264 Mo. 306 | Mo. | 1915
Petition filed November 9, 1909, in the circuit court for the city of St. Louis. The plaintiff sues as trustee of The Gila Farm Company, Oliver J. Westlake and Charles J. Laughlin, upon a promissory note signed by Edward Butler and Thomas Ward McManus, dated May 1,1907, payable to said Westlake and Laughlin or order on or before May 1, 1908, for $25,000, with interest from date at the rate of five per cent per annum, on which $1500 had been paid and indorsed July 31, 1907. The petition states that “on the
The defendants each filed a separate answer, which, with a general denial, pleads as follows:
“1. Avers that plaintiff has not legal capacity to maintain this suit, in manner and form as the same is brought. Wherefore this defendant prays to be hence discharged with his costs.
“2. For further defense this defendant avers that there is a defect of parties plaintiff, in that said plaintiff, trustee, cannot lawfully maintain this action, in manner and form as the same is brought. Wherefore this defendant prays to be hence discharged with his costs.
1 ‘ 3. This defendant for further defense avers that some of those named as beneficial plaintiffs herein are not necessary parties to a complete determination of the action, and therefore should not have been joined therein. Wherefore because of said redundancy of parties this defendant prays to be hence discharged with his costs.
“4. This defendant for further defense avers that plaintiff, as alleged trustee, is not the real party in interest to prosecute or maintain this action, in manner and form as the same is brought. Wherefore this defendant prays to be hence discharged with his costs.
Plaintiff replied hy general denial.
The note was duly protested for nonpayment at St. 'Louis at the instance of the National Bank of Commerce May 1, 1908, and written on its hack were the following indorsements without date: “Pay to the order of Silver City National Bank, Silver City, N. M. Charles P. Laughlin. Oliver J. Westlake.” “Pay Nat’l Bank of Commerce in St. Louis, or order, Silver City Nat’l Bank, Silver City, N. M. J. W. Carter, Cashier.”
The evidence tended to prove, and was undisputed, that the payees indorsed the note to' the Silver City National Bank, of which the plaintiff was cashier, for collection, with direction to forward it to St. Louis for collection, and to get collection on it, without designating to whom it should he sent in St. Louis. Colonel Carter stamped on it the indorsement to the National Bank of Commerce in St. Louis and mailed it. After it was protested it was returned to the Silver City National Bank, where it remained until the institution of this suit.
Plaintiff introduced the following instrument:
“Oliver J. Westlake, (seal).
“Charles P. Laughlin, (seal).”
“That the said parties of the first part, for and in consideration of the sum of one thousand dollars, to them in hand paid by the said parties of the second part, the receipt whereof is hereby acknowledged, have remised, released and quitclaimed, and by these presents do remise, release and quitclaim unto the said parties of the second part, their heirs and assigns: “All the following described real estate and mining property, situate in the Burro Mountain Mining-District, county of Grant and Territory of New Mexico, to-wit:
“The Ajax Lode mine and mining claim, the location notice whereof is duly recorded in the office of the probate clerk and ex-officio recorder for Grant county, New Mexico, in book 19 of Mining Locations, at page 427.” ' -
Then follows, in the same form, the description of the Ajax No. 2, the Ajax No. 3, the Ajax No. 4, the Princeton, the Hazleton, the Black Oak and the Big Horn Lode mines and mining claims.
The habendum and covenants are as follows:
“To have and to hold the lands, tenements hereby conveyed unto the said parties of the second part, their heirs and assigns forever, and the said parties of the first part do covenant and agree with the said parties of the second part that said mines and mining claims
The defendants took possession of the land described in the deed. The defendant Laughlin was their superintendent and manager, working an adjoining mine called “The National,” and supposed to be their superintendent or general manager. The defendant McManus testified about the possession as follows: “Q. You have held it ever since you received it from them? A. I suppose that would be it.”
Sometime after the conveyance to defendants it was discovered that the whole of the Black Oak claim, containing 21.741 acres, upon which there were several buildings, as well as small fractions of the Hazelton claim (6.050 acres) and the Ajax claim (5.394 acres), in all 33.185 acres, conflicted with surveyed land theretofore patented to one Simmons. The plaintiff proved title to the land conflicting with this patent in the Lyons and Campbell Ranch and Cattle Company and offered a copy of the record of a master’s deed in Grant county, New Mexico, certified by the probate judge and ex-officio recorder of deeds of said county, purporting to convey the same land to the Gila Farm Company, New Mexico, a corporation. This deed recited that the grantor was appointed special master or referee by the district court of the third judicial district of the Territory of New Mexico for the county of Grant in a cause pending in said court entitled “The Farmers’ Loan and Trust Company, a. corporation, Trustee, plaintiff, v. Lyons & Campbell Ranch & Cattle Company et al., defendants.” That they advertised the property for sale in a newspaper published in said county on Tuesday of each week, beginning August 20, 1907, and ending September 17, 1907; that the Gila Farm Company was the highest bidder for it and other property both real and personal at the price of $100,000, for which it was struck off and sold to that company.
The defendants objected to its introduction as follows: “It does not appear by what authority this deed is made, whether it was authorized by the order of court, or what were the circumstances upon which it is based. Nor does it appear that the formal steps of the order under which it purports to have been made were observed. The order itself does not appear. Also this deed is irrelevant to the present inquiry because made on the 19th of September, 1907. On the 14th of May, 1907, there was no sufficient title in these parties to support the deed, which they then made to defendants. I imagine it is intended to be at least a chain of title through subsequent events; all of which is irrelevant because there being nothing but a general denial here by way of reply, the only issue is whether they had the title at the time that this deed of May 14, 1907, was executed and delivered.” No objection was made on the ground that it was a copy or that it was not properly authenticated. The objection was overruled and the deed admitted, to which the defendants duly excepted. The plaintiffs then introduced a general warranty deed in the usual form, conveying all that part of the claims conflicting with the Simmons patent, by the words grant, bargain, sell and convey, from Westlake and Laughlin and their wives to the defendants. This deed was dated May 1,1908. It contained all the usual covenants of seizin, right to convey, against incumbrances and for quiet enjoyment. The evidence tends to show that a general warranty deed dated April 30, 1908, from the Gila Farm Company to Westlake and Laughlin, for an expressed consideration of $18,000, was tendered by plaintiffs to Me
“1. The court instructs the jury that if you find from the evidence that the plaintiff, J. W. Carter, is the holder of the note introduced in evidence, and that the consideration of said note was the transfer of certain mining claims referred to in the evidence from the payees in said note, Westlake & Laugklin, to the makkers of said note, Edward Butler and Thomas Ward McManus, defendants in this case, and that said Butler and McManus were put in possession of said mining claims by said Westlake & Laughlin under their deed of date May 14, 1907, which is in evidence, and that said Butler and McManus have since that time had peaceable possession of said mining claims, then your verdict should be for the plaintiff for the amount of said note with interest, after deducting all payments made thereon.”
The defendants asked the court to instruct peremptorily for each defendant, which it refused to do, to which defendants excepted at the time.
The defendants asked for seventeen other instructions which were refused by the court and exceptions saved to each. These will be noticed in this opinion as necessary.
' II. The note sued on is payable to order, and appellants call attention to the fact that it shows, on its back, a perfect title by indorsement in the National Bank of Commerce, “which,” they say, “under the Negotiable Instruments Law makes this plaintiff an improper party to maintain this action;” and they cite sections 10001 and 10004, Revised Statutes 1909, in support of this conclusion. The first of these sections is as follows : “An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder, completed by delivery.” The other section cited (10004) provides, among other things, that “a special indorsement specifies the person to whom or to
Section 10001 expressly recognizes that a transferee is not always the holder in the sense implied by the act, and this is fully explained by section 10019, which is as follows:
“Where the holder of an instrument payable to his order transfers it for value without indorsing it,
This section conclusively shows that it was not intended by section 10004, or by any other provision of the act, to prescribe any exclusive method by which contracts of this character might be transferred. It only prescribes the manner in which their negotiability, that is to say, their independence of equities existing against the transferor, may be preserved. In other respects it leaves the laws in force at the time of its passage untouched except'in so far as the rights-of the transferee are enlarged by the terms of the section. One of these enlargements is the right to still have the indorsement of the transferor if it has been omitted by accident or mistake,- and to thus become, a holder in du-ecourse. We thus see that the word holder, as used in section 10001 to represent the position of the indorsee, has reference to such a title as may constitute him a “holder in due course” as those words are used in the act. For all other purposes than to preserve its negotiability in the sense we have mentioned, and its negotiability is not involved in this case, the Negotiable Instruments Law of 1905 left this instrument transferable in the same manner and as freely as if it had not been enacted. So far as the right of plaintiff to maintain the action is concerned, it depends upon the right . of the payees at the time of the execution of the contract of June 15, 1908, pleaded and shown by plaintiff as the foundation of his title. It is sufficient in form to constitute him the trustee of the parties to it for that purpose.
III. Before the note became due the payees took the usual steps for the collection of such paper by indorsing it to their local bank, The Silver City National Bank, for that purpose; and that bank in turn, as the custom is in such cases, indorsed and transmitted it to the National Bank of Commerce in St. Louis, the home of the makers, where it must be presented for payment, for the like purpose. Neither of these indorsements gave the indorsee any interest whatever in the note. It simply constituted him a naked trustee of an express trust to collect it and account, like all trustees, for the fund, to whom it might concern. The prevalence of and necessity for such indorsements to meet the demands of commercial transactions which include the world in their field, in which paper drawn in our homes is frequently collected in the antipodes, is no doubt one of the reasons for the growth and firm establishment of the. rule which in its effect transforms commercial paper payable on its face and by indorsement “to order,” into paper payable “to bearer” in the possession of any of its payees and indorsees. In Dugan v. United States, 3 Wheat. 172, perhaps the leading modern case upon the subject, the Supreme Court of the United States formulated the rule as follows: “After an examination of the cases on this subject (which. cannot all of them be reconciled), the court is of opinion that if any person who indorses a bill of exchange to another, whether for value or for the purpose of collection, shall come to the possession thereof again, he shall be regarded, unless the contrary appear in evidence, as the bona-fide holder and proprietor of such bill, and shall be entitled to recover, notwithstanding there may be on it one or more indorsements in full subsequent to the one to him, without producing any receipt or indorsement back from either of such indorsees, whose names he may strike from the bill, or not, as he may think proper.” This case was decided
Applying these principles: The plaintiff brings tMs note into court with a written contract by which the payees appoint him trustee for its collection and application to the purposes stated. He does not claim to hold it for himself, but for the payees. The instrument of appointment expressly negatives any interest in the plaintiff by reserving to the payees the right to collect it themselves. The payees having, through their agent, the possession of the note, are, under the statute, the holders of it, having the right to sue for its collection, and having that right they have the right under section 1730, Revised Statutes 1909, to contract, either orally or in writing, with the plaintiff to sue for their benefit and the benefit of others to whom they desire to appoint the proceeds. It is not necessary that they should prove, or that the plaintiff should prove for them, that they are the holders. The law
IY. The question of failure of consideration is next interposed as a defense. In approaching this it is well to say that there is nothing in either the pleadings, proof or position of the parties to the transaction that carries a hint of unfairness or undue advantage. Each ox the parties had active interests in the particular locality where the mining property which was the subject of the transaction is situated, and, so far as appears in the evidence, they had equal opportunities to judge of its value. It is conceded by the plaintiff that, at the date of the deed, the title of the grantors to one of the eight claims that constituted the consideration of the note sued on, and also to a small portion of each of two others, was defective. Whether this, under the pleadings and evidence, constitutes a defense to this suit on the notes is the question.
In this inquiry we are still aided by the Negotiable Instruments Law. It provides (sec. 9999): “Absence or failure of consideration is a matter of defense as against any person not a holder in due course; and partial failure of consideration is a defense pro tanto, whether the failure is an ascertained and liquidated amount or otherwise.”
The answers stated that the sellers and payees in the notes given for the mining property warranted the title to be sound and good, that it was not sound and good, wherefore the consideration of the notes had failed. The case was tried by defendant upon that theory alone. No evidence was given as to the value or relative value of the land to which the defective
“If you believe from the evidence that the note sued on in this action was' executed and delivered by defendants to Oliver J. Westlake and Charles P. Laughlin, as part consideration for the purchase by defendants from said Westlake and Laughlin of certain interests in real estate, to-wit, mining claims, in the county of Grant, Territory of New Mexico, and that a conveyance thereof was made, as shown by the deed offered in evidence herein, dated May 14, 1907; and if you further find that, at the time of said conveyance to defendants, said Westlake and Laughlin did not have title to a portion of said property so conveyed, and did not then have good right to sell and convey the said interests (described in said deed), but that the title thereto was (at the time said note was executed and delivered) in a person or persons or corporation other than said Westlake and Laughlin, and if you further find from the evidence that said property named in said conveyance consisted of contiguous mining claims, and purchased by defendants for mining purposes, then your verdict should be for defendants.”
Having tried the case upon the theory that the fail-, ure of the title to any part of the mining claims which constituted the consideration of the note was a complete defense to this action, and having asked the court to so instruct, it is now too late to ask a retrial upon a theory, and calling for a line of evidence, not suggested in the case we now have before us. [Tube Works Co. v. Ice Machine Co., 201 Mo. 30, 59.]
VI. The note in suit imported a consideration, and the burden rested upon the defendants to prove affirmatively that it was lacking or had failed. The answer admitted that the consideration was the transfer to defendants of certain mining property with a warranty of title, and that the title was defective. The word transfer implies delivery of possession. They could not have chosen a broader word to express it. Bouvier defines it as “the act by which the owner of a thing delivers it to another with the intent of passing the right he has in it to the latter.” To the same effect are Ex parte Thomason, 16 Neb. 238, and Robertson v. Wilcox, 36 Conn. 426. If the possession of the property had not been delivered to defendants, or if they had been deprived of any part of it on account of failure or defect of title, the burden was on them to show it. But even were Ibis burden upon the plaintiff it was well sustained. The statement of Mr. McManus already quoted amounted to an admission that the possession had been delivered to the defendants and that they had held it up to the time he testified.
We find no error against the appellant, and the judgment of the St. Louis City Circuit Court is affirmed.
PER CURIAM. — This cause having been transferred to Court in Banc from Division One, on the dis