166 P. 27 | Mont. | 1917
delivered the opinion of the court.
On April 17, 1913, J. M. Grant, J. J. Johnston and B. V. Fuqua executed and delivered to Charles E. Clark ten promissory notes, each- for the sum of $200. Before maturity of any of the notes they were all indorsed and transferred by Clark to the Baker State Bank for their face value. The first note was paid at maturity and this action was brought to enforce payment of the other nine notes.
The principal defense interposed is that the ten notes were
While there is some conflict in the testimony as to the knowledge possessed by the bank at the time it purchased the notes, for the purpose of these appeals the evidence will be treated in the light most favorable to the defendants and as establishing that the bank knew what the consideration for the notes was and knew the terms of the contract of warranty.
The notes were transferred to the bank on the day following their execution axid at a time when there had not been any breach of warranty to the knowdedge of anyone. If at the very instant it purchased the notes, the bank had made inquiry of the defendants, it could not have ascertained that there was thexx any possible outstaxxding defense. It did know that the car was warranted to. a certaixx staxidard of service, but it had a right to presume that the contract of warranty would be
Our Codes provide: “Sec. 5900. A holder in due course is a holder who has taken the instrument under the following conditions: 1. That it is complete and regular upon its face; 2. That he became the holder of it before it was overdue, and without notice that it has been previously dishonored, if such was the fact; 3. That he took it in good faith and for value; 4. That at the time it was negotiated to him, he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it. ’ ’
It has often been said that a negotiable promissory note is a courier without luggage whose face is its own passport. To such extent do notes of this character enter into and form a substantial part of the very life of the commercial world, that the law has always been solicitous to exclude any rules calculated
A clear distinction is to be drawn between the case at bar and the eases cited above, on the one hand, and cases of which Citizens’ State Bank v. Garceau, 22 N. D. 576, 134 N. W. 882, is typical, on the other. In the last case, Garceau executed and delivered his promissory note to Stevens in payment of the first premium on a policy of life insurance. The note accompanied the application. Title to the note was to pass to Stevens if the application was accepted by the insurance company and the policy issued; otherwise the note was to be returned to Garceau. Before the application was acted upon, Stevens indorsed and transferred the note to the bank which then knew all the facts concerning the transaction. The application for insurance was rejected, and in an action by the bank to collect the note, the court held that Stevens did not have an unqualified title to the note, and the bank, with knowledge, acquired no better title than he had; that upon rejection of the application the consideration for the note failed altogether, and that the maker could properly avail himself of the defense that the bank was not a holder in due course. In the case at bar, the unqualified title to the note passed to Clark upon the delivery of the automobile, and upon indorsement by him the title passed to the bank, free from any defenses not then known to exist.
The plaintiff brings itself within the definition of a holder in due course, as given in section 5900 above. The trial court ruled correctly, and its judgment and order are affirmed.
Affirmed.,