. Kenefick, 111 Iowa 147, 82 N.W. 485; Brown v. Schock, 77 Pa. 471; Phila. & T. R. Co. v. Stimpson, 14 Pet. (U.S.) 448, 10 L.Ed. 535; State v. Anthony, 6 Idaho 388, 55 P. 884.)

When a purchaser of a note proves that he is the owner and that he paid value for the note before maturity, and that he had no notice of the defenses against the note, then before it is competent for the defendants to introduce evidence showing fraud in the inception of the note, they must introduce some evidence tending to show that the plaintiff had notice of the fraud. (Drover Nat. Bank v. Blue, 110 Mich. 31, 64 Am. St. 327, 67 N.W. 1105; Reeve v. Liverpool etc. Ins. Co., 39 Wis. 520; Wetmore v. Markoe, 196 U.S. 68, 25 S.Ct. 172, 49 L.Ed. 390, 2 Ann. Cas. 265; Catlin v. Hensen, 1 Duer (N. Y.), 310; Hart v. Potter, 4 Duer (N. Y.), 458; Winter v. Nobs, 19 Idaho 18, 112 P. 525.)

There was no evidence introduced showing that plaintiff had knowledge of any facts at the time of purchasing the instrument in question that would show bad faith on his part. (Bothwell v. Corum, 135 Ky. 766, 123 S.W. 291; Goetz v. Bank of Kansas City, 119 U.S. 551, 7 S.Ct. 318, 30 L.Ed. 515.)

The jury was not warranted in disregarding the positive and direct evidence of the plaintiff to the fact that he had no knowledge or notice of these fraudulent transactions. (American Nat. Bank v. Lundy (N. D.), 129 N.W. 99; Jennings v. Todd, 118 Mo. 296, 40 Am. St. 373, 24 S.W. 148.)

Even though the assignee be in possession of facts or circumstances sufficient to arouse suspicion in the mind of a person of ordinary prudence, and though he is guilty of negligence in not first following up such information for the purpose of disclosing the fraud or illegality to which the suspicious circumstances may seem to point, he may recover against the maker. (Bank v. McClelland, 9 Colo. 608, 13 P. 723; Tourtelotte v. Brown, 1 Colo. App. 408, 29 P. 130; Coors v. Bank, 14 Colo. 202, 23 P. 328, 7 L. R. A. 845; Rand v. Stationery Co., 1 Colo. App. 270, 28 P. 661; Swift v. Smith, 102 U.S. 442, 26 L.Ed. 193; First State Savings Bank v. Webster, 121 Mich. 149, 79 N.W. 1068.)

Whitla & Nelson, for Respondents.

It was proper for the jury to pass upon the question of good faith. (Park v. Winsor (Minn.), 132 N.W. 264; Citizens' Savings Bank v. Houtchens (Wash.), 116 P. 866.)

Considering the numerous reports in which the courts have passed upon McLaughlin Brothers' paper, we think there is no question but what one taking this paper now simply takes it with full knowledge of the fraudulent and swindling transactions of McLaughlin Brothers, as the courts of last resort of every state under the negotiable instruments law have sustained verdicts against them based upon similar state of facts. (City National Bank v. Jordan, 139 Iowa 499, 117 N.W. 758; Union Nat. Bank v. Winsor, 101 Minn. 470, 118 Am. St. 641, 112 N.W. 999, 11 Ann. Cas. 204; Winter v. Nobs, 19 Idaho 18, 112 P. 525; Citizens' Savings Bank v. Houtchins, supra; Park v. Winsor, supra; Hallowell v. McLaughlin Bros., 136 Iowa 279, 111 N.W. 428, 121 N.W. 1039.)

The jury had a right to consider the knowledge of the plaintiff, as he could not remain wilfully ignorant of facts which were apparent on the transactions of McLaughlins and then claim good faith. (Johnson County Bank v. Rapp, 47 Wash. 30, 91 P. 382; State National Bank v. Bennett, 8 Ind.App. 679, 36 N.E. 551; 2 Ency. of Ev. 526; Kirby v. Berguin, 15 S.D. 444, 90 N.W. 856.)

STEWART, C. J. Ailshie and Sullivan, JJ., concur.

OPINION

STEWART, C. J.

This is an action upon a promissory note executed by respondents to McLaughlin Brothers, and by them indorsed and transferred to appellant. The complaint is in the ordinary form and alleges that the note sued upon was sold and delivered to the plaintiff for value before maturity, and that the plaintiff is now the owner and holder thereof. The answer puts in issue the allegations of the complaint, and affirmatively pleads fraud, want of consideration, breach of warranty and false representations on the part of McLaughlin Brothers in the inception of the note.

The cause was tried to a jury and a verdict rendered in favor of the respondents. Judgment was rendered in accordance with the verdict. This appeal is from the judgment and also from an order overruling the motion for a new trial.

Sixty-one errors are assigned, thirty-two of which errors relate to the ruling of the trial court in permitting certain questions to be asked plaintiff upon cross-examination. All of these errors were fully discussed and passed upon by this court in Park v. Johnson, recently decided by this court and reported ante, p. 548, 119 P. 52. In that case the plaintiff was the same as in the case under consideration, and the note in suit was given in payment of the purchase of a stallion sold by the same McLaughlin Brothers, and the only difference in the two transactions is the names of the defendants, and in the former case one Wood was the agent of McLaughlin Brothers, while in the case now under consideration one Byers was the agent who made the sale. The evidence, however, is practically the same. What this court said in that case applies in this case, and justifies this court in holding that the evidence in this case is sufficient to support the verdict of the jury and that the trial court committed no error in his ruling upon the questions asked the plaintiff upon cross-examination, and that such inquiries were proper cross-examination and that the evidence was relevant, competent and proper.

In principle, we think the case of City National Bank v Jordan, 139 Iowa 499, 117 N.W. 758, and the case of Citizens' Savings Bank v. Houtchens (Wash.), 64 Wash. 275, 116 P. 866, support the decision of this court. These two cases to which reference has thus been made were cases in which the courts were dealing with promissory notes executed to the same McLaughlin Brothers who were payees of the note involved in this case, and were given under the same circumstances and in like cases as the case now under consideration. These cases are likewise supported in many of the questions involved by the following cases where the same McLaughlin Brothers were payees of the notes, and such notes were given under circumstances very much like the one now under consideration. (Hallowell v. McLaughlin Bros., 136 Iowa 279, 111 N.W. 428; Union National Bank v. Windsor, 101 Minn. 470, 118 Am. St....