Williams v. Schmeltz
| Decision Date | 04 March 1929 |
| Citation | 14 S.W.2d 966,223 Mo.App. 477 |
| Parties | CHARLES H. WILLIAMS, RESPONDENT, v. FRED SCHMELTZ, APPELLANT. [*] |
| Court | Kansas Court of Appeals |
Appeal from the Circuit Court of Jackson County.--Hon. George H Kelly, Special Judge.
Judgment reversed and remanded.
Robert E. Rooney for respondent.
Frank G. Warren for appellant.
Trimble P. J., absent.
This is a suit on a promissory note. Plaintiff's claim of title is that he acquired it for value by delivery from his father, Eli P. Williams, who in turn acquired it by endorsement from the original payee, L. K. Flanagan.
Defendant contends first that there was not proper proof of Flanagan's endorsement; secondly, that in any event Eli P. Williams acquired the note from Flanagan merely as security for another obligation and had not acquired absolute title; and thirdly, that Charles H. Williams, the plaintiff, is not a holder in due course, and can therefore be met with any defenses to an action on the note which existed against his assignor, Eli P. Williams.
The action was first brought before a justice of the peace, who gave judgment for defendant. Plaintiff appealed to the circuit court, where a jury was waived and the whole case tried before the court, who gave judgment for plaintiff, and defendant thereupon appealed to this court. There are therefore no formal pleadings except the statement filed before the justice of the peace, as follows:
At the trial in the circuit court plaintiff identified a paper marked Exhibit 1 as the note being sued upon; whereupon, his attorney said, "We offer the note marked Exhibit 1 in evidence." The offer did not in terms include the endorsement of L. K. Flanagan, which, however, appeared upon the back of the note as introduced as above shown, and must be held to have constituted a part of the exhibit.
1. Defendant contends there was no proper proof of the endorsement and that such proof must be by evidence aliunde the endorsement. The case of Worrell v. Roberts, 58 Mo.App. 197, and the case of Hugumin v. Hinds, 97 Mo.App. 346, 71 S.W. 479, hold that the mere exhibition of the endorsement is not sufficient proof thereof, if objected to, but do not hold that the proof would be insufficient in the absence of objection. In the case of Nance v. Hayward, 183 Mo.App. 217, 170 S.W. 429, an endorsement in blank was pleaded. It does not appear that there was any proof whatsoever on the point. The court's opinion states that there was "no evidence to prove endorsement by the payee," and holds that it devolves on the holder of the note to prove the endorsement by evidence aliunde the endorsement.
In the case of Dunlap v. Kelly, 105 Mo.App. 1, 78 S.W. 664, plaintiff was the original payee of the note, which by several mesne endorsements had returned to his possession. The court held that he might have sued on his original title as payee, but that having alleged the intermediate endorsements he must prove them as alleged.
None of the foregoing cases, cited by appellant, sustain his position that an exhibition of the endorsement in evidence is insufficient in the absence of objection by defendant.
In addition to the bare exhibition of the endorsement, the witness Eli P. Williams, after testifying that he transferred the note to his son for value, was asked why he did not endorse same, and replied, "Didn't have to, that was already endorsed by the maker." The only endorsement which appeared on the note was that of L. K. Flanagan, the original payee, and the use of the word "maker" instead of "payee" by the witness was evidently a mere slip of the tongue. Moreover, no objection was made at the time or until this appeal, to the fact of the endorsement or to the sufficiency of its proof. We hold that this contention of appellant is without merit (Baade v. Cramer (Mo.), 213 S.W. 121), and that the endorsement was sufficient to support future negotiation by delivery. [R. S. 1919, secs. 820, 833; Carter v. Butler, 264 Mo. 306, 174 S.W. 399.]
2. Eli P. Williams testified that the note was received by him from Flanagan in connection with a contract which was identified as Exhibit A. He further testified that he knew he was holding the note as a pledge, but stated that he had thought and still thought that he had a right to sell it to his son. Defendant offered Exhibit A in evidence, to which plaintiff objected.
The action of the court in sustaining this objection is one of the grounds of defendant's appeal.
A mere pledgee, as distinguished from a mortgagee, does not obtain title to the thing pledged, but only possession, with a possessory lien as security. [31 Cyc. 839.] Upon default in the obligation for securing which the pledge is given, it has been said that he may proceed against the debtor personally on that obligation, or he may enforce the security, either by a foreclosure suit in equity, or by sale of the pledge upon reasonable notice to the debtor. [See Notes to Luckett v. Townsend, 49 Amer. Dec. 730, 3 Tex. 119.] But "nonpayment of the original debt at the stipulated time does not work a forfeiture of the pledge either by the civil or at the common law." [Richardson v. Ashby, 132 Mo. 238, 245, 33 S.W. 806.] A stipulation in the pledge that upon such nonpayment the title shall become absolute in the pledgee, is void. [Luckett v. Townsend, 3 Tex. 119, 49 Am. Dec. 723.] Even where a power of sale is given, such sale must be a fair one, made in good faith. [Hagan v. Continental National Bank, 182 Mo. 319, 81 S.W. 171, 2 Kent's Comm. 583.]
The nature of Eli P. Williams' interest in the note, therefore, goes to the very essence of his right to sell it. On that point the terms of the contract under which he admitted he held the note (identified as Exhibit A and excluded by the court), were relevant. If any primafacie evidence of the nature of his title were necessary, as suggested by the court, it was furnished by his admission that he originally received the note merely as a pledge. In the absence of a title beyond that of a bare pledgee, as justification for his sale, the title of which he attempted to pass plaintiff was defective under section 841, Revised Statutes 1919, which reads as follows:
"The title of a person who negotiates an instrument is defective within the meaning of this chapter when he obtained the instrument, or any signature thereto, by fraud, duress or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud."
...
To continue reading
Request your trial
-
Pierpoint v. Prudential Ins. Co. of America
... ... 208; Joerdens v ... Schrimpf, 77 Mo. 383; Wilkins v. Fehrenbach, ... 180 S.W. 22; Hower v. Erwin, 221 Mo. 93; ... Williams v. Harrison County, 110 A. L. R. 59; ... Wolff v. Ward, 104 Mo. 127; Keith v ... Bingham, 97 Mo. 196. (5) The burden of proof was upon ... ...