Tamlyn v. Peterson

• Decision Date: 21 May 1906
• Citation: 107 N.W. 1081,15 N.D. 488
• Parties: TAMLYN v. PETERSON et al.
• Court: North Dakota Supreme Court

15 N.D. 488

107 N.W. 1081

TAMLYN

v.PETERSON et al.

Supreme Court of North Dakota.

May 21, 1906.

Syllabus by the Court.

When fraud in the inception of a negotiable instrument is alleged and proved, the burden is upon the indorsee to prove that he is a purchaser for value, before maturity without notice, and in good faith.

Evidence examined, and held to sustain the verdict.

Appeal from District Court, Ransom County; Frank P. Allen, Judge.

Action by E. A. Tamlyn against P. O. Peterson and Karen O. Peterson. Judgment for defendants. Plaintiff appeals. Affirmed.Pierce & Tenneson, for appellant. Chas. S. Ego and T. A. Curtis, for respondents.

ENGERUD, J.

Suit on a negotiable promissory note, the plaintiff claiming to be an indorsee for value in the ordinary course of business before maturity. The defendants admit the execution of the note, but allege that its execution was induced by the fraud of the original payee and that there was no consideration therefor, and they deny that the plaintiff is a bona fide purchaser. The trial resulted in a verdict for defendant, after plaintiff's motion for a directed verdict in his favor had been denied. The plaintiff thereupon made an alternative motion for judgment, notwithstanding the verdict, or for a new trial. The court denied both features of that motion. Plaintiff then appealed from that order. The motion was made upon a statement of the case duly settled. The plaintiff contends, first, that the defendant's evidence does not show fraud or want of consideration; and, second, even if the evidence is sufficient to prove those allegations, the evidence was inadmissible because defendant failed to plead or prove sufficient facts to show that plaintiff was not a bona fide purchaser without notice of the invalidity of the paper.

We shall dispose of the latter proposition first. Appellant relies upon those cases from other states, which held that the maker of negotiable paper, who, in an action by the indorsee, seeks to avail himself of defenses existing against the original payee, has the burden of pleading and proving that the indorsee took with notice. Such is not the law of this state. In the case of Vickery v. Burton, 6 N. D. 245, 69 N. W. 193, this court declined to follow that line of authorities and held that in such cases, when the defendant had shown fraud on the part of the original payee, “the plaintiff has the burden of showing a good faith purchase of such paper in due course and without notice.” This view was reiterated and adhered to in ...