Prouty v. Musquiz

• Decision Date: 22 October 1900
• Parties: PROUTY v. MUSQUIZ.<SMALL><SUP>2</SUP></SMALL>
• Court: Texas Supreme Court

58 S.W. 721

PROUTY v. MUSQUIZ.²

Supreme Court of Texas.

October 22, 1900.

Certified question from court of civil appeals of Fourth supreme judicial district.

Action by Rafael Musquiz against Cheney R. Prouty. From a judgment for plaintiff, defendant appealed to the court of civil appeals, which certifies a question. Question answered.

Winchester Kelso and Clark, Ball & Fuller, for appellant. J. R. Sanford and W. C. Douglas, for appellee.

GAINES, C. J.

This case comes to us upon a certificate showing the following statement and question: "A negotiable promissory note executed by Cheney R. Prouty to James Riddle, payable to the latter's order, was transferred by the payee before maturity, for valuable consideration, to Sarah E. Eager, by delivery only; that is to say, by parol delivery, without indorsement. Mrs. Eager assigned it to Rafael Musquiz. The above is a theory of fact presented by the record material to the case. In such case, is the burden of proof upon Musquiz, the holder of the note, to show that Mrs. Eager had no notice of the maker's defenses, discounts, or set-offs against the note, or was the burden upon Prouty, the maker, to show that she had such notice when she acquired the note?"

Article 307 of our Revised Statutes is as follows: "Any person to whom any of the said negotiable instruments may have been assigned, may maintain any action in his own name which the original obligee or payee might have brought; but he shall not only allow all just discounts against himself, but, if he obtained the same after it became due, he shall also allow all just discounts against the assignor before notice of the assignment was given to the defendant; but should he obtain such instrument before its maturity, by giving for it a valuable consideration, and without notice of any discount or defense against it, then he shall be compelled to allow only the just discounts against himself." This statute was construed by this court in the case of Word v. Ellwood, 90 Tex. 130, 37 S. W. 414; and it was there held that "the form of the transfer, whether written or verbal, is immaterial," and that "the statute extends its protection to all assignees coming within its terms, though they may not have acquired their instruments in accordance with the technical rules regulating transfers under the law merchant." The holder of a negotiable instrument by an assignment not in writing being placed upon the same footing as an indorsee at common law, it follows that the rule of the commercial law must determine the question, unless it should be held that there is something in the language of the statute to indicate a purpose to change that rule. In Wright v. Hardie, 88 Tex. 653, 32 S. W. 885, construing article 314, in reference to the burden of proof in case of a plea of a want or failure of consideration, we held that the language made it plain that the intent of the legislature was that when the plaintiff showed that he had paid value the onus was upon the defendant to show notice on his part. So in Tillman v. Heller, 78 Tex 597, 14 S. W. 700, 11 L. R. A. 628, it was held that the statute in relation to the transfer of property in fraud of creditors indicated the order in which the burden of proof should shift in a case between the creditor and one claiming to be an innocent purchaser for value. But in McAlpin v. Fynch, 18 Tex. 831, the court, in construing article 2521 of Hartley's Digest, which is the same as article 307 of the Revised Statutes, quoted above, say, "But we do not understand the statute as affecting, or as intended to affect, the question of the burden of proof." The court in that case further hold that it is only in case of fraud or illegality in the inception of the note that the burden is upon the plaintiff to show that he, or some one under whom he claims, had paid value for the paper before...