104 Minn. 65 | Minn. | 1907
The plaintiff and respondent, a corporation, sought judgment for the principal and interest due on a promissory note dated September 16, 1901, payable to the order of F. S. Woodworth one day after date, for the sum of $6,126, which prior to maturity had been transferred by indorsement to plaintiff. The answer of defendant and appellant for a first defense alleged facts intended to show that as between the maker and payee the note arose out of friendly transactions and did not create a legal obligation, and that the plaintiff was not an innocent purchaser for value before maturity.
For a second defense the defendant alleged “that in the year 1896 he became a purchaser of capital stock of the plaintiff of the par value of $10,000, while the said plaintiff had but an authorized capital stock of $50,000, with only $40,000, par value thereof, outside of plaintiff’s stock outstanding; that defendant paid for his said stock the sum of $10,000; that * * * while defendant so held and owned said stock the said plaintiff duly increased its capital stock to the sum of $100,000-par value; that at the time it made its said increase of capital stock plaintiff was entitled to one-fifth of the increase thereof over and above the said $50,000 upon the payment by him therefor at par value to said plaintiff; that he was then able and willing to pay for the said stock in his proportion thereof, and offered to do so at the par value, and demanded that plaintiff allow him to receive the same and pay therefor; that plaintiff did not either issue said additional stock to
For a first counterclaim the answer asserted the said claim for damages set forth in the second defense; for a second counterclaim, a loan by defendant to plaintiff of $500. The defendant prayed judgment in the sum of $10,726.08, with interest.
The reply put the defenses and counterclaims in issue, and pleaded the bar of the statute of limitations as to the first counterclaim.
At the close of the trial before a jury the court granted plaintiff’s motion to direct a verdict for the amount prayed for. Subsequently $500 was deducted from the verdict by agreement. This appeal was taken from the order denying defendant’s motion for a new trial.
The first question presented by the assignments of error is whether the facts showed plaintiff to be an innocent purchaser for value before maturity. The note fell due one day after date. It was delivered' by defendant to plaintiff on the day of its date, and entered on the books of the company on the next day. It did not become past due until after that day. The trial court, therefore, properly held plaintiff to be a purchaser before maturity.
With respect to the purchase in regular course of business without notice, defendant insists the dealings between him and Woodworth which led to the execution of the note show that it was made as a matter of accommodation purely without consideration, that it was delivered on conditions which have never been fulfilled, and that the knowledge of Woodworth, the president of the plaintiff company, was notice to and knowledge by it of these facts. The record, • however*
Defendant contends that the consideration paid by plaintiff consisted merely of the cancellation of a prior indebtedness, and did not make the plaintiff a purchaser of the note in good faith for a valuable consideration.' It is, however, the rule alike of the English and the American cases that “a bona fide.holder, taking a negotiable note in payment of or as security for a pre-existing debt, is a holder for a valuable consideration, entitled to protection against all the equities as between the antecedent parties.” Mr. Justice Story, in Swift v. Tyson, 16 Pet. 1, 10 L Ed. 865. And see Railroad Co. v. National Bank, 12 Otto, 14, 26 L. Ed. 61; 9 Rose’s Notes on U. S. Reports, 1039. We are referred in this connection by plaintiff to Minor v. Willoughby, 3 Minn. 154 (225) and to Baze v. Arper, 6 Minn. 142 (220). These cases, if inconsistent with the rule that a bona fide indorsee, taking a negotiable in
In the case at bar plaintiff had advanced money for defendant and entered charges therefor upon its books. It balanced the account by crediting on those books the note for total amount of the loans, executed by a third person and accompanied by insurance policies as collateral security, upon the indorsement to it of that note. It is wholly incidental and immaterial that for these insurance policies another was subsequently substituted. The consideration paid by the plaintiff for the note was this allowance of credit and the acceptance of the new obligation payable in futuro for the pre-existing debt payable in praesenti, which included the additional liability of the payee through his indorsement. There is no reasonable question as to the existence of a valuable consideration.
The second question concerns the propriety of the trial court’s denial of defendant’s second defense and counterclaim arising from plaintiff’s conduct in connection with its issue of new stock, and its refusal to allow defendant, a stockholder at the time, to purchase his pro rata' share of such new stock. Defendant insists that the refusal of the company to accept the proffered purchase of additional stock created an express trust, of which the plaintiff was the trustee and Wood-worth the principal; that defendant was not bound as a matter of law to accept the violation of implied contract with plaintiff company, but was entitled to keep it open until he should dispose of the whole matter and treat it as a breach on June 20, 1906, as he had done. By what construction of the actual facts here presented the company can be treated as the trustee of an express trust, in the sense for which defendant contends, we confess to being entirely unable to see. Jones v. Morrison, 31 Minn. 140, 16 N. W. 854, holds the general doctrine
There is no merit in the contention that, if the matter of increased stock should not be held a counterclaim by reason of the statute of limitations, it would be an equitable offset.
Order affirmed.
We have reconsidered the questions presented in this cause, with the result that our former conclusion is adhered to.
The order appealed from is affirmed.