229 F. 486 | 8th Cir. | 1916
This was an action instituted by the plaintiff, who is now the plaintiff in error, against the defendants, the administratrix and administrator of the estate of C. B. Hoffman, deceased, to recover on a promissory note executed by their intestate, and purchased by the plaintiff in good faith, before maturity, and for a valuable consideration. The following is a copy of the said note, with all indorsements thereon:
“$4,500.00. No........ Kansas City, Ho., Sept. 18th, 1907.
“Due...... Six months after date, for value received, I promise to pay to the order of Merchants’ Refrigerating Company, Kansas City, Mo., forty-five hundred and no/100 dollars at the office of the Merchants’ Refrigerating Company, Kansas City, Mo., with interest from maturity until paid, at the rate of 0 per cent per annum. To secure the payment of this note and of any and ail other indebtedness which I now owe to the holder hereof, or may owe Mm at ¡my time before the payment of this note, I have hereto attached, as collateral security, the following: Stock certificate No. 137 of the capital stock of the Merchants’ Refrigerating Company, calling for 50 shares of stock, par value $5,000.00. C. B. Hoffman.”
On the left side of the signature the following appears:
“The above collateral has a market value of $0,250.00. If, in the judgment of the holder of this note said collateral depreciates in value, the undersigned agrees to deliver when demanded additional security to the satisfaction of said holder; otherwise, this note shall mature at once. Any assignment or transfer of this note, or other obligations herein provided for, shall carry with it the said collateral securities and all rights under this agreement.
“And 1 hereby authorize the holder hereof, ou default of payment of this note or any part thereof, according to the terms hereof, to sell said collateral or any part thereof, at public or private sale and with or without notice, and by such sale the pledgor’s light of redemption shall be extinguished.”
On the back the following indorsements appear:
“Demand, notice, and protest waived. Merchants’ Refrigerating Co., per J. E. Brady, President. J. E. Brady.”
There were several defenses set up, bitt as the case was decided by the court and appealed on the demurrer to the first paragraph of the answer, it is only necessary to state the allegations in that paragraph. The defendants in that paragraph pleaded that the note was obtained from their intestate, by the payee, the Refrigerating Company, without any consideration, and upon fraudulent representations of the value of some stock in the Refrigerating Company, which, at the time, was of no value whatever, and, was so known to the payee.
The plaintiff declining to plead further, but resting upon the demurrer, judgment was entered for the defendants, and this writ of error was prosecuted to reverse this, judgment. Therefore the only question involved now is whether under the Negotiable Instrument Law this note was negotiable, so as not to be subject to the defense of a failure of consideration, when in the hands of a bona fide purchaser, for value, before maturity.
In an action on the same note against these defendants, prosecuted in a state court in the state of Kansas, the Supreme Court of that state held that the note was not negotiable under the Negotiable Instrument Law of that state, which was merely a re-enactment of the law merchant, and reversed the judgment of the trial court, which had held that it was negotiable under the statutes of Kansas and the law merchant. Bank v. Hoffman, 85 Kan. 71, 116. Pac. 239, 35 L. R. A. (N. S.) 390, Ann. Cas. 1912D, 1. When the remittitur reached the state trial court, the action was dismissed by the plaintiff, and this action commenced in the District Court of the United States.
The decision of tire Supreme Court of Kansas, while entitled to- the highest respect, is not conclusive on this court for several reasons. The note was a Missouri contract, having been executed and made payable in that state, and must therefore be controlled by the laws of the state of Missouri.
Ordinarily we would unhesitatingly follow former decisions of this court, unless in conflict with the decisions of the Supreme Court of the United States. In Chicago Railway Equipment Co. v. Merchants’ National Bank, 136 U. S. 268, 10 Sup. Ct. 999, 34 L. Ed. 349, it was expressly held that a promissory note containing an acceleration of maturity clause, such as the note in the instant case contains, does not destroy its negotiability under tlie law merchant. This case was evidently overlooked by the court in the Perry Case, as no reference is made to it in the opinion. In Kennedy v. Broderick, 216 Fed. 137, 132 C. C. A. 381, L. R. A. 1915B, 472, the United States Circuit Court of Appeals for the Seventh Circuit held that a note, identical with the one now in controversy, is under the Negotiable Instrument Law of Missouri and the general commercial law a negotiable instrument, free from such defenses as are set up in this case, if in tlie hands of a bona fide holder, acquired for value and before maturity.
For the error in overruling the demurrer to this paragraph of the answer the cause must be reversed, with instructions to set aside the judgment in favor of the defendants and sustain the demurrer.
Reversed.