36 Iowa 305 | Iowa | 1873
The defendant testified that the signature was not his, though he admitted that he signed a contract constituting him agent for the sale of patent roofing cement.
Whatever may be the rule of the common law, there is no cn bt of the competency of this evidence under section 3997 of tn Revision of 1860.
The evidence being competent, its weight and effect is a question for the jury, or for the court when trying an issue of fact without a jury.
It appears from tbe evidence that tbe note was exhibited to defendant before tbe commencement of tbe suit. Under chapter 28 of tbe Laws of tbe Ninth General Assembly, be was entitled to an examination of tbe note sued on before filing bis answer. And under section 4026 of the Revision of 1860, be could have obtained possession of tbe note before trial for tbe purpose of inspecting it. It cannot be doubted that by tbe exercise of reasonable care tbis testimony submitted in tbe affidavits could have been obtained before and produced at tbe trial. It was not error, therefore, to overrule tbe motion for new trial on tbis ground. Lisher v. Pratt, 9 Iowa, 59; Richards v. Nickolls, 19 id. 555; Kilburn v. Mullen, 22 id. 498.
III. It appears from the evidence that tbe payee of tbe note procured it fraudulently and without consideration, and that tbe plaintiff paid $80 therefor, without any knowledge of tbe circumstances attending its execution. A question is presented as to tbe amount plaintiff is entitled to recover; whether tbe amount of tbe note, or tbe sum paid therefor with interest.
It is an elementary principle that tbe equities existing between tbe maker and tbe payee cannot be set up against tbe indorsee in tbe ordinary course of business, for a valuable consideration, in good faith, and before maturity.
There is some confusion and uncertainty in tbe authorities as to whether one who purchases a note for less than its face can be considered a bona fide holder. Bailey v. Smith, 14 Ohio, 396, and cases cited. In tbis State, however, tbe rule is settled, that one who purchases a note at a discount may be a bona fide bolder and entitled to recover thereon. Sully v. Goldsmith, 32 Iowa, 397. And tbis view has tbe support of both principle and authority. Bailey v. Smith, supra; Gould v. Leger, 5 Duer, 270. The amount of the consideration paid
Where a note for $300, on a responsible person, and nearly due, was sold for $5, it was held that the indorsee was not a holder in good faith for value, and that he could not recover thereon, the note being without consideration. De Witt v. Perkins, 22 Wis. 473. The amount of consideration paid becomes an important element, in connection with the responsibility of the maker, the rate of interest, the time of maturing, and the circumstance of the transfer in determining the bona fides of the holder. And if he is not a purchaser in good faith, he takes the note subject to the equities growing out of the note, existing between the maker and the payee. When, however, the consideration paid, and the other circumstances of the purchase, show that the indorsee is a bona fide holder, in the usual course of business, there is no logical principle upon which his recovery from the maker can be reduced below the amount of the note.
The defense that a note has been obtained fraudulently or without consideration does not avail against a bona fide holder. If, however, the recovery of such holder may be limited to the amount paid, it is apparent that the defense does avail, for, without such defense he would recover the amount evidenced by the note.
There is a class of cases in which the holder has been allowed to recover only the amount advanced upon the note. But it is believed that they will nearly, if not quite all, be found to be cases in which the holder is not a purchaser in the ordinary course of business. Thus in Allaire v. Hartshorne, 1 Zab. 665, cited in 1 Pars. on Notes and Bills, p. 191, note l, the note was deposited with the holder as collateral security for a preexisting debt. The plaintiff was the owner of the note only to the extent of the debt secured. If he had recovered more, he would have held the surplus in trust for the payee. But the payee was not entitled to recover, the note, as between him and the maker, being invalid. Hence it was held, and very properly, that the holder could recover only the amount
It is essential to the utility of commercial paper, as a medium of exchange, that the parties dealing with it, so long as they act in good faith, should be allowed to regulate its value by the responsibility of the parties bound thereby, and all the circumstances attending the transfer; and it would very much lessen the usefulness of such paper, if the purchaser for less than its face, in the ordinary course of business, holds it, pro temto, subject to the defenses which the maker may have against the payee.
We hold, therefore, that the court did not err in rendering judgment for the amount of the note. This holding is in accord with the general current of decision in this State, upon the subject of commercial paper. See Dickerman v. Day, 30 Iowa, 444; Loomis & Leroy v. Metcalf & Fuller, id. 382; Sully v. Goldsmith, 32 id. 397; National Bank of Michigan v. Green, 33 id. 140.
Affirmed