126 P. 688 | Utah | 1912
Appellant, as indorsee of a negotiable promissory note, sued the responden,ts as the makers thereof. Judgment was entered in favor of respondents, from which appellant has appealed to this court.
■ The material facts, briefly stated, are as follows:
On August 24, 1907, respondents, made and delivered their certain promissory note for the sum of $519, payable in three years from date, with eight per cent, interest to one James D. Lewis or order. On January 8, 1908, respondents made a payment of $100 on said note, which was indorsed thereon, and thereafter paid $300 more to be applied thereon, but which was not indorsed on the note, leaving, as respondents believed, unpaid of the principal of said note the sum of $119. Afterwards, to wit, on August 1, 1908, said Lewis, as evidence of an indebtedness for lumber theretofore purchased from appellant, made and delivered his certain promissory note for the sum of $519 payable - after date to appellant or order, and, as collateral seu curity to secure the payment of said note, indorsed and delivered to appellant the note sued on in this action. The only payment that was indorsed on the note sued on was the sum of $100, and appellant received and accepted the note without notice of any payments except said sum, and received the same in due course of business and in good faith before maturity. Before this action was commenced, respondents offered to pay and tendered appellant the sum of $119.75, the amount they believed to’ be- due on said note, and appellant refused to receive the same, and brought this action to recover the whole amount except the $100 aforesaid.
In view that the question is novel in this jurisdiction, and because of its importance, we shall briefly refer to the latest cases in which the negotiable instruments law is construed and applied to the question now under consideration. The parts of the negotiable instruments law that are directly involved are found in Comp. Laws 1907, in the following sections :
“Sec. 1578. Where value, has at any time been given for the instrument, the holder is deemed a holder for value in respect to all parties who. became such prior to that time.
“See. 1579. Where the holder has. a lien on the instrument, arising either from contract or by implication of law, he is deemed a holder for value to the extent of his lien.”
Respondents’ counsel contends that section 1606 of that compilation should also be considered in connection with the foregoing sections. That section reads as follows:
“When the transferee receives notice of any infirmity in the instrument or defect in the title of the person negotiating the sarnie before he has paid the full amount agreed to be paid therefor, he will be deemed a holder in due course only to the extent of the amount theretofore paid by him.”
The first three sections referred to above have in the following recent decisions been construed and applied.
In Brooks v. Sullivan, 129 N. C. 190, 39 S. E. 822, decided in 1901, the Supreme Court of North Carolina assumes without comment that the first three sections of the negotiable instruments law above quoted required the court to hold that the transfer of a negotiable instrument before due in due course of business and without notice as collateral security for a pre-existing debt constitutes the transferee a holder for value, and as such is protected the same as any innocent purchaser for- value before maturity and without notice of equities or infirmities would be. The Supreme Court of North Carolina prior to this decision had held to the contrary doctrine.
Graham, v. Smith, 155 Mich. 65, 118 N. W. 726, decided in 1908, taires precisely the same view that is taken by the Supreme Court of North Carolina. The Michigan court also changed its holdings, as it is said, to harmonize them with the negotiable instruments law.
Voss v. Chamberlain, 139 Iowa, 573, 574, 117 N. W. 269, 19 L. R. A. (N. S.) 106, 130 Am. St. Rep. 331, decided in 1908, adopts tbe rule laid down in tbe foregoing three cases. In tbe Iowa case there was perhaps some additional consideration which would have been held' sufficient under tbe minority rule, but tbe court places tbe decision upon both grounds; that is, upon tbe new instruments law and' also upon tbe additional consideration if indeed there was such.- It is assumed by tbe Iowa court without discussion that tbe negotiable instruments law makes a bolder under tbe facts and circumstances we have set forth above a holdter for value, and as such is protected against prior equities of which be bad no notice.
Tbe case of Commercial Bank v. State Bank, 132 Iowa, 706, 109 N. W. 198, which, in some respects, may be said to differ from tbe doctrine laid down in tbe Voss Case, is not referred to in tbe later ease. In a later case still, however, namely, Iowa National Bank v. Custer, 144 Iowa, 715, 123 N. W. 237, the Voss Case is referred! to, and it is assumed in tbe later case that tbe question was decided in accordance with tbe holdings referred to in North Carolina and Michigan.
In Birket v. Elward, 68 Kan. 295, 74 Pac. 1100, 64 L. R. A. 568, 104 Am. St. Rep. 405, 1 Ann. Gas. 272, decided in 1904, tbe Supreme Court of Kansas squarely bolds that, an indorsee of a negotiable instrument taken as collateral security for a pre-existing debt without any other or further consideration is a bolder for value, and thus protected1 against all claims of payments made to tbe original bolder of which tbe indorsee bad no knowledge or notice. Tbe Kansas court also places1 the ruling squarely upon tbe negotiable instruments law. Tbe later ease is reported in 1 Ann. Cas. 272, where, in a note, tbe cases for and against tbe question are collated.
In Wilkins v. Usher, 123 Ky. 697-702, 97 S. W. 37, it is squarely held that the laiw in Kentucky under the negotiable instruments law is now settled in conformity with the majority rule. To the same effect is Campbell v. Bank, 137 Ky. 555, 126 S. W. 114.
An intelligent discussion is found in a note to Exchange National Bank v. Coe, reported in 31 L. R. A. (N. S.) 287, where the cases are again reviewed on both sides.
We have referred only to such cases ias had under consideration the precise question presented for decision here, and,
The judgment of the district court is therefore reversed, with directions to grant a new trial, appellant to recover costs.