Limerick National Bank v. Adams

70 Vt. 132 | Vt. | 1897

Thompson, J.

The plaintiff claimed to recover as the bona fide purchaser for value of the note in suit before it was due.

On the part of the defendants, the evidence tended to show that as between the original parties to the note, it was void for want of consideration and by reason of the payee’s fraud in obtaining it.

In its opening, the plaintiff introduced evidence tending to show that it was a bona fide holder of the note for value. The law presumed this without other evidence than the production of the note by the plaintiff, the contrary not appearing. The case standing thus, the ordinary course of such a trial was not thereby changed, nor was it affected, by the fact that the plaintiff alleged in its declaration that it gave value for the note. Notwithstanding this aspect of the case, when the plaintiff rested it was competent for the defendants to show that the note was without consideration and void for fraud as between the original parties, and their evidence tending to show such to be the fact was properly admitted as a step in their defence, and for the purpose of casting the burden upon the plaintiff of showing that it was not chargeable with knowledge of the fraud, if the fraud alleged was established. Nor were the defendants held to any particular line of proof by the allegations in their notice, for under the general issue they could show that the note was void for the causes alleged, and that the plaintiff was chargeable with notice thereof when it purchased it. V. S. § 1150, requiring a defence to be set forth by way of plea or notice, does not apply where the defence is of such a character as to show that no cause of action ever existed. Gregory v. Tomlinson, 68 Vt. 413.

From the evidence of the defendants it appeared that H. P. Reynolds, the payee of the notes, by his agent, one Wolcott, came to certain of the defendants with a horse, which he claimed to be am imported German coach stallion, representing to them that he was organizing a -stock company to which to sell the horse. In his interviews with such of the defendants as he saw, he was accompanied and assisted by one Griswold, who lived in the vicinity of and was well known to all the defendants. Griswold and Wolcott represented, in substance, that in order to make a sale of the horse, thirty good, responsible men must take shares in him at one hundred dollars each — the price of the horse being $3000 — and that all of the thirty must sign the note, and that unless thirty shares were so taken there was to be no sale. Each person taking stock was obliged to sign what was termed a “stock book,” which was, in substance, an agreement to take said shares in the horse. After several signers to the stock book had been procured, Wolcott left, and one Niece and one Schoonmaker appeared, who, in connection with Griswold, went on with the work of procuring signers to the stock book upon representations substantially similar to those formerly made by Wolcott and Griswold. Later, Niece, Schoonmaker and Griswold came to the defendants with the notes in question, representing to each one, in substance, that all of the thirty shares had been taken and demanding that the defendants sign the notes. It was then represented to them that the notes were not to be valid or complete, and not to be considered as delivered, until thirty financially responsible men had signed them, and until a meeting of all the signers thereto should be had, at which meeting Niece was to be present with the notes for the examination and approval of all the signers, and a company was to be organized, and the horse turned over to the company. Under these representations and conditions, each of the defendants signed the notes.

The evidence of the defendants tended to prove the falsity of the representations made to them by the alleged agents of Eeynolds; that the horse was never delivered to the signers of the notes; that there was never any valid organization of a stock company; that the notes were not signed by more than twenty persons, and not all of these were financially responsible, and that certain other details which had been agreed to be consummated before the notes should become valid and binding, had never been consummated. The notes on their face indicated a joint and several liability for the full amount.

Against the exception of the plaintiff, J. B. Adams, one of the defendants, was permitted to testify that at the time he signed the notes his total liability thereon was represented to him by the agents of Reynolds to be only $100. One Luke Parish was improved as a witness by the defendants. It appeared that he had signed the stock book, but not the note, and was not a defendant. The defendants’ counsel offered to show by him the representations made to him by Niece, when the latter presented him the notes to sign, as to the necessity of all signing in order to make the notes valid. While testifying with respect to the subject matter of this offer, the witness was asked, “In the course of the conversation, did he, Niece, tell you anything about whether there was any necessity of all signing?” to which the witness answered, “He said they were all going to sign, and if I didn’t sign he should sue me right away.” To this answer, the plaintiff excepted. The testimony of the witnesses Adams and Parish was admissible to show the manner in which Reynolds, the payee of the note, by his agents, operated the scheme to secure • the signers to the note. What Parish said about being threatened with a suit if he did not sign the note, when told that all were going to sign it, was an inseparable part of the conversation and for that reason admissible; but it also tended to show the emphasis put upon all signing the note, as claimed by the defendants.

Defendant Folsom was a competent witness for the other defendants to show that he was financially irresponsible when he signed the notes. It is not necessary to decide whether, if financially irresponsible, it could avail him by way of defence. If admissible for any purpose, plaintiff’s exception cannot avail it, as it does not appear that the court was requested to limit its application, nor does it appear that it was not admitted in support of the defence set up by his co-defendants, and so limited in its . application.

The county court properly excluded the plaintiff’s offer to show that before the purchase of the note in suit, it bought of Reynolds similar notes signed wholly by people of the town in which the plaintiff bank is located, and that the signers of these notes knew that the plaintiff was the holder and owner thereof before this suit was brought.

The evidence offered raised an immaterial issue. It had no bearing upon the question whether in the transaction in which the plaintiff bought the notes in controversy, it was a bona fide purchaser for value. That on another occasion, in the purchase of other notes, it had been such a purchaser, had no tendency to prove that it was so in respect to the note in suit.

There seems to have been no qnestion made on trial but that the note in suit was without consideration, and procured by fraud on the part of the payee. Fraud and want of consideration being shown, the burden was cast upon the plaintiff to show that it was a bona fide holder for value. Clough v. Patrick, 37 Vt. 421; Blaney v. Pelton, 60 Vt. 275; Stevenson v. Gunning's Est., 64 Vt. 601. This burden was not changed by the pleadings nor by the plaintiff’s case as made in its opening.

In its charge to the jury, the court defined a bona fide holder for value to be a holder of negotiable paper who takes it before maturity for a valuable consideration in the usual course of business without knowledge of facts which impeach its validity as between the antecedent parties, and without knowledge of facts or circumstances that would lead a careful and prudent man to suspect that the paper was invalid as between antecedent parties. To the words in this definition “and without knowledge of facts or circumstances that would lead a careful and prudent man to suspect that the paper was invalid as between antecedent parties,” the plaintiff excepted. The charge correctly stated the law of this State on this subject. Roth v. Colvin, 32 Vt. 125; Gould v. Stevens, 43 Vt. 125; Savings Bank v. National Bank of St. Johnsbury, 53 Vt. 82; Hill v. Murray, 56 Vt. 177; Bromley v. Hawley, 60 Vt. 46. We are now asked to overrule the decisions of this court on this subject. The question was fully considered in Roth v. Colvin, supra. After carefully considering the cases holding the contrary doctrine, the court then said in regard to the rule then adopted: “In our judgment, the doctrine is best sustained by authority, but if the question were wholly new, and we were called upon to establish a rule for the first time, we should feel no hesitation in saying that such should be the rule to govern the purchase and transfer of negotiable securities.” This court still adheres to the same view.

In the course of its charge, the county court said:

“It is claimed by the defendants that the circumstance that these defendants live here in Orange county, and that this plaintiff bank was located in a neighboring state, is a circumstance which should be considered; that it is a circumstance that should put a reasonable man upon inquiry. The weight to be given this circumstance, if a circumstance, is all for you, and it is for you to say whether it is a circumstance that would lead a careful and prudent man to suspect that there was anything wrong about this note.” To this, the plaintiff excepted.

There was no error in permitting the jury to consider this circumstance as bearing upon the question of whether the plaintiff was chargeable with notice of the fraud, as it bore with other evidence of the same tendency directly upon that question.

The evidence tended to show that such facts and circumstances were brought to the knowledge of the plaintiff in respect to the note before its purchase as to put it upon its inquiry in regard to its validity, and to lead it as a careful and prudent man to suspect that the paper was invalid as between antecedent parties. Hence, the court below properly denied the plaintiff’s motion to direct a verdict in its favor.

“The question whether the holder of current negotiable paper has taken it with or without notice of defence between prior parties, whether he has exercised good faith in the transaction or has been guilty of negligence or want of proper caution, are always questions of fact to be submitted to and determined by the jury. All the circumstances attending the transaction, the condition of the several other parties, and all other facts that bear upon such an issue, are only evidence for the jury to weigh in deciding it.” Roth v. Colvin, 32 Vt. 125.

Judgment affirmed..