Eastern Acceptance Corp. v. Henry, 62 A.2d 309

Eastern Acceptance Corp. v. Henry

62 A.2d 309

D.C.

1948

Check Treatment

CLAGETT, Associate Judge.

This wаs a suit by the holder against the maker of a negotiable promissory note. Decision of the case turns entirely upon whether plaintiff wаs a holder in due course within the meaning of the Uniform Negotiable Instruments Law, in force in the District of Columbia,1 and thus took the note free from dеfenses available to the maker against the payee. The case was tried without a jury, and- the trial court made a general finding fоr defendant. Plaintiff appeals.

The transaction was initiated November 8, 1946, when defendant made a written contract with Patterson-Caulfiеld Corp., whereby it was agreed that the corporation would install for defendant certain storm windows, screens and ventilators. The cоntract was to be completed within from three to six weeks “for a cash sum of $575”, “payable $18.85 monthly for 36 months” — the first payment not to fall due before May 8, 1947. The note sued on' was signed by defendant, dated November 22, 1946, payable to the order of-Patterson-Caulfield Corp. and was in the amount of $678.50, ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍payment “beginning in 62 days.” It was witnessed by the same officer of the Patterson-Caulfield Corp. who had signed the contract. Emphasis is laid upon the fact that the note, which was on. a printed form, was marked payable at the office of plaintiff at its Washington address. Thе note bore two endorsements, both without recourse, the first to the order of the United Clay Products Company, signed by the office manager of the Patterson-Caulfield Corp., and the second signed by an officer of the United Clay Products Company and payable to the order of plaintiff.

An official of plaintiff testified that plaintiff acquired the note November 22, 1946, the day it was made, and that plaintiff took the notе in good faith and for value and at the time had no notice of any infirmity in the instrument or the title of the person negotiating it. He further testified that рrior to suit payments up to November 1947, totaling $188.50, had been made, leaving a balance due of $490, the-amount sued for.

Defendant admitted thе genuineness of-the note, but denied making the payments claimed by plaintiff, and--testified that before the first payment was due under his-contraсt with the Patterson-Caulfield Corp. he had paid the entire amount due under the contract directly to that corporation. Over the оbjection of plaintiff, the trial' court admitted in evidence two checks from defendant to Patterson-Caulfield. Corp., the first dated Marсh 13, 1947, for $100, and the second dated April 25, 1947, for $475. Upon this- evidence, it was the. position of defendant that under his contract he had two alternative ways of paying the obligation and that since he had paid the full “cash price” before the date fixed for the first payment in his cоntract, he was not liable on the promissory note-held by plaintiff. Defendant urged further, that there was such a close association between plaintiff and Patterson-Caul-field Corp. that plaintiff was not a holder in due course of the note. The evidence ■ of closе association relied' upon was prin- - *311cipally that the note form was supplied by plaintiff and that the note was made payable 'at its office, and further that ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍plaintiff had not notified defendant that it held the note until shortly before suit was brought in November 1947.

We have concluded that the position of defendant is not supported by any substantial evidence, and hence that the judgment must be reversed. Defendant offered no explanation why, after he signed a contract November 8 providing that ■payments thereon woiild not fall due earlier than May 8, 1947, he nevertheless signed a note on November 22, 1946, providing that monthly payments should begin in 62 days, or on January 23, 1947. He ■conceded signing the note.. Dеfendant also complains that since he did not make the ten installment payments received by plaintiff, plaintiff should have explainеd how they were made. The record, however, merely recites that plaintiff’s witness testified that so far as his company’s rec■ords indicаted such payments were made .by defendant. Since plaintiff received payments on the note until shortly before suit was filed, we do not bеlieve any inference can be drawn from the fact that plaintiff did not notify defendant that it was the holder of the note.

Defendant reliеs most strongly upon Palmer v. Associates Discount Corporation, 74 App.D.C. 386, 124 F.2d 225, wherein it was held that the plaintiff in that ■case was not a holder in due cоurse. There, as here, the note was made ■ payable at the office of the finance company, ■but there were various оther factors leading to the -conclusion that the finance company was not a holder in due course. The -principal faсtor was that since no testimony had been offered as ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍to the date of the purchase of the note by the finance company the evidence could have been ■construed to mean that it presented the note for payment as agent, which was refused, аnd then purchased the note subsequently. Under such circumstances,' the finance company, of course, was not a holder in due cоurse. There is no such evidence in the present case.

We have examined the other cases cited by defendant and find that eаch contains important distinguishing features. For example, in Catlin v. Reed, 141 Okl. 14, 283 P. 549, 67 A.L.R. 1410, the note involved was made payable at the office of the payee, and it was subsequently :sold to another party, who did not notify the maker that he was the holder. The court properly held that the holder could not complain when the maker continued making the payments to the payee, as provided by the note. A totally different situation exists here where defendant, after signing a note payable at the office of plaintiff, claims he' made payments instead £o the payee. Had he made the payments-to plaintiff, as provided in the noté, he would have had no cause for comрlaint. Payment of a note to a person not in possession of it is at the payer’s peril.2

While knowledge of an infirmity in a negotiable instrumеnt may be established by circumstantial evidence, it' has been .well said that an endorsee’s bad faith or fraud in acquiring a negotiable ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍notе can never be assumed but must be shown by clear and unequivocal testimony and mere suspicion is insufficient to upset the proof offered by plaintiff that it was-- a holder in due course.3 It appears .clear from defendant’s evidence. that he has a cause of complaint against the company with which he dealt, but we must hold that plaintiff established that- it was a holder in due course of the note sued on and hence, under the Negotiable Instruments Law, that it took the instrument free from defenses available between the immediate parties.

Reversed, with instructions to' enter judgment for plaintiff.

Notes

Code 1940, § 28-402.

Davis v. Casey, 70 App.D.C. 27, 103 F.2d 529; see also Uniform Laws Annotated, Negotiable Instruments, ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍§ 119-141, and cases there cited.

Hudson County Nat. Bank v. Alexander Furs, 133 N.J.L. 256, 44 A.2d 73.