Garesché v. Chouteau

37 Mo. 413 | Mo. | 1866

Holmes, Judge,

delivered the opinion of the court.

The note sued on was drawn payable to the order of the defendants, the payees, who endorsed it to the plaintiff. It was not expressed to be for -value received, nor did it contain the words “ negotiable and payable, without defalcation.” The decision of the case depends upon the construction of the instructions which were given for the plaintiff. They are predicated upon the assumption that the note imported a valuable consideration, both as between the maker and payees, and as between the endorsee and endorsers. The question is whether this construction be correct under the statute concerning bonds, notes, and accounts. (R. C. 1855, p. 319.)

it is declared by this act that all notes in writing, payable to order or bearer, for any sum of money or property, though not expressed to be for value received, shall import a consideration, and be due and payable as therein mentioned. They are declared to be assignable in writing, or by endorsement, so that the assignee may maintain an action on them in his own name ; but the assignee shall obtain no greater title or interest in them than the assignor himself had at the time, or before notice to the maker; and the maker may avail himself of any defence against the assignee that he could have made against the assignor. Protest and notice are dispensed with, and, in place thereof, the right of the assignee to sue the assignor is made to depend upon his using due diligence to sue the maker, unless he be insolvent, or a non-resident. Under the law merchant, notes were written promises to pay money ; and if they were made payable to order, or bearer, or assigns, they were negotiable; that is, they contained words which made them assignable, transferable, or negotiable ; but if they did not contain such words, they could not be transferred or negotiated, so as to enable the assignee to sue in his own name, and they were non-negotiable notes. (8 Kent, 90; Sto. Prom. Notes, §§ 43-4.) Such negotiable notes implied value received without those words being inserted in them, and there arose, prima facie, a presumption of validity and of a valuable consideration, and the burden of proof was shifted upon the other side. An endorsement by the payee of such notes raised an implied contract that the endorser had a good title to the note, and that it would be paid by the maker, or if not, that the endorser would pay it himself, upon protest and notice ; that is, a valuable consideration was implied as between the endorser and the endorsee, as well as between the payee and the maker. (3 Kent, 108.) The statute dispenses with this implied warranty of good title, as well as with the protest and notice, and substitutes in place of it an implied warranty only of as good a title as the assignor himself had at the time of the assignment ; but there is nothing in the act which dispenses with the implied warranty or prima facie presumption of a valuable consideration, whether as between the assignor and the assignee, or as between the payee and the maker. It is expressly declared that such notes shall import a consideration, and be assignable in writing, or by endorsement, so that the assignee may maintain an action on them in his own name, either against the maker, or against the assignor. If a consideration were not to be implied, the contract on the face of the note would be nudum pactum, and no action could be maintained on it; or, if he could aver and prove a specific consideration, as upon a mere contract, he would have no occasion to invoke the aid of the act; he could do that on the general principles of the law of contracts; and a construction which should require that, would render the assignability or negotiability created by the act next to useless, if not wholly nugatory.

Such notes contain words of assignability and negotiability in the sense of the law merchant, as well as in the sense of the statute. They create a privity of contract resting on the original consideration. Under the law merchant, notes containing no words of negotiability or assignability were for that reason non-negotiable, and the endorsement or assignment of them did not enable the endorsee or assignee to sue on them in his own name at law, though he might do so in equity. (Sto. Prom. Notes, § 128.)

In such case there was no privity of contract between the assignee and the parties antecedent to his immediate assign- or ; though even then, as between the payee and his immediate endorsee, the endorsement will ordinarily create the same liabilities and obligations on the part of the payee as in case of negotiable notes (Sto. Prom. Notes, § 128); and there are authorities which hold that, in such case, a consideration will be implied both at law and in equity. (Mackie’s Ex’r v. Davies, 2 Wash. 219; Stapp v. Anderson, 1 A. K. Mar. 538; 3 A. K. Mar. 305; Biddle v. Mandeville, 5 Cranch, 332.)

In fact, under our laws, there are three classes of notes. The first consists of notes which are negotiable within the meaning of the act concerning bills of exchange. Being expressed to be for value received, negotiable and payable without defalcation, they are negotiable in like manner as inland bills of exchange.

The second class consists of notes which are drawn in accordance with the provisions of the act concerning bonds, notes and accounts, and which, as such, possess a qualified negotiability only. They are negotiable notes, under the restrictions and limitations of that act.

The third class may consist of notes which are utterly nonnegotiable under either statute, ar by the law merchant. This class will certainly include all such notes as are not drawn payable to order, or bearer, or assigns, and contain no words of negotiability that can make them assignable under the statutes, or otherwise than in equity.

The note in question here was not a non-negotiable note, but a negotiable note, having the qualified negotiability that is given to such notes by the statute; and, being such, a valuable consideration was implied in the endorsement of it, prima facie, as a presumption of law, between these parties, as well as between the maker and the payees. The burden of proof rested upon the defendants to rebut this presumption. In Muldrow v. Agnew, 11 Mo. 616, an instruction to this effect was said to be well enough; and in Odell v. Pres-bury, 13 Mo. 330, where the question was upon'a note of the same kind, payable to order, the court expressed the opinion that “ the blank endorsement of a note not negotiable under our statute [that is, the statute concerning bills of exchange, but negotiable in the sense of the act concerning bonds and notes] should be held to ba prima facie equivalent to an assignment for value, subject to be filled up by any subsequent assignee.”

We are not aware of any case which has given a different construction to this act. A consideration being implied by law, and the force of the statute, it was, of course, unnecessary for the plaintiff to aver and prove a specific consideration in order to sustain his cause of action. (Bristol v. Warner, 19 Conn. 7.)

A number .of cases have been cited on the other side of the question, and among them the cases of Whistler v. Bragg, 31 Mo. 124, and Elliott v. Thralkeld, 16 B. Mon. 343; but these cases, so far as the reports show, were founded upon notes which contained no words which made them assignable, transferable, or negotiable. They were upon notes non-negotiable under the law merchant, as well as under the statutes; and the cases are not in point here. Such appears to have been the case in Duncan v. Littell, 2 Bibb. 242.

The defendants excepted to the exclusion of certain conversations between the witness and one of the assignors, about endorsing the note, before it was done. The assignor of a note is not a competent witness to facts occurring anterior to the assignment, and his conversations with the witness in the absence of the plaintiff were mere hearsay at best. His statements might have been admissible against him, but certainly not in his favor. We think the testimony was properly excluded.

There was no basis in the evidence for the instruction which was asked by defendants, and it was rightly refused.

Upon the principles above established, the first three instructions given for the plaintiffs laid down the law correctly enough.

The fourth instruction was to the effect that there was no evidence in the case that the note sued on was given in consideration of any money of Victoire Labadie, or that said note was ever her property. This proposition is in general terms the converse of that propounded in the instruction which was refused for the defendants.

As applied to the issue on trial, it is not very clear what they mean. If it were, as it would seem, that there was no evidence which tended to prove that the consideration of the note was money of Mrs. Labadie, which she had entrusted the defendants to loan to a person selected by her; that she took the responsibility of the loan on herself; and that the note was • drawn payable to the firm by mistake, when it should have been drawn payable directly to her; and that being so drawn, it was endorsed for the mere purpose of transferring the legal title, then, we think, the instruction was properly given, for the same reasons that the defendants’ instruction was rightly refused. The evidence, so far as it showed anything, rather tended to prove that the firm had taken this note on their own responsibility ; and if it were true, as the defendants seemed to contend, that they had loaned money on that note which belonged to Mrs. Labadie, without her knowledge or direction, and had the note drawn payable to themselves, a jury might very well b§ warranted in inferring that they intended to place themselves between her and the risk of loss, and that the true consideration for the endorsement was the money which Mrs. Labadie had already put into their hands. But it is not our province to discuss the evidence. ’

There was certainly no evidence to support the proposition contained in the instruction as-therein stated. Upon the ground of newly discovered evidence, we do not think the ca'se made was sufficient to warrant us in interfering with the discretion of the court below'.

The burden of proof was on the defendants to rebut the prima facie case made by the plaintiff.

There is no error in the instructions; and the verdict being for the plaintiff on the facts, the judgment must be affirmed.

The other judges concur.