Sanders v. McAlister Bros. & Co.

• Decision Date: 11 March 1912
• Docket Number: 15,564
• Parties: J. B. SANDERS v. MCALISTER BROS. & CO
• Court: Mississippi Supreme Court

57 So. 801

101 Miss. 227

J. B. SANDERS v. MCALISTER BROS. & CO

No. 15,564

Supreme Court of Mississippi

March 11, 1912

APPEAL from the circuit court of Tippah county, HON.W. A. ROANE Judge.

Suit by J. B. Sanders against McAlister Bros. & Co. From a judgment for defendants, plaintiff appeals.

The facts are fully stated in the opinion of the court.

Reversed and remanded.

Sharp &amp McIntyre & T. E. Pegram, for appellant.

Fraud is never presumed and the burden of proving it rests upon him who asserts it is so well settled that argument is unnecessary. 20 Cyc. 108, 109; Ency. of Evi., Vol. 6-8; Archer v. Helm, 70 Miss. 874.

Before a jury could have rendered a verdict in favor of the appellees on the ground of fraud connected with the contract the proof that fraud was perpetrated would have had to be clear, strong and convincing. Wigmore on Evidence, Vol. 6 section 2498; Chambers v. Meaut, 66 M. 625; Insurance Co. v. Farnworth, 72 M. 555. The evidence in this case in support of the claim of fraud is not sufficient; it doesn't even reach to that height to excite a suspicion of fraud which would not be sufficient. Shoe Co. v. Davis, 75 M. 447.

It is a well settled proposition of law that before a trial court is warranted to take a case from the jury on the ground of fraud, that there must have been not only proof of fraud but clear, convincing and uncontradicted proof, such proof as would lead reasonable men to reach but one conclusion, namely that there was fraud practiced in the transaction. 20 Cyc 123, and foot notes. Even though the alleged false representations may have been uncontradicted, the question as to whether those representations amounted to fraud was a question for the jury, and should have been so submitted. Anderson v. Bennett, at page 165.

If the court granted the peremptory instruction for the appellees, defendants in the court below, on the theory of fraudulent inducements to execute the note sued on, it is indeed strange, for the evidence not only fails to reach that degree which would have authorized the court to have taken such a course but there is a total lack of testimony, which would even indicate or hint at fraud. The contracts themselves contain no terms that indicate fraud. It is true that the certificate of deposit designates that interest will be paid thereon at the rate of twelve and one-half per cent. per annum and that the note only provides for eight per cent. per annum. This discrepancy in interest is accounted for, and consideration is given therefor, by reason of the fact that the appellees obligated themselves to their banking business with the Tishomingo Savings Institution. If it should be insisted that this discrepancy is indicative of fraud, did not the appellees have full notice thereof and were they not induced to sign the note on this very feature, doubtless?

The appellees offered no proof whatever that the Tishomingo Savings Institution had no authority to issue the certificate of deposit, nor does such lack of authority appear. It was not a stock certificate, but merely a certificate of deposit, with some additional stipulations, as shown on the face thereof, to strip it of its verbiage, it is simply a promise to pay the depositors the sum of five hundred dollars with interest thereon, with other conditions.

Under the appellees special plea of want of consideration the same burden rests to prove such want. The very certificate of deposit itself shows that there was a consideration for the note, because by this certificate, as before stated, the bank obligated itself to pay to the appellees the said sum of five hundred dollars. Notes exchanged one for the other form a sufficient consideration and it is true also of an exchange, check or bills or of a note for a letter of credit. In such exchange each note or bill is a separate or independent contract. 7 Cyc. 710; Joyce's Defences to Commercial paper, Sec. 227. A certificate of deposit is a good consideration for a note discounted in a bank. Miss. R. Co. v. Scott, 7 Howard 79.

Stephens & Kennedy, for appellees.

The uncontradicted proof in the case is that the Tishomingo Savings Institution ordered these certificates issued and sold to an unsuspecting public at a time when said institution was in a most desperate strait and was using every possible means to secure money and avoid bankruptcy and ultimate ruin, having borrowed all the money it could borrow, it devised this farfetched plan of getting the people's money without disclosing or even intimating its great financial press and need of funds, being thus embarrassed it not only borrowed all it could on paper bearing ten per cent. per annum, but it actually pretended that the certificate so issued and sold to appellees was represented by a deposit of an amount equal to the face value of said certificate, which was then in its bank to the credit of appellees, agreeing to carry appellees' paper at eight per cent. and at the same time pay them twelve and one-half per cent. on the certificate of deposit so issued and sold to these appellees, is fraud per se to say nothing of the shrewd and artful condition contained in the body of the certificate itself, q. v. Houston's Case, 56 So. 336; Loan Co., 56 So. 293. We cannot escape the conclusion that the Tishomingo Savings Institution was insolvent, when it issued its certificate to appellees and took their note in payment of the same, never expected to do more than pledge the note and secure funds with which to satisfy its present impending demands. Having done this, no further consideration was ever given the matter, until it along with a number of other notes were sold in St. Louis, when appellant became the buyer with actual notice of all these outstanding equities, etc., and just how appellant can claim to be an innocent purchaser for value under our anticommercial statute, I am unable to see or understand. Certainly the Tishomingo Savings Institution could not recover on this note if it had brought the suit instead of appellant. Can appellant occupy any better position in a suit to enforce payment of this note than said Institution would have occupied in a similar proceeding? Certainly not, etc.

Whether the consideration failed before or after the transfer, is quite immaterial under the facts in this particular case; one thing certain and that is, these appellees never received any thing for the note sued on and appellant knew this when he bought the note in St. Louis, etc. Of course, it was fraudulent for the Tishomingo Institution to issue certificates like the one issued to appellee, when it was in great financial stress and making every possible twist to save itself from impending ruin, and its paper from going to protest and default in payment, etc. The transaction stated in short is simply this: The Tishomingo Savings Institution agreed with certain parties that it would execute its note for five hundred dollars in favor of any one of them bearing interest at the rate of twelve and one-half per cent, per annum and give it in exchange for their note for like amount bearing interest at the rate of eight per cent, per annum. The proposition is a query and the answer is a solution to this controversy; motive is the main spring of both thought and action, and just why a business institution, a bank if you please, would offer its paper in exchange for individual paper bearing a much less rate of interst, cannot be answered in truth except by stating that the institution must have been to all intents and purposes insolvent, and fixing to retire from business, etc. If it was at the time insolvent; if it was at the time unable to carry out its obligation with appellees and concealed this fact from...