Pratt v. Rounds

• Decision Date: 20 October 1914
• Parties: PRATT v. ROUNDS.
• Court: Kentucky Court of Appeals

169 S.W. 848

160 Ky. 358

PRATT v. ROUNDS.

Court of Appeals of Kentucky.

October 20, 1914

Appeal from Circuit Court, Daviess County.

Action by W. I. Pratt against Elizabeth M. Rounds. From a judgment for defendant, plaintiff appeals. Reversed, and remanded for new trial.

Louis I. Igleheart, of Owensboro, and Edward A. Kennedy, of Iowa City, Iowa, for appellant.

W Foster Hayes and C. W. Wells, both of Owensboro, for appellee.

HOBSON C.J.

On February 2, 1912, Elizabeth M. Rounds, doing business in the name of B. H. Rounds & Sons, executed to the Brenard Manufacturing Company six notes each for $50, due respectively, in two, three, four, five, six, and seven months. W. I. Pratt brought this suit upon the notes alleging that the Brenard Manufacturing Company had assigned them to him for value before maturity in due course. Mrs. Rounds answered in substance that the notes had been obtained by fraud, and denied that they had been assigned to Pratt. Pratt replied, denying that the notes were obtained by fraud, and pleaded that he was a bona fide purchaser in due course for a valuable consideration and without notice of any infirmity in them. The case came on for trial before a jury, who found for the defendant. The plaintiff appeals.

Mrs. Rounds is the owner of a jewelry store in Owensboro, Ky. The Brenard Manufacturing Company is a partnership doing business at Iowa City, Iowa. They own a copyrighted plan under which pianos are put in the stores of merchants, and the successful contestant in the contest gets the piano. They send out traveling men, who make contracts with the merchants. One of their traveling men went to Owensboro, made a contract with Mrs. Rounds, through her son, and obtained the notes in suit. The son's evidence as to the fraud in the obtaining of the notes is in substance this: The traveling man came to the store, representing that the Brenard Manufacturing Company was going to put pianos in Owensboro on sale, and they had a copyrighted plan of contest which he had misplaced, saying:

"Now, we will give in this contest so much commission on every piano that every man sells. We will handle this contest for you, and all these contestants will be at work selling for your store."

Rounds signed the contract, and gave the notes on this basis, without seeing the copyrighted plan of contest. The contract was then sent to the Brenard Manufacuring Company and was approved by them. Ten days later Rounds, on examining the copyrighted plan of contest, which in the meantime had been sent to him, saw that it was altogether a different proposition from that stated to him by the drummer. In the copyrighted plan the merchant was to get the contestants and keep them going. He was to have sole charge of it. The Brenard Manufacturing Company was not to send any man to Owensboro to assist in the contest or to sell any piano there. Finding that the proposition was entirely different from what it was represented to him, he on February 12th wired the Brenard Manufacturing Company, revoking his order, and on the same day wrote to them stating fully the reasons. There was no contradictory evidence offered by the plaintiff. The only evidence offered by him was the deposition of Theodore O. Loveland, one of the firm of the Brenard Manufacturing Company. He testified that, after receiving the contract and approving it, they immediately bought the piano and ordered it sent to Mrs. Rounds; that the piano was bought on February 5th, and was in fact shipped by the makers of the piano on February 15th; that they sold the notes to W. I. Pratt on February 8th, or four days before they had notice by wire of the disaffirmance of the contract by Mrs. Rounds, and seven days before they received her letter; that they at the time had no notice of anything being wrong; that Pratt was not connected with the Brenard Manufacturing Company and never had been; that they bought their pianos each day, as they received orders handling from 500 to 1,000 a year; that they received the order on February 3d; that the piano was shipped from Chicago; that in all they had sold Pratt about $40,000 worth of notes from time to time; that, at the time of the transfer of these notes to Pratt, they got $1,000 from him, and transferred to him $1,250 worth of notes. These questions and answers occur in his cross-examination:

"Q. Then for each dollar you received, you transferred to him $1.25 face value of the notes? A. Yes, sir. Q. Were these notes transferred without recourse, or is the Brenard Manufacturing Company responsible, providing they are not collected? A. Do you mean by 'without recourse' that those words were written upon the note? Q. Yes. A. No; these words were not written on the note. They never were written on any note that we ever disposed of, to the best of my knowledge. Q. In case Mr. Pratt is unsuccessful in this suit and should fail to collect these notes, would it be Mr. Pratt's loss, or would the Brenard Manufacturing Company have to reimburse him for the money paid, at the time they were transferred? A. We have no contract with Mr. Pratt to that effect. Q. Well, in the $40,000 worth of notes transferred to Mr. Pratt, have there been any which he has failed to collect? A. Not that I know of. If there have been, it has not been called to my attention. Q. The company, then, is in no way responsible to Mr. Pratt for the payments of these notes, if he should fail to recover in this suit? A. I think not; the $1.25 has always covered it. Q. In your transactions in this kind of notes, it has been found that the deposit of $1.25 worth of notes for one dollar in money advanced covers all shrinkage and losses in the way of collections? A. That has been our experience. Q. And these notes were transferred to Mr. Pratt on that basis? A. Yes, sir."

The defendant offered no evidence contradicting Loveland, and the plaintiff, Pratt, did not testify on the trial. During the examination of a witness for the defendant, this occurred:

"The Court: Have you any evidence as to the fair market value of that piano, Mr. Wells? Mr. Wells: No, sir; I think not."

Again, at the conclusion of the defendant's testimony, this occurred:

"The Court: I think that it is very material that the jury should know the fair market value of the piano. (The court allows the defendant time in which to try and find a witness who will testify as to the value of the piano, and after due deliberation the defendant announced that he could find no witness who would testify on this point.)"

The court, by the fourth instruction which he gave the jury, told them in substance that, although a fraud was practiced on the defendant at the time the notes were executed, yet, if the Brenard Manufacturing Company sent the defendant goods of value, they might in their discretion find for the plaintiff the fair...