185 P. 415 | Cal. Ct. App. | 1919
This action was brought by plaintiff, appellant herein, to recover judgment on a promissory note for five thousand dollars, dated May 13, 1913, executed by defendant Alex T. Crane, and made payable one year after date to the order of C. W. McKee and Kit Carson, defendants herein. Before maturity the note was indorsed and delivered to appellant, together with three other promissory notes, the four notes amounting to the sum of fourteen thousand five hundred dollars. These notes were transferred by defendant Crane to plaintiff in payment for certain real property situated in the city of San Diego. To secure their payment a declaration of trust was entered into by the parties, under which the property was conveyed to a certain trust company, to be held by it in trust and until the notes were paid, or to be sold by the company in the event of the nonpayment thereof. For failure to pay two of the notes when they became due the trust company sold the real property as provided by the terms of the declaration of trust.
As a defense to the note sued upon defendant claimed that it was non-negotiable and that he had been induced to execute the same through fraud on the part of the payees. Plaintiff claimed, however, that the note had been transferred to him before maturity in due course and for a valuable consideration, and that the defense of fraud could not be set up as against him. The trial court found the instrument to be negotiable, and that the plaintiff had acquired it before maturity, duly indorsed, in good faith, and without any notice, information, or knowledge whatever of any claim of defendant that he had any defense thereto; but further found that defendant was induced to sign it by fraud, and that plaintiff did not acquire it in the usual course of business or for a valuable consideration, and accordingly rendered judgment in favor of defendant Crane. Judgment went against Carson by default.
The principal contention in the court below related to the question as to whether or not the instrument sued upon was a negotiable promissory note. Defendant claimed that it was non-negotiable by reason of certain conditions therein contained. The finding of the trial court being against him upon this question, he presents the same objection here.
*561The note reads as follows:
"$5,000.00. San Diego, Cal., May 13, 1913.
"On or before one year after date, for value received, we or either of us promise to pay to the order of C. W. McKee at the Merchants' National Bank of San Diego, the sum of $5,000.00 with interest thereon at the rate of 7% per annum from date until paid, payable annually, and if not so paid to be compounded and bear the same rate of interest as the principal; and should the interest not be paid when due then the whole sum of the principal and interest shall become immediately due and payable at the option of the holder of this note. All payable in U.S. gold coin, and should suit be commenced or an attorney be employed to enforce the payment of the note we agree to pay an additional sum of one per cent on principal and accrued interest as attorney's fees in such suit.
[1] Two reasons are urged by respondent in support of his contention that the note is not a negotiable instrument. The first of these is that the provision, "Should an attorney be employed to enforce the payment of this note, we agree to pay an additional sum of one per cent on principal and accrued interest as attorney's fees," brings about this result. This contention is based upon the construction given to a similar provision by our supreme court in Adams v. Seaman,"ALEX. T. CRANE, "KIT CARSON."
In Glen v. Rice, 174, Cal. 269, [
For the reasons given we conclude that the court correctly determined that the note was negotiable.
[3] We are of the further opinion, however, that the evidence fails to support the findings of the trial court that the appellant did not acquire the note in the ordinary course of business, and that he did not acquire it for value or pay a valuable consideration for the transfer and delivery thereof from McKee to himself. The evidence upon this subject is without conflict. Appellant owned and sold his land in San Diego to McKee for the sum of fifteen thousand dollars. Five hundred dollars was paid in cash and the balance by four promissory notes, two of which were signed by defendant McKee as maker, and the remaining two by defendants Crane and Carson, as makers, in favor of defendant *563
McKee and indorsed by him and delivered to plaintiff at the time the contract of purchase was made. No fraud on the part of plaintiff is charged. The evidence of defendant Crane himself affirmatively shows that plaintiff visited him and informed him of the transaction, and asked him if the notes were good, and was informed by Crane that they were and that he had signed them. Under these circumstances we fail to see how the notes were not acquired for value and in the usual course of business. [4] As applied to commercial paper, the term "in the usual course of business" means the delivery for value under such circumstances that a business man of ordinary intelligence and capacity would give his money, goods, or credit for it when offered for the purpose for which it was transferred. (2 Raad on Commercial Paper, sec. 988.) And one who receives a note in exchange for real property acquires it in the usual course of business (Cunningham v. Holmes,
Here there is no claim, and the evidence presents no facts which show any fraud or lack of fair dealing on the part of plaintiff. He suffered a detriment by being deprived of a right to dispose of his land during the time the property was held in trust.
We conclude, therefore, that the note was acquired by plaintiff for value and in the usual course of business, and without any notice of fraud, and before its maturity.
For the reasons given the judgment appealed from is reversed.
*564Richards, J., and Waste, P. J., concurred.