Aрpellant is a national banking corporation with its principal place of business at Salt Lake City, Utah. The Sweet Coal Company, a Utah corporation, mined and sold coal to purchasers. Respondent, Stirling, a resident of Pocatello, conducted a business at the latter place and among other things was operаting a retail coal business.
This action is brought upon what is commonly called a trade acceptance, a commercial paper, in the form of a draft. The face of the draft reads as follows:
*126
*127 On the. back of the paper are the following endorsements:
*128 The trade acceptance was given by respondent acceptor to the Sweet Coal Company for the purchase of coal. Upon accepting and signing the draft, Stirling directed that it be paid through the First Security Bank at Pocatello. February 9,1940, the trade acceptance was endorsed by the Sweet Coal Company and sold to appellant for $2700 and that amount was passed to the credit of the' Coal Company. February 27th, interest due was charged by the bank to the account of the Coal Company. Since the purchase of the trade аcceptance, the Sweet Coal Company passed into receivership.
The cause was tried tо the court with a jury. At the close of the testimony, defendant renewed his motion for nonsuit. Motions for directed verdict were made by both defendant and plaintiff. Stipulation entered into between counsel, that the jury be discharged and thе court take the case and decide it, was approved by the court. Whereupon judgment was entered, dismissing plaintiff’s complaint and awarding costs to defendant, from which judgment defendant has appealed.
The instrument above, set forth, upon which this action was instituted, was negotiable under our statute. Secs. 26-101, 26-108, 26-901, 26-1011, I.C.A. Respondent by his acceрtance became primarily liable as acceptor for payment of the instrument. (Sec. 26-503, I.C.A.;
Harris v. Sainsbury,
The paramount question arises as to whether appellant was a bona fide holder of this instrument “in due course.” It can not be denied that the endorsement of the bill by the drawer, after acceptance by respondent, “for deposit only”, was a restrictive endorsement. (Secs. 25-1304, 26-308, I.C.A.;
Soma v. Handrulis,
This presents the problem of determining whether or not the drawer of the bill, after endorsing it “For deрosit only”, could then sell the paper to the bank in which the deposit was made, take the cash value and thеreby convert the bank (appellant here) into a bona fide holder in due course, as against the drawer аnd acceptor. It has been held, under a statute like our sec. 26-319, I.C.A.,
1
(sec. 48, Uniform Negotiable Instruments Act) that one who had authority to endorse and deposit commercial items “had authority to waive the restrictive character of a specific endorsement which he himself had placed on them and to collect them as though thеy had been generally endorsed.”
(Glens Falls Indemnity Co. v. Palmetto Bank, 4
Cir., 104 F. (2d) 671;
Jerman v. Edwards,
29 App. Cas. (D.C.) 535;
Robinson v. Gentry,
(Mo. App.)
The only reason for denying such authority seems to be the desire of proteсting the acceptor until such time as he receives from the drawer the goods or other consideration fоr which the acceptance was made; in other words, to preserve his right of defense on grounds of failure of consideration. However, since the bill shows on its face that “it arises out of the purchase of goods from thе drawer”, but fails to disclose whether or not the goods have been delivered, there is nothing on the face of thе bill to give notice or put the purchaser of the bill on inquiry as to whether or not the delivery of the goods has beеn made, or the terms of any extraneous contract.
(Bartoshesky v. Houston Trading Corp.,
“The holder of negotiable instruments is not bound at his peril to be on the alert for circumstances which might possibly excite the suspicions of wary vigilance; he does not owe to the party who puts paper afloat the duty of active inquiry in order to avert the imputation of bad faith.” (Citing cases.)
(Pacific States A. F. Corp. v. Addison,
As between the purchaser for value of negotiable paper' and the maker or acceptor who puts it in сirculation, the loss, if any arises, should fall upon one who places it in circulation.
Judgment reversed and casе remanded with direction to the trial court to enter judgment for appellant. Costs to appellant.
Notes
“26-319. Striking Out Indorsement. The holder may at any time strike out any indorsement whiсh is not necessary to his title. The indorser whose indorsement is struck out, and all indorsers subsequent to him, are thereby relieved from liability on the instrument.”