63 Ark. 604 | Ark. | 1897
(after stating- the facts.) There was no error in the court’s refusal to give the first instruction asked for by the defendant. While the decisions are at variance upon the question whether a pre-existing indebtedness, without more, is a valuable consideration for the transfer of a negotiable promissory note made for accommodation only, before its maturity, without notice that it is accommodation paper by the transferee, so as to make the transferee a bona fide holder for value, our court has taken position on that question. In the case of Bertrand v. Barkman, 13 Ark. 159, the court, through Scott, J., said : “There can be no doubt of the general proposition of law in reference to commercial notes that, when it is shown, in an action against the maker by the holder, that it was without consideration, * * * * * the holder, to protect himself against the equities of the maker, must show that he acquired the paper before it matured, and that he is a bona fide holder for a valuable consideration, or, to speak more technically, it must have been received in ‘due course of trade, for value.’ This proposition is so indisputably fixed that it is unnecessary to resort to reasoning or to cite authority to sustain it.” Further on he says: “When, however, the note is transferred by way of indemnity against probable future loss, or from an existing liability, or of collateral security for a preexisting debt, it is not such a holding for value as comes within the rule.”
This is, according to our decisions, the settled rule. Yet in this case was there not a new consideration? Reinman & Simon had agreed that they would collect the Biscoe notes, and pay the proceeds to the bank, and, having failed to turn over the proceeds of the Biscoe notes to the bank, upon being threatened by the bank, they placed the Wright notes as collateral in lieu of the Biscoe notes, which they had been permitted to withdraw, or the proceeds. In the opinion of a majority of the court, this was a sufficient consideration moving1 from the bank to Reinman & Simon to fix the liability of Wright to the bank, and to constitute the bank a bona fide holder for value.
Besides,-the uncontradicted proof is that the notes of Wright were held as collateral by the bank at the time the note of Reinman & Simon was renewed, and the time extended for its payment, and the fact that they were placed as collaterals, by the terms of the renewal note, furnishes indisputable evidence that the extension of time was induced by the collaterals given, and that it was so understood at the time by the parties. The bank was entitled to recover judgment on these notes against Wright.
The written instruction given by the court is correct, and accords with the authority of Bertrand v. Barkman, supra, and the principle above laid down. The first paragraph of the oral instruction given by the court is correct, but the other part of the instruction was calculated to mislead the jury; for it appears that when the note of Reinman & Simon was renewed,-and the time extended by the bank for its payment, these notes were ■continued as collateral security, and, we think, were an inducement to the bank to extend the time for payment, and were so designated and understood by Reinman & Simon. Reversed and remanded for a new trial.