Vaughan v. Brandt

• Decision Date: 10 April 1912
• Citation: 123 P. 591,21 Idaho 628
• Parties: EDGAR J. VAUGHAN, Appellant, v. AXEL J. BRANDT et al., Respondents
• Court: Idaho Supreme Court

123 P. 591

21 Idaho 628

EDGAR J. VAUGHAN, Appellant, v. AXEL J. BRANDT et al., Respondents

Supreme Court of Idaho

April 10, 1912

COMMERCIAL PAPER-INNOCENT PURCHASER-SUFFICIENCY OF EVIDENCE.

(Syllabus by the court.)

1. Evidence in this case examined and held sufficient to support the verdict and judgment.

2. The mere fact of the purchase, by one who invests his money in commercial paper, of a promissory note fair and regular on its face, from a person who has lawsuits over the collection of other notes, or who has a shady reputation as to his business transactions, is not of itself sufficient to put an otherwise bona fide purchaser on notice that there was fraud practiced in the procurement of the note.

APPEAL from the District Court of the Eighth Judicial District for Kootenai County. Hon. John M. Flynn, Judge.

Action on a promissory note. Judgment for defendants. Plaintiff appeals. Affirmed.

Judgment affirmed. Costs awarded in favor of respondents.

Reed &amp Boughton, for Appellant.

Those who execute negotiable paper and set it afloat are chargeable with a much higher degree of diligence and caution than is chargeable to those who purchase such paper in the due and regular course of commercial transactions. (Vaughan v Johnson, 20 Idaho 669, 119 P. 879.)

Whitla & Nelson, for Respondents.

The respondents in this case contend that anyone seeking to make a claim in good faith on the purchase of McLaughlin Bros.' paper must show such a state of facts and such a lack of knowledge of McLaughlin Bros.' transactions that they will entirely get away from the taint of fraud with which all these notes are marked. (City Nat. Bank v Jordan, 139 Iowa 499, 117 N.W. 758; Citizens' Savings Bank v. Houtchens, 64 Wash. 275, 116 P. 866; Hallowell v. McLaughlin Bros., 136 Iowa 279, 111 N.W. 429; Union Nat. Bank v. Windsor, 101 Minn. 470, 112 N.W. 999; Hallowell v. McLaughlin Bros. (Iowa), 121 N.W. 1039; Winter v. Nobs, 19 Idaho 18, 112 P. 525; Park v. Windsor, 115 Minn. 256, 132 N.W. 264; City Nat. Bank v. Windsor (Minn.), 133 N.W. 961; Park v. Johnson, 20 Idaho 548, 119 P. 52; Park v. Brandt, 20 Idaho 660, 119 P. 877; Vaughan v. Johnson, 20 Idaho 669, 119 P. 879.)

AILSHIE, J. Sullivan, J., concurs, STEWART, C. J., concurring in the conclusion.

OPINION

AILSHIE, J.

This action was instituted to recover on a promissory note. The defense was interposed that fraud was practiced by the payee in procuring the execution of the note and that it was given as payment of the purchase price for a stallion, and that the agent of the payee represented that the note should not be completed or delivered until sixteen signers had been procured, and that among them should be two persons who were well known to the other signers as men of good financial standing, and that in truth and fact neither of them ever signed or executed the note. A further defense was interposed that the horse was never delivered to the defendants, and that they never received any consideration whatever for the execution of the note. It was also alleged that the plaintiff Vaughan had notice of the fraud practiced in the execution of the note and the failure of consideration, and that he was not an innocent purchaser.

Substantially the same defense was made in this case as was made in Vaughn v. Johnson, 20 Idaho 669, 119 P. 879; Park v. Brandt, 20 Idaho 660, 119 P. 877; Park v. Johnson, 20 Idaho 548, 119 P. 52; Winter v. Nobs, 19 Idaho 18, 112 P. 525.

The only serious question presented for our consideration on this appeal is whether there has been any substantial evidence produced to show or tend to show that Vaughan had notice of the fraud entering into the execution of this note or the failure of consideration. We shall not undertake to review the evidence. It is sufficient to say that it is of a shadowy and vague character. We are not prepared, however, to say that there is no evidence whatever that would justify a jury in concluding that Vaughan had notice of the defects in this instrument or the nature and character of the transaction out of which it arose. For that reason we have concluded to affirm this judgment. We feel, however, like reiterating what was said by this court in Vaughan v. Johnson, supra, that:

"The frequency with which such defenses as the one set up in this case are being pleaded reminds us that there is either a grave need of invoking the...