Sumter County State Bank v. Hays

• Decision Date: 09 December 1914
• Citation: 68 Fla. 473,67 So. 109
• Parties: SUMTER COUNTY STATE BANK v. HAYS et al.
• Court: Florida Supreme Court

67 So. 109

68 Fla. 473

SUMTER COUNTY STATE BANK v. HAYS et al.

Florida Supreme Court

December 9, 1914

Error to Circuit Court, Sumter County; W. S. Bullock, Judge.

Action by the Sumter County State Bank against R. S. Hays and another. Judgment for defendants, and plaintiff brings error. Affirmed.

Syllabus by the Court

SYLLABUS

Where an indorsee takes a negotiable note with knowledge of an executory contract that is the sole consideration for the note, such indorsee is not a holder in due course without 'notice of any infirmity in the instrument or defects in the title' thereof within the meaning of the negotiable instrument statute, even though the indorsee did not know of the subsequent breach of the contract.

Where an executory contract is the sole consideration for a negotiable note, the contract and its breach may be shown in defense of an action on the note by a holder who took with knowledge of the contract.

COUNSEL McMullen & McMullen, of Tampa, for plaintiff in error.

Hocker & Martin, of Ocala, for defendants in error.

OPINION

WHITFIELD J.

The bank brought an action on a promissory note for $500 made and indorsed by R. S. Hays and R. M. Hays to the Florida Consolidated Canning Company, who indorsed the note to plaintiff bank. The pleas were: (1) That the defendants did not execute and deliver the note; (2) that the note was given for stock subscribed for, and to be issued by, a corporation thereafter to be organized as the Consolidated Canning Company, the condition being that a canning plant of a stated capacity per day be built and equipped at Webster, Fla within a time limit; that the company be organized within three months from a stated day, and that, in the event said company should not be organized within such time, said subscriptions to stock were to be canceled; that 'thereupon defendants, upon the sole consideration' of the premises, made and delivered the note; 'that at the time of the indorsement and delivery of said note to the plaintiff, it had actual notice of the conditions upon which the said note was made, and that the conditions were broken and the plaintiff is not a holder in due course, and the consideration for the note has wholly failed.' It is not necessary to set out other pleas seeking to raise somewhat similar issues. Demurrers to all the pleas except the first were overruled. A replication to the second plea alleges that the plaintiff purchased the note immediately after the execution thereof, and long prior to its maturity, in good faith and in the usual course of business, for full value and plaintiff had no notice or knowledge of any breach of the executory contract which was the consideration for which the note was given. A demurrer to the...