195 Iowa 224 | Iowa | 1923
Two of the notes sued on are for $2,500, each dated December 5, 1919, and due September 1, 1920, with 8 per cent interest after maturity. The other two notes are for $3,000 each, of like date with the former, but due on October 1, 1920, with interest after maturity. They are signed by all the defendants. They were all payable to the Gibford Chemical Company. They purported to carry the indorsement of such payee, by E. B. Gibford. These notes are a small part of a series, all delivered at the same time, and amounting to $500,000, and all signed by the same makers to the same payee. The transaction is quite inexplicable upon any hypothesis of common sense. The makers received no consideration for any of these notes. They
At the close of the- evidence, the trial court directed a verdict for the defendants. The one question presented on this appeal is, Was the evidence such as to leave any question for the consideration of the jury? The execution and delivery of the notes being admitted, and the defendants having interposed an affirmative defense of fraud, the burden was upon them to prove the defense. Such a defense ordinarily, if not necessarily, presents a jury question. We look, therefore, to the brief of the appellees for the grounds upon which they purpoxT to sustain the action of the trial court in taking the case from the jury.
If the fictitious character or nonexistence of the payee was not known to the maker, then impliedly the instrument is not payable to bearer. Necessarily, it cannot be payable to a non-existing payee. Nor does this statute confer authority upon any person to indorse a note in the name of a fictitious or nonexisting person, where the nonexistence or fictitious character of the payee was not known to the maker. A purported indorsement in such a case is without authority, and comes within the provisions of Section 3060-a23, Code Supplement, 1913, which is as follows:
“Sec, 3060-a23. Where a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority.”
In American Exp. Co. v. Peoples Sav. Bank, 192 Iowa 366, we held the foregoing section to be applicable to such an indorsement. There is no provision of the Negotiable Instruments Act whereby a negotiable indorsement can be made of,such an instrument as we here assume. It necessarily follows that even a good-faith purchaser who should otherwise be deemed as a holder in due course must take notice of the character or authority of the indorser through whom he takes his title. The plaintiff in this case was charged with the inquiry, and therefore with notice of the extent of the authority of R. B. Gibford to make the indorsement under which it purports to hold the instrument.
It is not denied in this case that these instruments were
Does it follow that the trial court was justified in directing a verdict on this ground ? On the one hand, it is contended that the defendants knew the fictitious character of the payee. On the other hand, it is denied. It appears that for some years Gibford had used the designation “Gibford Chemical Company” as a trade name. This fact was known by the defendants. Some of them had previously done business with Gibford under that name. This evidence was admissible, as bearing upon the question of the knowledge and real intent of the makers. As against this, they offered evidence that, prior to the termination of the negotiations and the delivery of the notes, Gibford represented that his business had been taken over by a corporation organized for that purpose; that its stockholders included several prominent and reliable men named by him; that its capital was large and abundant. The makers had a right to rely upon these representations, if they were made, and had a right to act upon them. They would not necessarily be precluded therefrom by the fact that the corporation had adopted the former trade name of Gibford. The credibility of their evidence is assailed by plaintiff on the ground that they made no inquiry or attempt to verify the truth of the representations of Gibford, though they could have ascertained their falsity with slight effort. They were not legally bound to make such inquiry. The fact, however, that they did not make it, when they could have done so with slight effort, is a circumstance proper for the consideration of the jury in weighing their testimony. "We deem it clear that the question of fact as to whether the defendants knew the fictitious character of the payee was a question for the jury.
Whether Section 3070 is to be deemed still in force, or whether it was impliedly repealed by the adoption of the Negotiable Instruments Act, we have no occasion herein to consider. It does appear from the plaintiff’s evidence that it had a valid pre-existing- and accruing account against G-ibford of about $5,900. These notes were taken as collateral security therefor. Under Section 3060-a25, this pre-existing indebtedness constituted a sufficient consideration. The direction of the verdict, therefore, was not warranted upon this ground.
It is our conclusion that, under the evidence, the case presents a jury question. The order of the court directing a verdict and entering a judgment upon such verdict is, therefore, reversed. — Reversed and remanded.