People's Bank of Springfield v. True
| Decision Date | 18 June 1921 |
| Citation | 231 S.W. 541,144 Tenn. 171 |
| Parties | PEOPLE'S BANK OF SPRINGFIELD v. TRUE. |
| Court | Tennessee Supreme Court |
Appeal from Chancery Court, Robertson County; J. W. Stout Chancellor.
Suit by the People's Bank of Springfield against H. C. True. From a decree for plaintiff, defendant appeals. Affirmed.
This suit was brought by the People's Bank of Springfield hereafter called complainant, against H. C. True, hereafter called defendant, to recover the balance due on a note of $7,000. An answer was filed denying liability, and by way of cross-bill defendant sought to compel a cancellation of the note.
The note was executed payable to his own order by defendant indorsed in blank by him, and delivered to R. F. Long for the benefit of his father, E. B. Long, and negotiated by the latter to complainant. Two payments were made on the note one of $500 and one of $1,000.
On the hearing the chancellor found that complainant was an innocent purchaser of the note for value before maturity and decreed in its favor. From this decree defendant has appealed to this court.
A mass of proof was taken in the case, which, however, we do not find it necessary to review. Whatever may be the merits of the case between defendant and the Longs, we must agree with the chancellor that the complainant is an innocent holder of the note.
Undoubtedly the complainant took the note for value. It gave in consideration thereof another note for $3,000 signed by J. A. Long & Co. and another note for $2,000 signed by R. E. Glover & Co., in addition to $1,500 cash. This made a total consideration of $6,500. The first payment of $500 was made on the note before the bank bought it. It is not denied that the bank obtained the note before its maturity, and the only debatable question is whether the bank took the note under such circumstances as to charge it with notice of defenses alleged to exist in favor of defendant as against the Longs.
There are two theories as to the origin of this note--the facts incident to its execution. One theory is advanced by the complainant, and the other by the defendant. It will not be necessary to determine which of these theories is correct, since upon either theory the bank is still entitled to recover.
The defendant says that he, along with other gentlemen in Robertson county, became involved in a land speculation in Texas. He says that as a result of this venture his associates, among whom was E. B. Long, became indebted to him in the sum of about $11,000; that to satisfy this indebtedness E. B. Long conveyed to defendant certain lands which he (Long) owned in Robertson county, Tenn.; that later E. B. Long's associates refused to contribute to him anything on account of the joint indebtedness to defendant which Long had settled as aforesaid. Defendant says that when it became apparent to Long that the others would not reimburse him, Long began to make demands on defendant to give back his lands or the proceeds thereof. Defendant says that Long was quite persistent in these demands and kept after him all the time; that finally, while he did not conceive that he owed Long any thing, he turned over to R. F. Long the $7,000 note here in suit with the understanding that said note was not to be collected. Defendant says that his agreement with R. F. Long was that the father, E. B. Long, should have the profits of the sale of the Robertson county lands conveyed as aforesaid by E. B. Long to defendant, together with some other personal property. Defendant insists that the note was only delivered to R. F. Long as a sort of protection to E.
B. Long, in case defendant should die or anything should happen to him, and defendant reiterates that it was fully understood by both the Longs that the $7,000 note was not to be collected.
R. F. Long was at that time the cashier of the complainant bank. Defendant contends that since R. F. Long was fully advised as to the conditions under which the note was executed and knew that it was not to be collected, the complainant bank became affected with the knowledge which R. F. Long had, and that it is not an innocent holder of the note.
It is fair to say that R. F. Long utterly denies that he had any such understanding as is claimed with defendant, but he claims that he took the note understanding that it was to be paid promptly. In fact, R. F. Long says that the note originated in an entirely different way, as will hereafter appear.
It is manifest, if we accept defendant's theory of the facts, that R. F. Long was acting in these negotiations with defendant as the agent of the father, E. B. Long.
It appears otherwise in the proof that when the $7,000 note was negotiated to the complainant, E. B. Long conducted such negotiation with both R....
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