179 Ky. 672 | Ky. Ct. App. | 1918
Opinion op the Court by
Reversing.
A concern -styling itself the Puritian Manufacturing Company, Chicago, New York, Winnipeg, and Toronto, entered into a long printed contract with the Union Store
“Chicago, UL, June 30, 1910.
“For value received the undersigned promises to pay at Chicago, 111., to the order of the Puritian Mfg. Co.
“Three Hundred Dollars, as follows:
A discount of 5% will $100. 3 months after date, be allowed if the full
amount of this instrument $100. 4 months after date, is. paid at maturity of first
installment. $100. 5 months after date.
“P. O. Beuchel, Ky., R. F. D. No. 12.
“Union Store Co.,
“By J. B. Reid, Mgr.”
Immediately upon the execution and delivery of the printed contract aforesaid, the obligation attached to it, below the dotted line, was detached and placed with the Johnson-County Savings Bank, Iowa City, Iowa, as collateral to a note executed by the Puritian Manufacturing Company, and by that bank transferred to J. C. Stouffer, who it is alleged furnished the money, and by said Stouffer endorsed and delivered to the plaintiff, C. W. Harrison, for collection only. Harrison instituted this action on the note in the Jefferson circuit court to recover the three hundred dollars of 'the Union Store Company. The amended petition alleges that Harrison is the holder for collection only. A demurrer interposed to the petition as amended-was sustained, and the plaintiff declining-to plead further the action was dismissed. The amended petition was not supported until after the answer of defendant had been filed. By its answer the Union Store Company alleged that at the time of the execution of the writing sued on the store
It is very doubtful from what appears in the record whether the plaintiff, ITarrison, or his assignor, occupies the position of a holder for value in due course. There are many indications of fraud and deceit connected with this contract and note. The long printed paper looks quite innocent when examined as one agreement, but it presents quite a different aspect when the note is detached at the dotted line. It is alleged, and no doubt sustained by the facts, that the drummer who obtained this contract from the store company gave no hint that in the writing was cunningly concealed a promissory note, which, when detached and negotiated at a. duly constituted bank, would be placed upon the footing of a hill of exchange against which the maker, could interpose no equitable defense. So careful were the drafters of this printed contract in the selection of words not calculated to excite the suspicion of the merchant that the
Under the expression “the detachable agreement below” are several heavy black lines running entirely across the page. Between two of these lines are these words, “this agreement is subject to the conditions printed on the back hereof.” Immediately under this is the following:
“Chicago, Ill., June 30th, 1910.
“Puritian Manufacturing Co.
‘ ‘ Gentlemen:—
“Please ship the undersigned one Krause piano mahogany finish, together with the advertising matter and goods described above upon the terms and conditions herein, and no others, all of which I understand and approve.
(Signed) “ J. B. Reid, Mgr.
^ By........................................................................
“Puritian Manufacturing Co.,
“By L. H. Peyton, Salesman.
“Freight station........................................................................;
“Express Station...................................., State...........................................”
Next on the page is a dotted line also running entirely across the page. This line, however, is not perforated. Below this line is the promissory note above set forth.
No doubt the Union Store Company’s name was placed to the long printed contract with no thought that the paper, or some part thereof, was negotiable, or that the Puritian Company or its agents- would detach a material part of it and attempt to place it in the hands of an innocent purchaser.
There is a well-recognized rule that renders a maker of a paper liable to an innocent holder for value even if the paper has undergone a material change, or has been detached from a collateral agreement if the maker of the paper, through his negligence or carelessness, placed the fraud within easy reach of a subsequent holder. This, rule is rested upon the principle that as between an innocent holder and one culpably negligent, the -
The demurrer of defendant to the petition, as amended, should have been overruled by the trial court and the parties allowed to,plead to an issue, and this should be done upon a return of the case. As holder of the note for collection Harrison was entitled to maintain the action as has been held by this court in Harrison v. Pearcy & Coleman, 174 Ky. 485; Dorherty v. First National Bank, 170 Ky. 813.
Judgment reversed, for proceedings consistent with this opinion.