Paulette v. Brown

• Decision Date: 31 March 1867
• Citation: 40 Mo. 52
• Parties: AGNES PAULETTE, Plaintiff in Error, v. JAMES G. BROWN, Defendant in Error.
• Court: Missouri Supreme Court

40 Mo. 52

AGNES PAULETTE, Plaintiff in Error,

v.JAMES G. BROWN, Defendant in Error.

Supreme Court of Missouri.

March Term, 1867.

Error to St. Louis Circuit Court.

Garesche and Mead, for plaintiff in error.

I. The instruction in regard to the witness Tallis, at instance of defendant, should have been refused; because such instructions are improper. The old decisions would sustain it--State v. Mix, 15 Mo. 153; Gillett v. Wimer, 23 Mo. 79; State v. Dwier, 25 Mo. 554. But later authorities repudiate them--State v. Cushing, 29 Mo. 217, where the court declares such an instruction to be an invasion of the province of a jury; and State v. Stout, 31 Mo. 406, where such instructions are regarded as unusual; and Blanchard v. Pratte, 37 Ill. 246, where perhaps the correct rule is to be found.

II. The test whether the transaction is usurious because a loan, and not a purchase, is, could the endorser in a suit against the maker have recovered? If a mere accommodation endorsement, he could not for want of consideration; and therefore, in such a case, the transaction is a loan, and, if for excessive interest, usurious. Hence, as Wimer's endorsement was for accommodation, it was not a purchase from him by the defendant, but a loan by the latter to Castello.--Jones v. Hake, 2 John's Cas. 60; Wilkie v. Rosevelt, 3 Id. 66; Marvin v. McCullum, 20 J. R. 288; Corcoran et al. v. Powers, et al., 6 Ohio (N. S.) 19, and distinctions drawn between business and accommodation paper, Clark v. Sisson, 4 Duer, 408.

III. Because defendant's loan to Castello was usurious, plaintiff should recover.

Cline & Jamison, and Comfort, for defendant in error.

I. The fact that the notes in controversy were taken by the defendant as collateral security can, under the circumstances, subject him to no equities that may exist in favor of the plaintiff as to parties taking with notice of the facts.

The jury have found the fact to be, under the second instruction given for the plaintiff (appellant), that “the endorsements on the two notes sued for, and the circumstances under which they were pledged, were not sufficient to put a man of ordinary prudence on his guard, or to cause him to institute inquiries as to whether the party pledging the notes had the right and authority to pledge said notes.” For the law is well settled, that a party who takes a negotiable promissory note before maturity, without notice of any facts which impeach its validity as between the antecedent parties, as a collateral security for an antecedent debt, even if there is no new consideration at the time of taking such security, is a holder for a valuable consideration, and will not be affected by any equities between the original parties. This doctrine is fully borne out by the following authorities--Bosanquet v. Dudman, 1 Stark. 1 (1814); Ex parte Bloxham, 8 Ves. Ch. p. 53 (1803); Heywood v. Matson, 4 Bingh. 499 (1828); Percival v. Frampton, 2 Cromp. Mees. & Ros. 183 (1835); Poirier v. Morris, 20 Eng. L. & Eq., 113 (1853); Smith's Merc. L. 320, note; Swift v. Tyson, 16 Pet. 19-22 (1842); Pugh v. Durfee, 1 Blackf. 414 (1849); Goodman v. Simonds, 20 How. 370 (1857); Chickopee Bk. v. Chapin, 8 Metc. 43-4 (1844); Blanchard v. Stevens, 3 Cush. 168 (1849); Atchinson v. Brooks, 26 Vt. 575 (1854); Allain v. Hartshorn, 1 Zab. (N. J.) 667 (1847); Carlisle v. Wishart, 11 Ohio 191-2 (1842); Vallette v. Mason, 1 Smith (Ind.) 89 (1849); Greeneaux v. Wheeler, 6 Texas, 527 (1851); Robinson v. Smith, 14 Cal. 98 (1859); Grant v. Kidwell, 30 Mo. 455; Story on Bills, § 192; 3 Kent's Com. 8, note 31, ed. 1848.

It will thus be seen that the principle of law above contended for is established in England, in the Supreme Court of the United States, in Vermont, Massachusetts, New Jersey, Ohio, Indiana, Texas and California, and that it has the high sanction of Lord Mansfield, of Story, and of Kent.

The fact that the notes in controversy were endorsed by Thomas Tallis as ““curator” does not subject them in the hands of the holder to any equities existing between antecedent parties. The notes in question belonged, it is alleged, at the time they were negotiated, to the plaintiff. Now the fact is that Tallis was not curator of the plaintiff, nor in fact did he hold any fiduciary relationship to her; but he was curator of her children, who had no interest in the notes.--Powell v. Morrison, 35 Mo. 244; Jeffries v. McLean, 12 Mo. 538; Thornton v. Rankin, 5 Mart. La. (N. S.) 703.

II. There was no error in the first instruction given for the defendant, to the effect that the jury, if they found that Thomas Tallis wilfully and knowingly swore falsely to any material matter in the case, then they were authorized to discredit the whole of his testimony. “If a witness wilfully testifies falsely to any material fact in the case, the jury are authorized to discredit and reject the whole of his testimony.”--State v. Mix, 15 Mo. 153; Gillett v. Wimer, 23 Mo. 77; State v. Cushing, 29 Mo. 217; State v. Stout, 31 Mo. 406, quoted by the appellant as being adverse, are both cases in which the jury were directed (not authorized) to disregard the whole of the testimony of the witness.

FAGG, Judge, delivered the opinion of the court.

This case is here, upon a writ of error to the Circuit Court of St. Louis county. The suit was instituted under the provisions of the statute in relation to the claim and delivery of personal property.

Two negotiable promissory notes, each for the sum of $1,050, executed by one Tesson, and made payable to the order of the plaintiff, were the articles of property sued for. They were alleged to be in the possession of the defendant, and by him wrongfully withheld from the plaintiff. She states in her petition that “one James Castello, without her knowledge, consent or authority, placed the same in the hands of defendant as collateral security for the payment of a certain note of said Castello, dated April 28, 1860, payable six months after date to the order of John M. Wymer, for eighteen hundred and seventy-five dollars.” It was further averred that “said notes had not been traded, sold or negotiated to or with any one, but that they had been placed by plaintiff in the hands of her friend Thomas Tallis, for safe keeping merely, and that if he or any one else had allowed said Castello to have or receive them, it was without her knowledge or consent.” Judgment was then asked for the recovery of the property and for damages. The allegations as to the ownership of the notes, as well as their wrongful detention by the defendant were specifically denied. The answer sets out at length the acts and circumstances connected with the defendant's possession of the property, and claims that he was rightfully the holder of the same by means of a transfer taken in good faith and for a valuable consideration. The case was tried by a jury, and resulted in a verdict for the defendant. The real question for the consideration of the jury was simple in its character, and as no objections were made at the trial as to the admissibility of testimony, the only questions for our consideration here relate to the declarations of law which were given and refused by the court. It appears that the note of Castello, drawn in favor of Wimer and by him endorsed, was negotiated through the agency of one Hunt, a note broker, and one Thomas Tallis, mentioned in the petition as the person with whom the notes in controversy had been deposited for safe keeping. They were endorsed in blank by plaintiff, and at the time of transfer to the defendant were also endorsed by the said Tallis, who attached to his name the word “curator.”

Much importance seems to have been attached to this fact at the trial, as being sufficient of itself to put the defendant upon his inquiry as to the power and authority of Tallis to transfer them by endorsement. It was not pretended at all that the defendant had obtained possession of the notes by fraudulent means, or that he had knowledge of the fact that they were really the property of the plaintiff, and that the transfer was against her knowledge and consent; but the right to recover seems to have been based mainly upon the ground that the circumstances attending the endorsement, by Tallis, were sufficient to affect the defendant with notice of the fact of his want of authority to make the transfer, or at least to put him upon his inquiry, and all of the instructions asked by plaintiff, with perhaps one exception, were directed to that one point alone. It is sufficient to say of the instructions given at the instance of plaintiff that they presented the law in the light most favorable to her. Those refused were all, with one exception, to the same effect substantially, and differing only as to form. This question having been thus fairly presented to the jury, the verdict must be taken to be conclusive on that point. The instruction asked by ...