Stevens v. Vermillion

• Decision Date: 09 February 1918
• Docket Number: 21,263
• Citation: 102 Kan. 408,170 P. 807
• Parties: FRED L. STEVENS, Appellant, v. A. E. VERMILLION, Appellee
• Court: Kansas Supreme Court

170 P. 807

102 Kan. 408

FRED L. STEVENS, Appellant, v. A. E. VERMILLION, Appellee

No. 21,263

Supreme Court of Kansas

February 9, 1918

Decided January, 1918.

Appeal from Morris district court; ROSWELL L. KING, judge.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

PROMISSORY NOTE--Pleading--Omission of Indorsement on Copy of Note--Amendment of Petition. In an action upon a promissory note, where it had been alleged that the note had been purchased and transferred to plaintiff in due course, but the copy of the note set forth in the petition failed to show a written indorsement of the note, and where upon the trial evidence was received, without objection, of a transfer of the note by a written indorsement before maturity, and the case was tried by the parties as if the plaintiff was a holder in due course, the court, on objection to the sufficiency of the petition at the close of the evidence should have allowed plaintiff to amend his petition to conform to the proof.

Edwin Anderson, of Council Grove, and Frans E. Lindquist, of Kansas City, Mo., for the appellant; Guy S. Calkins, of Iowa City, Ia., of counsel.

Malcolm B. Nicholson, and William J. Pirtle, both of Council Grove, for the appellee.

OPINION

JOHNSTON, C. J.:

This was an action upon a promissory note, which the plaintiff claimed he had acquired before maturity, in due course, for value, and without notice of any infirmity. The defendant admitted the execution of the note, but denied that plaintiff purchased the same before due or was the owner or holder thereof. He set up a transaction that he had with the original payee, which he says was illegal and fraudulent, and which resulted in a failure of consideration for the note. In the trial the plaintiff offered testimony tending to show that the note was duly indorsed and transferred before it was due, and that the plaintiff was a holder in due course. The defendant offered testimony for the purpose of showing that the note was not transferred before it was due and was therefore open to defenses he had against the original payee, upon which evidence was produced. When the evidence was closed the court, without motion or objection, suggested the insufficiency of the petition, saying that counsel had been laboring under a mistaken view as to the pleadings and that under the petition the plaintiff had obtained title by purchase and assignment and not by indorsement. Plaintiff then asked for leave to amend the petition to conform to the proof, but this was refused for the reason, as the court said, that "the defendant has consumed all this time making a defense under your pleading as it stands. If it had been plead they might have taken other testimony and appeared and cross-examined your witnesses," and a verdict against the plaintiff was directed.

Under the circumstances we think the amendment should have been allowed. It appears that the indorsement on the back of the note was omitted from the copy set out in the petition. In a former action on the note the indorsement was set forth, but this action was dismissed; and in the present one, begun five months later, a copy of the indorsement was not included in the petition, nor did the petition contain an express allegation that the note was transferred by indorsement. It is alleged that before maturity the payee of the note--

"sold, assigned and transferred said promissory note to the First National Bank of Iowa City, Iowa, and that said First National Bank of Iowa City, Iowa, purchased the said promissory note, in due course for value and without notice of any infirmities; that thereafter, the said First National Bank of Iowa City, Iowa, for value received, sold, assigned and transferred said promissory note to this plaintiff, who is now, and ever since the purchase thereof has been, the owner and holder thereof, in due course."

In alleging that the note had been transferred in due course and that plaintiff had become the holder in due course it is manifest that the pleader attempted to allege a transfer by indorsement, and that the omission of the indorsement in the copy was an oversight. According to the negotiable instruments law a holder in due course takes the instrument on the conditions:

"(1) That it is complete and regular upon its face; (2) that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; (3) that he took it in good faith and for value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it." (Gen. Stat. 1915, § 6579.)

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