Tyson v. Joyner

• Decision Date: 19 September 1905
• Citation: 51 S.E. 803,139 N.C. 69
• Parties: TYSON. v. JOYNER et al.
• Court: North Carolina Supreme Court

139 N.C. 69

51 S.E. 803

TYSON.

v.JOYNER et al.

Supreme Court of North Carolina.

Sept. 19, 1905.

Promissory Note — Action by Indorsee — Proof of Indorser's Signature—Sufficiency.

Where, in an action on a note, the complaint alleges and the answer denies its indorsement to plaintiff, the introduction in evidence of the note, with the indorsement thereon, without proof of the signature of the indorser, is insufficient to prove that plaintiff is the legal holder, so as to cut off defenses available against the indorser.

Appeal from Superior Court, Pitt County; Webb, Judge.

Action by M. E. Tyson against J. H. Joyner and others. From a judgment for plaintiff, defendants appeal. Reversed.

This action was brought to recover on a bond for $200 executed in 1897 by defendant, and payable to J. L. Little, or order. Defendant alleged, and there was evidence tending to show, that he, at the request of his brother, S. V. Joyner, signed the note for the accommodation of the latter and gave a mortgage to secure it S. V. Joyner received the amount of the note, less the discount. Little did not discount the note or pay any consideration for it, but indorsed it to B. F. Tyson, who, it seems, paid the money to S. V. Joyner. Plaintiff at the trial introduced the note and rested. The name of B. F. Tyson was indorsed on the note, but there was no proof of the signature, other than the production of the note by plaintiff. Defendants objected to this as evidence of the indorsement of the note by Tyson. The objection was overruled, and he excepted. Indorsement of the note by B. F. Tyson was alleged in the complaint and denied in the answer. Defendant further alleged that Tyson, who was commissioner to sell certain land, had agreed, at the time the note was executed, to pay it out of that part of the proceeds of the sale which would go to defendant in satisfaction of a judgment held by him, and which was a lien on the land, and he afterwards collected more than enough for that purpose. Defendant relied upon this agreement and the receipt of the money by Tyson as a payment or satisfaction of the debt, or at least as a set-off or counterclaim. The issues and answers thereto were as follows: "(1) Is the note declared on the property of the plaintiff M. E. Tyson? Yes. (2) In what amount, if any, is the defendant J. H. Joyner indebted to the plaintiff? $200, with interest from February 12, 1897." The court charged the jury that, if they believed the evidence, they should answer the issues as above indicated. Judgment for plaintiff, and defendant appealed.

Skinner & Whedbee, for appellants.

Fleming & Moore, for appellee.

WALKER, J. (after stating the case). There was much argument as to whether the note or bond had been duly executed—that is, delivered—as Little did not accept it, nor advance any money on it; but it is not neccessary to discuss this matter, as we think the defendant had virtually admitted its execution by the form of his answer, and the case was not tried below upon the theory that the note was not a completed instrument when it passed into the hands of Little, and then by indorsement to Tyson. The only questions presented there related to the character of plaintiff's ownership of the note and the validity of defendant's plea of payment or counterclaim. The court erred in holding that the mere introduction of the note was evidence of its indorsement by Tyson, so as to vest the legal title in plaintiff, and cut off any defenses good against Tyson. It is very true, as contended by counsel, that the introduction of the note by plaintiff raised the presumption that she was its owner, but only the equitable owner or assignee, and it was subject in her hands to any equities or other defenses of the maker against prior holders. The note must have been indorsed specially to her, or at least in blank, to justify the claim that she is its legal owner, and the bona fide holder of a title good against prior equities of which she is not shown to have had notice. It was necessary, therefore, to show such an indorsement in order to defeat any equity the defendant may have against B. P. Tyson. Referring to this doctrine, Harlan, J., in Osgood's Adm'rs v. Artt (C. C.) 17 Fed. 575, says: "It is a settled doctrine of the law merchant that the bona fide purchaser for value of negotiable paper, payable to order, if it be indorsed by the payee, takes the legal title unaffected by any equities which the payor may have as against the payee. But it is equally well settled that the purchaser, if the paper be delivered to him without indorsement, takes by the law merchant only the rights which the payee has, and therefore takes subject to any defense the payor may rightfully assert as against the payee. The purchaser in such case becomes only the equitable owner of the claim or debt evidenced by the negotiable security, and, in the absence of defense by the payor, may demand and receive the amount due, and, if not paid, sue for its recovery in the name of the payee, or in his own name when so authorized by the local law." In Trust Co. v. Bank, 101 U. S. 08, 25 L. Ed. 876, the court says: "The contract cannot, therefore, be converted into an indorsement or an assignment;...