198 Mo. App. 236 | Mo. Ct. App. | 1918
Plaintiff’s petition is - in equity whereby he seeks to have ascertained and declared which of three holders of three separate sets of promissory notes of three each, each set purporting to be secured by the same deed of trust, is entitled to priority; that is to say, which set should be considered as secured by deed of trust to the exclusion of the others.
Plaintiff has become the owner of the real estate described in the deed of trust and alleges in her petition that she paid one thousand dollars on the principal of the note for five thousand dollars, now held by Heaton and interest on two notes of five hundred dollars each. She alleges in her petition that she does not know which of the three sets of notes are the ones really secured by the deed of trust, but that if the Court finds that the notes held by Schwartz are the true notes that then the payment made and credited on the Heaton notes, as aforesaid, be credited on the Schwartz notes, and that any effort made to sell the land under the deed of trust be enjoined until such credit is made.
These notes were thus executed in triplicate by C. M. Young and his wife. One was for $5000, due in three years, one was for $500, due in* four years, and one was for $500, due in five years, each payable to J. S. Chick Investment Company or order, each dated September 1, .1911, and each bearing' six per cent interest.
It appears that the Chick Company held the set of notes now owned by- defendant Heaton for nearly two months, when on October 21, 1911, it (through Chick) negotiated them to the Southwest National Bank of Commerce as collateral for a loan, by the following endorsement: “Por value received J. S. Chick Investment Co., hereby assigns and transfers this note to -or order, without recourse, together with all its interest in and rights under the deed of ' trust securing same. J. S. Chick Investment Co., J. S. Chick, Jr., President.” On October 30, 1911, Chick took them up from the bank and on November 2, 1911, he negotiated them to plaintiff Casner as collateral by •same endorsement and again, on January 19, 1912, took them up; and on the same day again negotiated them to the Southwest National Bank of Commerce as collateral for another loan, and again, on March 19, 1912, he took them up, and on the same day negotiated them by same endorsement to Jobes. Then, after néarly three years, on January 28, 1915, he took them up from Jobes and on same day sold and negotiated them by same- endorsement, to defendant Heaton, who now holds them.
Chick on January 18, 1912, sold and negotiated by same character of endorsement another set of the triplicate issue to. Schwartz and he has held them since.
It will be noted that the notes now claimed by defendant Heaton were the first to be negotiated by Chick. They were negotiated to the bank in October, 1911, while those held by defendant Schwartz were
But it will be noted that the notes finally getting to and now held by Heaton were, after their first endorsement, several times taken up by Chick and again endorsed by him to other parties. The last time they were in Chick’s hands and re-negotiated by him was January 28, 1915, when he took them up from Jobes and then sold them to defendant Heaton. This was more than three years after Schwartz bought his set, which, as we have sáid, he still holds.
But when Chick took up the notes from his various endorsees and re-negotiated them, they, each time, became a reissue by Chick, so that when he took up the notes and again 'negotiated them to Jobes and then to defendant Heaton, it was a new issue (Kelly v. Staed, 136 Mo. 430; Sater v. Hunt, 66 Mo. App. 527; Hawkins v. Weist, 167 Mo. App. 439; Devens v. Van Valkenburgh, 192 Mo. App. 215), and being subsequent to the issue to Schwartz, it left the latter, in point of time, with a superior claim to the lien of the deed of trust. Being .a new issue, the line of negotiation, in regular course with consequent rights of innocent endorsees, was broken and they were freed from any past negotiation and stood in Chick’s hands as though never negotiated by him.
This view is supported by another rule of law, viz, that though one with knowledge of the infirmity of a note may purchase it from any innocent holder and get good title, freed from defense by the maker, “this .rule does not reach so far as to include the original payee who may, in the course of business, again become the owner of the note; since he is the original wrongdoer in negotiating the note and would be liable
So we are of the opinion that Chick having sold the notes to Swartz on January 18, 1912, and on the next day (January 19th) having taken up the Heaton notes, the latter notes became as though never issued and his act resulted in protecting the Schwartz notes and giving them first place in the' lien of the deed of trust — a place they could not lose by any subsequent act of Chick.
The foregoing views lead to a reversal of the judgment and remanding of the cause with directions to enter a decree for Schwartz.