17 S.D. 396 | S.D. | 1903
This is an appeal from a judgment entered on a directed verdict in favor of the plaintiff. The action was brought upon a promissory note executed by the defendants to the Janney Manufacturing Company, and transferred by that company to the plaintiff. ^The defendants, in their answer, set up a warranty on the part of the Janney Manufacturing Company, and claim that the machinery delivered to them was notin compliance with the warranty. It was proven on the part of the plaintiff, and uncontradicted, that before the maturity of the note in suit the same was transferred to the plaintiff bank by the president of the Janney Manufacturing Company, and discounted by the teller of the bank, and the proceeds passed to the credit of the Janney Manufacturing Company, which was indebted to the plaintiff bank in a sum exceeding $10,000; and it further appeared from a cross examination of the president and cashier of the bank that the president of the bank was a stockholder in the Janney Manufacturing Company and its treasurer, and that the cashier of the plaintiff bank was the secretary of the Janney Manufacturing Company, and also a stockholder therein.
The appellants seek a reversal of the judgment.in this case upon four grounds: (1) That the president of the Janney Manufacturing Company was not authorized to transfer the note in controversy to the plaintiff bank, or at least that there was no evidence tendingto show that he was authorized to make the
It is contended by the appellants that the president of a corporation is not authorized to transfer a note belonging to such corporation by virtue of his office as president, and that a transfer by him, unless specifically authorized by the board of directors, does not have the effect to transfer the title. It appears in this case that the Janney Manufacturing Company was engaged in the manufacture of agricultural machinery, and that much of its business was transacted by way of notes taken by it for machinery delivered, and that it was in the habit of transferring such notes to the plaintiff bank by the indorsement of the president. The Janney Manufacturing Company being engaged in a business in which it received notes from its agents and customers, the president, in the ab
It appeared from the evidence that he was accustomed to accept and place to the credit of parties negotiable notes of such parties as it did business with and were regarded as good, and it further appeared in evidence that the plaintiff: bank did a very large business with the Janney Manufacturing Company, in the way of discounting its notes, and that these transactions were often made by the teller in the absence of the cashier, and were recognized and approved by the officers of the bank.
This brings us to the next and more important question,' namely, was the bank, through its officers, charged with the notice of the defendants’ defense to the action? It was shown that the president and cashier of the bank had no actual knowledge that there was any defense to the note, and the question is, can they be held to have constructive notice by virtue of their connection with the Janney Manufacturing ' Company as its treasurer and secretary? We are of the opinion that to hold that they had such constructive notice would be carrying the principles of constructive notice too far, in order to defeat negotiable paper held by a corporation whose officers hold stock
It is further contended by the appellants that the plaintiff is not in the position of an indorsee of negotiable paper before maturity, for the reason that it advanced no money to the Janney Manufacturing Company at the time of the transfer of the note or at any time, and the giving the Janney Manufacturing Company credit for the amount of the note did not place it in a position to defeat the defendant’s right to make their defense to the action. It seems to be well settled that the transfer of a negotiable promissory note before maturity in the .payment of a pre-existing debt is of itself sufficiently valuable consideration to constitute a transferee a bona fide holder, and to entitle him to protection as against infirmities in the paper-of which
Finding no error in the record, the judgment of the circuit court and order denying a new trial are affirmed.