Rossiter v. Loeber

• Decision Date: 15 June 1896
• Citation: Rossiter v. Loeber, 18 Mont. 372, 45 P. 560 (Mont. 1896)
• Parties: ROSSITER v. LOEBER.
• Court: Montana Supreme Court

45 P. 560

18 Mont. 372

ROSSITER v. LOEBER.

Supreme Court of Montana

June 15, 1896

Appeal from district court, Silver Bow county; J. J. McHatton Judge.

Action by H. D. Rossiter against J. Fred. Loeber to recover on a promissory note. There was a judgment against the defendant and from an order granting a new trial plaintiff appeals. Affirmed.

Action on a promissory note made by the defendant, Loeber, to William Schneider or order, for $350, dated October 8, 1891 and due on or before November 8, 1891. Plaintiff alleged that on November 1, 1891, and before the note became due, the payee, Schneider, transferred the same by indorsement to plaintiff, and that plaintiff is now the owner and holder for value. Judgment is prayed for the face of the note, interest and costs. Defendant admitted the execution of the note, and that it had not been paid, but denied that the note was transferred prior to maturity. Defendant further set up that the note was made and executed without consideration, and that it was made under duress by the payee and others, and that the plaintiff was cognizant of the fact that the note was made and executed without consideration and under duress, before the alleged purchase by him of the note. The replication denied knowledge on the part of plaintiff concerning the alleged duress and lack of consideration and all other affirmative matter in the answer. Plaintiff also avers in his replication that the defendant admitted to the payee that the note was legal and valid, and promised to pay the same, and that plaintiff relied upon the truth of said statement, and that the defendant is now estopped from setting up the defense of duress. There was a trial to a jury, and a verdict for the plaintiff. Defendant moved for a new trial, and the motion was granted. Plaintiff appeals from the order sustaining the defendant's motion for a new trial.

John W. Cotter, for appellant.

F. T. McBride, for respondent.

HUNT J. (after stating the facts).

The plaintiff, on the trial, testified that he thought he purchased the note after maturity, that he was the owner of the note, and that it was not paid. The plaintiff then rested, whereupon the defendant moved for a nonsuit upon the ground that it appeared that the witness purchased the note after maturity, and that, therefore, it was not entitled to any protection in his hands as an innocent purchaser; that the answer challenged the consideration for the note, and, no answer having been given to the plea of no consideration, under such circumstances it was necessary for the plaintiff not only to show the note, and that he was the owner of the note, but also that there was a consideration for its execution. The court overruled the motion. The defendant saved his exceptions, and has argued to us that under the decision in Thamling v. Duffey, 14 Mont. 567, 37 P. 363. the pleading of the defendant denying the purchase of the note before maturity, and alleging notices of the defenses set up in the answer, was sufficient to require the plaintiff in his case in chief to prove that he purchased the note before maturity, and without notice of such defenses. But we think defendant's construction of the decision of the court in Thamling v. Duffey is not accurate. A careful reading of the opinion with relation to the pleadings that were before the court in that case will demonstrate that the conclusion of the court did not change the well-established rule of law as laid down by Daniel on Negotiable Instruments, who says (section 166): "But if the defendant show that there was fraud or illegality in the origin of the bill or note, a new coloring is imparted to the transaction. The plaintiff, if he has become innocently the holder of the paper, is not permitted to suffer; but, as the knowledge of the manner in which it came into his hands must rest in his bosom, and the means of showing it must be much easier to him than to the defendant, he is required to give proof that he became possessed of it for a sufficient consideration. If he is innocent, the burden must generally be a light one; and, if guilty, it is but a proper shield to one who would be, but for its protection, his victim." Section 167: "It was formerly considered necessary, in order to enable the defendant to put the plaintiff on proof of consideration, that the defendant should have given the plaintiff notice to prove consideration; but it is well settled now that no such notice is necessary, and it is seldom given. It was also formerly held that, where the consideration given by the plaintiff was disputed, and a notice to that effect had been given, the plaintiff must go into his whole case in the first instance, and could not reserve proof of consideration as an answer to the defendant. But not the plaintiff is only required to give affirmative proof of consideration after the defendant has given evidence tending to rebut the prima facie case which the production of the instrument makes out." The approved quotation from Bank v. Diefendorf, 123 N.Y. 191, 25 N.E. 402, in Thamling v. Duffey, very clearly states the law to the effect that the burden of proving good faith is always upon the party asserting his title as a bona fide holder in a case where the proof shows that the note has been fraudulently or illegally obtained from its maker, but such a party makes out his title by presumptions until it is impeached by evidence showing the paper had a fraudulent inception. When this evidence is before the court or jury, then the plaintiff can no longer rely upon the presumption, but must affirmatively show good faith. And so in this case, the plaintiff, by producing the note and furnishing evidence of the fact that he was the holder and owner at the time of the commencement of the suit, made out a prima facie case; that is, there was competent evidence tending to prove propositions of fact, which, if not rebutted or controlled by other evidence, stood as sufficient proofs of such propositions of fact. The defendant then undertook to prove that the note was given under duress, and offered evidence tending to support such averment. Having introduced this evidence, the burden of introducing evidence to prove that he was a bona fide holder for value was yet on the plaintiff; that is, his presumptions were overcome, and he had to show good faith by affirmative evidence on rebuttal. The plaintiff might have offered his evidence of good faith when he first presented and proved his note, or he might have delayed offering it until after the defendant introduced his testimony. That was a matter largely in the discretion of the plaintiff, subject to rules of practice in a court, which has generally the right to control the order of proof, limited always by the statutes and manifest justice of the case. But whatever rule might have been prescribed for the introduction of testimony, the burden of making out good faith always rested upon the plaintiff, whether before or after the testimony of defendant had been introduced tending to show that the note was not in plaintiff's hands as a bona fide holder. See, also, Burnham v. Allen, 1 Gray, 496; Greenl. Ev. § 172. This view is also in accord with the decision of the supreme court of the United States in Commissioners v. Clark, 94 U.S. 278, where it was decided that where the question is whether the indorsee and holder had notice of the prior equities between antecedent parties to the instrument, the holder of such a note under such circumstances is not obliged to show that he paid value for the instrument until the other party has proved that the consideration was illegal, or that it was fraudulent in its inception. See Meadowcraft v. Walsh, 15 Mont. 544, 39 P. 914; 2 Greenl. Ev. § 172. We therefore think that the motion for a nonsuit was correctly overruled, and that the court properly denied to the defendant permission to open and close upon the question of duress.

The evidence to sustain the plea of duress showed substantially the following state of affairs: The defendant, Loeber, went to Sheridan, Mont., about October 7, 1891, to receive the concentrates of the Toledo mine in behalf of two of the lessees of the mine. On the next morning, directly after breakfast, about 8 o'clock, some 12 or 15 miners gathered about the person of the defendant, and when he was about to take his team, and leave Sheridan for Dillon, some 40 miles away, some of them informed him that he could not go. One of them, Erick by name, told him that if he did not remain in Sheridan, and settle the matter of the claims of the men right then, he would shoot him. Another one, by the name of Storm, told him that if he got on the wagon they would pull him off, and that they had a rope there. The defendant immediately thereafter was crowded by the men into a room in the hotel, and for about two hours he was held there, and told that he must settle the claims against the mine. He remonstrated by saying that he did not owe anything. The crowd then told him that he could sign the notes on the pay roll. The note in suit was one of several amounts on the pay roll, which was for work that the men had done at the mine. The defendant testified that two men, named Wier and Spooler had leased the mine, and had worked the men, and it was the time of these men that was included in this pay roll handed to the defendant. The defendant denied that he owed any part of the pay roll, and said that he was induced to sign the note simply because he wanted to get away from Sheridan, and out of danger. He testified that the men used rough language, and said that...