134 N.E. 772 | Ind. Ct. App. | 1922
This is an action by appellant against appellee, to recover judgment on three promissory notes, executed by the latter to the American Underwriters Incorporated, and by it assigned to the former, two of said notes being for $2,000 each and one for $1,000. Each is dated, Indianapolis, Indiana, April 18, 1917, is payable four months after date, and bears interest at the rate of six per cent. per annum from date until paid. Each of the paragraphs of the complaint, in addition to the usual allegations for such an action, contains the following: "The plaintiff alleges further that before the maturity of said note, said American Underwriters, Inc., for value received, sold, assigned and transferred said promissory note to this plaintiff, and in transfer of the same executed its written indorsement on the back of said note, and that the plaintiff ever since has been and is now the owner and holder of said note; that said note is now past due and is wholly unpaid." When the issues were closed, four paragraphs of answer remained in the record. The first is a general denial. The second pleads a want of consideration. The fourth alleges in substance that the notes in suit were renewals of original notes given for the purchase of stock in the American Underwriters, Inc., hereinafter called the American Underwriters; that the consideration therefor had failed because the stock was worthless; that the notes were procured by the payee named therein by fraudulent representations as to the value of said stock; that said payee was a foreign corporation engaged in selling its stock in Indiana on the installment plan, and had not complied with the statutes of Indiana to authorize *124 it to make such sale; that, at the time of executing said original notes, it was agreed between appellee and said payee that the notes should not be negotiated, but that appellee should have the option to renew said notes from time to time upon payment of ten per cent. of the original principal thereof; that said agreement to accept renewals was later reduced to writing in a letter from the payee to appellee, of all of which facts appellant had full knowledge before it purchased said original notes. The fifth paragraph is substantially the same as the fourth, except that it does not recite the details of the fraud alleged to have been used by said American Underwriters to secure the execution of said notes. Appellant filed a reply in three paragraphs. The first is a general denial. The second alleges that appellant is a bona fide holder of the notes in suit; that it purchased the same before maturity, for full value, in due course of business, and that, at the time they were assigned to it, it had no notice of any failure of consideration therefor, or of any other defense thereto. The third paragraph alleges that appellee did not use reasonable or any diligence to discover the facts as to the various defenses set up in his answer; that he did not, within a reasonable time after discovering said facts, repudiate his stock subscription and said notes; and that, before said repudiation, said American Underwriters withdrew from the State of Indiana, taking therefrom valuable assets belonging to it, and has had no assets within said state since its withdrawal therefrom. Other steps were taken in the formation of the issues which are not noted here, as they are not material to a determination of the questions presented by this appeal. The cause was submitted to a jury for trial, resulting in a verdict and judgment in favor of appellee. Appellant filed a motion for a new trial, which was overruled, and this appeal followed. *125
The only assignment of error on which appellant relies for reversal is based on the action of the court in overruling its motion for a new trial. Under this alleged error, it is contended, among other things, that the verdict is not sustained by sufficient evidence, and is contrary to law. This contention is based on a claim that the notes in suit are negotiable instruments, purchased by appellant before maturity for full value, in due course of business, without notice of any defense thereto, and, therefore, in its hands, they are not subject to the defenses which appellee seeks to assert against them. Appellee does not contend that said notes, if they stood alone, would not be negotiable instruments. His contention is that they must be read and considered in connection with a certain letter, received by him from the payee named in said notes, which renders the same non-negotiable. Said letter, omitting the date, address and signature, is as follows: "In connection with certain notes executed by you in favor of the American Underwriters, Inc., in the sum of $2,000.00, $2,000.00, $1,400.00, it is hereby agreed that these notes may be renewed from time to time on a minimum payment of ten (10) per cent. of the original amount of the note, together with current interest at the rate of six (6) per cent. It is understood, however, that interest on said notes shall not be chargeable until first renewal."
The evidence tends to establish the following facts with reference to said notes and letter: The notes in suit are the second renewals of three other notes, which, together with a check for $600, were executed by appellee in consideration of one hundred shares of stock in the corporation named as the payee therein. Said stock was purchased by appellee through a Mr. Hegepeth, who at the time was its president. Prior to the execution of said notes, Mr. Hegepeth called on appellee, and it was there agreed that the latter should purchase *126 fifty shares of said stock at $60 per share; that ten per cent. of the purchase price should be paid in cash, and that time would be given for the payment of the remainder thereof. Later, when Hegepeth returned to close the matter, he brought with him a subscription blank for appellee to sign, filled out for one hundred shares, being double the amount appellee had agreed to purchase. When Hegepeth's attention was called to this fact, he stated that he had been talking with some of appellee's friends, and found that they were very anxious for him to get a larger amount of the stock while it could be had at $60 per share. Appellee answered that he did not want to obligate himself for so large an amount, and Hegepeth then said, "You sign the subscription blank and these notes, give me your check for $600 and I will take the subscription blank and place it in my safe * * * and there is where it will remain, which notes will not be put in any bank, and if at any time you don't want to take the additional fifty shares, all you have to do is to let our office know, and the company will take the additional fifty shares back, and whatever you paid will be applied on the first fifty shares." With that understanding, appellee signed the subscription for one hundred shares, gave Hegepeth a check for $600, and executed said original notes, aggregating $5,400. At the time this was done, Hegepeth promised that when he returned to his office, he would write appellee a letter, confirming their agreement with reference to the time he was to have in which to pay for said stock. About eight days thereafter, appellee received the letter set out above, which was signed by the payee named in said notes, and its president, who negotiated the sale of said stock. Some time during the day after appellee had received said letter, the payee named in said notes sold and transferred the same to appellant. This sale and transfer was made after said *127 payee had solicited appellant to purchase a line of its notes. In the negotiations following such solicitation and preceding said sale and transfer, appellant was informed that the notes which it offered were received from the sale of stock in the American Underwriters; that in some cases, it was sold for cash, but in the majority of cases, it is sold for part cash, with the right given the customer to reduce his notes at each due date. During the course of such negotiations, it was agreed that when any of the notes purchased by appellant pursuant to their agreement fell due, that it should not notify the payors, but should notify the American Underwriters instead, and that it would "collect from the customer the amount due on the note and get the renewal note, and turn over to the bank the amount paid and the renewal note."
It is well settled that a note and a contemporaneous written instrument intended to control it, made between the same parties, should be read and considered together as if one in form, 1-4. where a controversy arises between the original parties, or those standing in their place, or chargeable with notice of such contemporaneous agreement. Crouch Son v.Parker (1919),
There is still another reason which prevents us from sustaining the contention of appellant, stated above, with reference to the verdict. It will be observed that the Negotiable 5, 6. Instrument Act of the state contains the following provisions: "Every holder is deemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as holder in due course. But the last-mentioned rule does not apply in favor of a party who became bound on the instrument prior to the acquisition of such defective title." § 9089g2 Burns 1914.
"The title of a person who negotiates an instrument is defective within the meaning of this act when he obtained the instrument, or any signature thereto, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates *131 it in breach of faith, or under such circumstances as amount to a fraud." § 9089c2 Burns 1914.
There is some evidence tending to show that the payee named in said notes obtained appellee's signature thereto by fraudulent representations, and thereafter committed a breach of faith by negotiating them. If the jury so believed, appellant was not entitled to recover unless it discharged the burden placed on it by said § 9089g2, supra, viz.: that it acquired title to said notes as a holder in due course. Appellant endeavored to discharge this burden by the testimony of its president, but may have failed, as indicated by the verdict in favor of appellee. If the jury so concluded, we cannot say it erred in that regard, although the testimony of appellant's president was not directly contradicted by any witness, as his credibility was a matter for the determination of the jury in the light of all the facts and surrounding circumstances. In so holding, we are following the general rule, often repeated and applied in similar cases, to the effect that, where a party has the burden of proving a fact in a trial before a jury, and undertakes to do so by the testimony of witnesses, the court ordinarily cannot say, as a matter of law, that such fact has been established. A reason frequently given for the existence of such rule is that the attending circumstances and conduct of the witnesses may be such as to warrant the jury in disbelieving them. The interest of such witnesses in the result of the suit is generally recognized as being such a circumstance, and where such interest is shown, the general rule has been held to be applicable. We cite the following decisions in support of the rule stated, a number of which, like the instant case, involve the testimony of officers of banks, in behalf of the institutions they represented as such. 3 R.C.L. 1041; Talge Mahogany Co. v. Burrows *132
(1921),
Appellant contends that the court erred in admitting the agreement in evidence that the notes should be held by the payee named therein and not placed in any bank, and that if at 7-9. any time appellee should not want to take the additional fifty shares for which he subscribed, that, upon notice, the payee would take back said shares, and whatever appellee had paid would be applied upon the first fifty shares. Appellant bases this contention on a claim that the agreement in question, not being in writing, was inadmissible, as it contradicted the terms of the note, and, even if admissible, would not constitute a defense to the notes in its hands, as it is only chargeable with the defenses of which it had notice at the time it purchased said notes, and there is no evidence that it had knowledge of such agreement. As to appellant's first proposition, it suffices to say that such agreement does not purport to contradict the note, but only embodies conditions under which it was delivered. These conditions were a proper subject of parol proof. McNight
v. Parsons, supra. Appellant's second proposition cannot be sustained, as the Negotiable Instrument Act of this state provides that a holder in due course is a holder who has taken the instrument under certain conditions, among which is the following: "That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it." (Our italics.) § 9089z1 Burns 1914. The act then provides that: "In the hands of any other holder than a holder in due course, a negotiable instrument is subject to the same defenses as if it were non-negotiable." § 9089f2 Burns 1914. These sections of the statute appear to be conclusive against *134
appellant's second proposition, since a non-negotiable instrument is subject to all defenses in the hands of any holder, whether known or unknown, at the time he acquires it. The evidence of the agreement in question was clearly admissible for the purpose of showing that the notes were negotiated in breach of faith, thereby placing the burden on appellant to prove that it acquired title thereto as a holder in due course, as provided in said § 9089g2, supra. 8 C.J. 984; Holdsworth v. Blyth Fargo Co.
(1915),
It is contended that the court erred in admitting in evidence the parol agreement as to the time appellee should have for the payment of the purchase price of said stock and the 10-12. letter written subsequently with reference thereto. We are of the opinion, as hereinbefore indicated, that this evidence was admissible as bearing on the negotiability of the notes in suit. We are also of the opinion that it was admissible upon the issue of fraud in their procurement. It is well settled that on the issue of fraud, great latitude is permitted in the introduction of evidence. The whole transaction from beginning to end may be scrutinized, and subsequent statements and acts, within certain limits, are competent as throwing light upon the intention of the party charged. 14 Am. Eng. Ency. of Law 196; 12 R.C.L. 430; First Nat. Bank v. Harvey (1912),
It is further contended that the court erred in permitting the witness Hall to testify as to whether the American Underwriters had ever paid dividends on its stock, and as to the 13, 14. source of the money used for such purpose. Also as to whether it had ever made any money, and as to its solvency when dividends were paid and when the stock in question was sold to appellee. Appellant insists that this testimony was based on mere hearsay, and consisted of conclusions drawn from facts of which the witness had no personal knowledge. If the first objection stated were valid, it must be deemed waived, as it was not made in the court below. Van Spanje v. Hostettler
(1918),
Appellant's final contention with reference to the court's error in admitting evidence is based on the fact that appellee was permitted to testify as to the representations made to 15. him by the president of the American Underwriters concerning its earnings, surplus, payment of dividends, and its financial condition generally. This evidence was clearly competent on the issue of fraud, and the court did not err in admitting it.
An application of the law, as hereinbefore stated, to the facts which the evidence in this case tends to prove makes it apparent that there was no reversible error in the action of the court in giving or refusing to give any instruction of which complaint is made. Failing to find that the court erred in overruling appellant's motion for a new trial, as it contends, the judgment is affirmed. *137