Taylor & Co. v. Nehi Bottling Co., No. 10607.

• Court: Court of Appeals of Texas
• Writing for the Court: Looney
• Citation: 30 S.W.2d 494
• Parties: TAYLOR & CO., Inc., v. NEHI BOTTLING CO.
• Docket Number: No. 10607.
• Decision Date: 10 May 1930

30 S.W.2d 494 TAYLOR & CO., Inc.,
v.
NEHI BOTTLING CO. No. 10607. Court of Civil Appeals of Texas. Dallas. May 10, 1930. Rehearing Denied July 26, 1930.

Page 495

Appeal from Dallas County Court; Jno. A. Rawlins, Judge.

Action by Taylor & Company, Incorporated, against the Nehi Bottling Company. From an adverse judgment, the plaintiff appeals.

Affirmed.

C. M. Cocke, of Dallas, and Emmett B. Cocke, of San Antonio, for appellant.

J. W. Chancellor, of Bowie, and Pinckney, Grissom and Thompson, Knight, Baker & Harris, all of Dallas, for appellee.

LOONEY, J.

Taylor & Company, Inc., of New York City, sued Nehi Bottling Company, a domestic corporation of the city of Dallas, on a negotiable promissory note for $180, one of a series of fourteen aggregating $2,530, remainder of the consideration for an automatic syruping, filling, and crowning machine, sold to defendant by Adriance Machine Works, a corporation of Brooklyn, N. Y. Plaintiff alleged that it was holder in due course, which carried the implication that it became holder before the note was overdue, that it took same in good faith for value and without notice of any infirmity or defect in the title of the Adriance Machine Works.

Defendant joined issue on plaintiff's allegations and, in addition, pleaded specially that plaintiff was not holder in due course, alleging facts, among others, that the consideration for the note failed, in that the machine for which it was given was defective and worthless. On findings by the jury favorable to defendant on all special issues, the court rendered judgment that plaintiff take nothing.

Under our view of the case, it will not be necessary to determine the correctness of the several propositions urged by appellant, because, whether correct or not, the case will have to be affirmed, for reasons which we will now state. Plaintiff made a prima facie case when the note sued upon was placed in evidence, but as defendant established its plea of failure of consideration, the burden shifted, and it was then incumbent upon plaintiff to show that it was holder in due course, that is for value, and without notice of any vice in the instrument. Section 59 of article 5935 of the Negotiable Instruments Act reads: "Every holder is deemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as holder in due course. But the last-mentioned rule does not apply in favor of a party who became bound on the instrument prior to the acquisition of such defective title."

The doctrine asserted by us above is in harmony with the construction given the quoted provision of the Negotiable Instruments Act by the Supreme Court of several states. See Central Nat'l Bank v. Pyeatt, 97 Okl. 28, 222 P. 533; Owsley County Deposit Bank v. Burns, 196 Ky. 359, 244 S. W. 755; First Nat'l Bank v. Carroll, 46 N. D. 62, 179 N. W. 664; Besse v. Morgan, 84 Okl. 205, 202 P. 1012.

The only evidence on the issue of notice was the testimony of Beatrice Irwin, assistant treasurer of Adriance Machine Works. She testified that, at the time the note was negotiated by Adriance Machine Works to Taylor & Co., the latter was not informed by any one, or from any source, that there existed any controversy between Adriance Machine Works and Nehi Bottling Company regarding the machine, nor were they given notice by any one or from any source that the consideration for which the note was given had failed, but that so far as she knew, Taylor & Co. was an innocent purchaser for value before maturity, and was not in possession of any information that would put it on inquiry concerning any infirmity in the note. She testified further that dealings and an account existed between these corporations, and transfers of notes by the machine company to Taylor & Co., such as the one in suit, occurred quite frequently.

It was not shown that this witness had any connection with Taylor & Co., or was in a position to acquire knowledge of facts with reference to notice, her testimony was incompetent being negative in character, the expression of opinions, and without probative value; hence we do not think the evidence sufficient to establish the fact that plaintiff was purchaser without notice of the vice in the note. Plaintiff controlled the means of establishing want of notice, could and should have produced testimony from its officer or agent who acted for it in the transaction, and failing in this, the presumption will be indulged that such testimony if produced would have been unfavorable to it on the issue. See Ryan v. M., K. & T. Ry. Co., 65 Tex. 20, 57 Am. Rep. 589; G., H. & S. A. Ry. Co. v. Horne, 69 Tex. 648, 9 S. W. 440; Standard Oil Co. v. State, 117 Tenn. 618, 100 S. W. 705, 718, 10 L. R. A. (N. S.) 1015; 10 R. C. L. 902.

But aside from the question of notice, the undisputed evidence is to the effect that Adriance Machine Works was debtor of Taylor & Co. at the time the note was transferred, and that Taylor & Co. credited the machine works with the consideration paid for the note upon this pre-existing indebtedness.

The law is settled in this state that a purchase under these circumstances is not for value. Overstreet v. Manning, 67 Tex. 657, 4 S. W. 248;...