Glines v. State Savings Bank

132 Mich. 638 | Mich. | 1903

Grant, J.

(after stating the facts). A. Ives & Sons were in fact insolvent. Plaintiff received no consideration from them for the transfer and deposit of the check. Whether they knew, or should have known, that they were insolvent, or whether they had no reasonable ground for expecting to repay the plaintiff, it is not necessary to determine. We will dispose of the case upon the question whether there is any evidence in the record to hold the defendant liable on the ground that it had knowledge of such facts as to show it to have been a mala fide purchaser of the check.

Checks are deposited as cash, pass current as cash, the amount thereof paid out by the bank as cash, and the same check is often used to liquidate several debts. Oftentimes the holder of a check obtains cash for it from a bank instead of depositing it.

Plaintiff seeks to hold the defendant liable under Mace v. Kennedy, 68 Mich. 389 (36 N. W. 187), and Goodrich v. McDonald, 77 Mich. 486 (43 N. W. 1019). Those were cases of fraud in the execution of promissory notes. They recognize the rule that whenever a note is based upon fraud, or is void as between the original parties, the burden of proof is then upon the holder to show himself to be a purchaser in good faith. These same cases, however, and many others, recognize the rule that, where there is nothing upon the face of the promissory note to cast suspicion upon it, it is valid in the hands of a holder for value, without evidence that he took it under circumstances which render him guilty of bad faith. It is not enough that the circumstances be suspicious, or sufficient to put a prudent man upon inquiry; they must be such as to show mala jides on his part. Stevens v. McLachlan, 120 Mich. 285 (79 N. W. 627), and authorities there cited; Davis v. Seeley, 71 Mich. 209 (38 N. W. 901).

The fact that one of the firm of A. Ives & Sons borrowed money of the defendant, and gave security for it, is no evidence of insolvency or of bad faith. Neither was it a circumstance sufficient to put the defendant upon inquiry. As the circuit judge very tersely said in his instructions to the jury, “ It was evidence of good common sense, and no evidence of fraud.” The fact that A. Ives & Sons had withdrawn from the clearing house, if known to the defendant, as it probably was, is no evidence of fraud, or of the insolvency of Ives & Sons. The custom of the First National Bank, and, in some instances, of some other banks, to require certified checks, constituted no notice to the defendant that Ives & Sons were insolvent, that they were engaging in fraudulent transactions, and that the paper received from them was liable to be tainted with fraud. The business in these banks had for months been done in the usual manner, — A. Ives & Sons making deposits and checking out. There is no evidence whatever to indicate that the defendant did not act in the utmost good faith. It had no notice that the plaintiff was a depositor at the bank of Ives & Sons, or whether the check had been deposited or had been cashed. It was conclusively proven by plaintiff’s own witnesses that this check was deposited as cash with the defendant in the usual course of business; that on the same day the defendant paid out its proceeds on A. Ives & Sons’ checks; that it then forwarded it for payment; and that it made no profit what-' ever by the transaction. These facts fully satisfied the law which casts the burden of proof upon the holder of commercial paper tainted with fraud to show good faith, and it was the duty of the circuit judge to direct a verdict for the defendant. See Fredonia Nat. Bank v. Tommei, 131 Mich. 674 (92 N. W. 348).

This disposal of the case renders it unnecessary to discuss any other questions.

Judgment reversed, and new trial ordered.

The other Justices concurred.