Penbrook Trust Co. v. Wiegand & Co.

• Citation: 126 A. 404
• Decision Date: 20 October 1924
• Docket Number: No. 24.,24.
• Parties: PENBROOK TRUST CO. v. WIEGAND & CO.
• Court: New Jersey Supreme Court

126 A. 404

PENBROOK TRUST CO.

v. WIEGAND & CO.

No. 24.

Court of Errors and Appeals of New Jersey.

Oct. 20, 1924.

(Syllabus by the Court.)

Appeal from Supreme Court.

Suit by the Penbrook Trust Company against Wiegand & Co. Prom a judgment for plaintiff, defendant appeals. Affirmed.

Ernest L. Quackenbush, of Newark (Ralph E. Lum, of Newark, of counsel), for appellant.

Pitney, Hardin & Skinner, of Newark (Charles R. Hardin, of Newark, of counsel), for appellee.

KATZENBACH, J. The plaintiff below, the Penbrook Trust Company, a Pennsylvania corporation, recovered a judgment in the Supreme Court against Wiegand & Co., a New Jersey corporation, for $4,237.08, from which Wiegand & Co. have appealed to this court. The suit was instituted to recover the amount due upon two promissory notes for $2,000 each. The notes were issued under the following circumstances:

In, September, 1922, Wiegand & Co., manufacturing jewelers, were in need of funds. They made two promissory notes, each for $2,000, one dated September 21, 1922, and the other dated September 23, 1922, each payable four months after date at the Irving National Bank at Irvington, N. J. The names of the payees were left blank. These notes were delivered in New York City to the White Finance Company, upon the promise of Mr. White that his company would give to the maker cash or other notes in exchange therefor. This promise was broken. Wiegand & Co. never received the promised consideration. They demanded the return of the notes, but never received them. In February, 1923, Wiegand & Co. learned that the notes had come to the hands of the Paxtang Shoe Manufacturing Company. This company had obtained the notes from the Mutual finance Company of Philadelphia in exchange for their notes of like amount. The notes, at the time acquired, were filled out, complete, and regular on their face, and were purchased by the Paxtang Company, so far as the evidence discloses, in good faith, and without notice of any irregularity or failure of consideration. On October 7, 1922, the Paxtang Company sold one of these notes to the Penbrook Trust Company and received credit for the face of the note, less discount. On October 13, 1922, the other note was similarly disposed of to the same banking institution. The Penbrook Company had no, knowledge of the original blanks in the notes, or of the failure of the maker to receive consideration therefor. When the notes were sold by the Paxtang Company to the Penbrook Company, L. V. Fritz, the president of the Paxtang Company, added his personal indorsement to the notes. At maturity the notes were not paid by the maker and were protested by the Penbrook Company. In February, 1923, Mr. Fritz went to Irvington with these notes in his possession and attempted to collect them from Wiegand & Co. Mr. Fritz had obtained possession of the notes from the Penbrook Company by giving it collateral. When unsuccessful in collecting the notes, Mr. Fritz, upon his return, returned the notes to the Penbrook Company and received back his collateral. The Paxtang Company then paid one of the notes and gave a judgment note for the other. The Penbrook Company, however, retained the notes as collateral for a larger indebtedness of the Paxtang Company. On April 24, 1923, the two notes in question were publicly sold by the Penbrook Company. It purchased the notes at the sale. On May 18, 1923. the present action was commenced.

The answer set up as defenses, First, that L. V. Fritz had paid the plaintiff the amount due and had had delivered to him the notes; second, that the notes were given by the defendant, Wiegand & Co., to the Paxtang Company for the accommodation of the latter, and upon its promise to pay the same at maturity; third, that the notes were given to the Paxtang Company upon its promise to pay a valuable consideration therefor, which it had failed to do of which the Penbrook Company had full knowledge; and, fourth, that the Paxtang Company had obtained the notes by fraud practiced by it upon Wiegand & Co., of which the Penbrook Company had full knowledge.

The plaintiff at the trial, through its secretary and treasurer, produced the notes and proved the indorsements thereon of the Paxtang Company and L. V. Fritz, and the notes were offered in evidence. The plaintiff then rested. The defendant moved for a nonsuit, upon the grounds that there had been no proof by the plaintiff of value given for the notes, no proof of consideration, and no proof that the plaintiff was a holder in due course. This motion was denied and an exception taken. The defendant then produced witnesses who testified to the circumstances under which the notes were made, and as to its version of what transpired upon the visit of Mr. Fritz to Irvington for the purpose of collecting the notes. The plaintiff offered in rebuttal testimony with reference to the discounting of the notes and the arrangements made between it and the Paxtang Company, by which Mr. Fritz was given the custody of the notes for the purpose of the trip to Irvington. Motions to direct a verdict for the plaintiff and for the defendant were each denied and exceptions taken. The court left to the jury, for its consideration, the question whether the plaintiff had obtained the notes before maturity without notice of any defect, in good faith, in the regular course of their business, for value. The court charged that, if the jury found that the plaintiff did so acquire them, then they should find a verdict for the plaintiff. The jury returned a verdict for the plaintiff for the full amount of the notes with interest. From the judgment entered on the verdict, the defendant below has appealed. The grounds of appeal were argued by the appellant under six heads. These will be considered in the order presented in the appellant's brief.

The first ground argued is that the court erred in its refusal to nonsuit the plaintiff. The grounds of the motion have been stated. Briefly, they were lack of proof of (1) value given for the notes (presumably by the payee); (2) of consideration (presumably to the maker); and (3) that the Penbrook Company had not proved that they were holders in due course. The appellant contends that it was incumbent upon the plaintiff to prove, as a part of its case, these facts. This position entirely overlooks the presumptions of law which arise from the holding of a promissory note. The fifty-ninth section of our Neeotiable Instrument Law (3 C. S. p. 3741) provides that:

"Every holder is deemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as a holder in due course."

Section 52 of the same act provides that:

"A holder in due course is a holder who has taken the instrument under the following conditions: I. That it is complete and regular upon its face; II. That he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; III. That he took it in good faith and for value; IV. That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it."

It is also provided in section 45 of the same act (3 C. S. p. 3740) that every negotiation is presumed to have been made before maturity, and in section 24 (3 C. S. p. 3738) that every negotiable instrument is presumed to have been issued for a valuable consideration and every person whose signature appears thereon to have become a party thereto for value. These provisions of our statute supply, in the form of presumptions of law, the proof of those matters which the appellant relied upon its motion to nonsuit. There was therefore no error in the refusal of the trial court to grant the motion.

The next point argued by the appellant deals with the overruling of three questions by the trial court. The first question was asked upon the cross-examination of Robert W. Gutshall, the secretary and treasurer of the Paxtang Company. It was, "All these notes you...