249 P. 795 | Wyo. | 1926
This is an action by the Dubois State Bank as endorsee against the defendant as maker of two promissory notes. Trial was had without a jury and judgment was in favor of the plaintiff. The defendant brings the case here on error.
The notes were dated July 21, 1920, signed by defendant and payable 6 months after date to Wyoming Livestock Loan Company. They were given in payment for capital stock of Wyoming Livestock Loan Company. The defendant bought the stock at the solicitation of G.O. Roy and A.K. Jones, to whom the notes were delivered. On July 22, 1920, the plaintiff purchased the notes, receiving them from Roy and Jones, who endorsed them, "Wyoming Livestock Loan Company, by G.O. Roy, A.K. Jones." The plaintiff gave for the notes its negotiable certificates of deposit payable to the order of the Wyoming Livestock Loan Company, for the full amount of the notes.
The plaintiff's petition was in the usual form, and included the allegation that the plaintiff was a corporation. *323 Defendant demurred to the petition on the ground that it did not state facts sufficient to constitute a cause of action, and when the demurrer was overruled, filed an answer, the allegations of which may be summarized as follows: (1) a general denial; (2) that the endorsement of the notes by Roy and Jones was not authorized by the payee; (3) that defendant was induced to buy the stock and make the notes by false representations made to him by Roy and Jones, and (4) that plaintiff took the notes with knowledge that they had been obtained by fraud, and was not a holder in due course.
The plaintiff did not prove the allegation that it was a corporation. The defendant contends that that allegation was material to plaintiff's cause of action, and was put in issue by the general denial. The general, and what we consider the better, rule is to the contrary. 14 C.J. 163; 14a C.J. 824; Brady v. The National Supply Co.,
"Where a corporation commences an action, it need not aver in its petition that it is a corporation; and if such averment is made, it will be held to be immaterial and mere surplusage, and a general denial to a petition containing such averment will not impose upon the plaintiff the burden of proving on the trial that it is such corporation."
"To raise the issue of nul tiel corporation, the defendant must specially plead in his answer that the plaintiff is not a corporation. Smith v. Weed Sewing Machine Co.,
We think the opinion in Mahan v. Wyopo Company,
It is contended by defendant that the evidence was insufficient to show that Roy and Jones had authority from Wyoming Livestock Loan Company to endorse and transfer the notes to the plaintiff. Section 3956, Wyo. C.S. 1920, N.I.L. Sec. 23, provides:
"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."
It may be conceded that plaintiff failed to prove express authority to Roy and Jones to negotiate the notes. But their authority could be established as in other cases of agency. Wyo. C.S. 1920, Sec. 3952, N.I.L. Sec. 19. The evidence to show authority may be briefly stated. A letter, dated July 6, 1920, from Wyoming Livestock Loan Company to plaintiff's cashier refers to Messrs. Roy and Jones as "our representatives." This letter does not show the extent of the authority of Roy and Jones, but when it was shown that they exchanged the notes in question for certificates of deposit payable to Wyoming Livestock Loan Company, and, as shall be presently explained, that the certificates of deposit were received and negotiated by that company, the court was justified in finding that *325
Roy and Jones were agents for the payee with authority to negotiate the notes. The only interest the defendant has in questioning the authority of Roy and Jones is to protect himself against a payment to the wrong person. Farmers etc. Bank v. Whitehead,
Because of the manner in which the trial was conducted, it must be assumed that the notes were obtained from defendant by fraud, and the title of the payee was defective. The burden of proof, therefore, was on the plaintiff to show that it was a holder in due course. Glendo State Bank v. Abbott,
For the notes, which were due in six months, the plaintiff gave its negotiable certificates of deposit due in nine months, payable to Wyoming Livestock Loan Company. The notes were made, transferred to plaintiff, and the certificates of deposit issued, in July, 1920. About December 31, 1920, the Wyoming Livestock Loan Company delivered the certificates of deposit as security to First National Bank of Cody. The certificates of deposit were endorsed in blank by the Wyoming Livestock Loan Company, but the date of the endorsement does not appear. *326 The First National Bank of Cody held the certificates until they were due. They were then presented to the plaintiff for payment through other banks. When they came to the plaintiff for payment, April 28, 1921, they bore the undated, blank endorsement of the payee and the endorsement of the First National Bank of Cody to the American National Bank of Cheyenne for collection. When presented for payment, they were paid, and the First National Bank of Cody then gave the Wyoming Livestock Loan Company credit for the amount thereof. This suit was commenced a year later, in April, 1922.
Section 3987, Wyo. C.S. 1920, N.I.L. Sec. 54, provides:
"Where the transferee receives notice of any infirmity in the instrument or defect in the title of the person negotiating the same before he has paid the full amount agreed to be paid therefor, he will be deemed a holder in due course only to the extent of the amount theretofore paid by him."
Relying on this section, the defendant argues that the plaintiff is not a holder in due course. The contention is that the giving of the certificates of deposit was not payment, but only a promise to pay, and while the plaintiff had no notice of the fraud when it took the notes and issued the certificates, it did have notice before it paid anything on the certificates, and cannot be deemed a holder in due course.
The plaintiff having the burden of proving that it was a holder in due course, we may assume that it was necessary for it to prove that it was not a transferee affected by section 54 of the Negotiable Instruments Law. Miller v. State Savings Bank,
"It is the settled rule in equity that a purchaser without notice, to be entitled to protection, must not only be so at the time of the contract or conveyance, but at the time of payment of the purchase money."
Dresser v. Missouri etc. Co., supra, was a clear case for application of the rule. The plaintiff had bought notes made by defendant, aggregating $10,000. Plaintiff paid on acquiring the notes $500, and promised orally to pay the balance. Before he had paid anything more than $500, he received notice that the notes had been obtained from *328 the maker by fraud. This notice was accompanied by a prohibition to pay. It was held that plaintiff could recover from the maker only $500. This was because he could have protected himself, after notice of fraud, by refusing to make further payment. The opinion is carefully guarded so as not to control cases where the purchaser has given a negotiable instrument, as witness the following excerpts:
"It does not appear that, upon the purchase of the notes in suit, the plaintiff gave his note or other obligation which might by its transfer subject him to liability."
Referring to the contention that negotiable paper may be sold for less than its face value, the court said (italics ours):
"This is true; and if the plaintiff had bought the notes in suit for $500, before maturity, and without notice of any defense, and paid that sum, or given his negotiable note therefor, the authorities cited show that the whole interest in the notes would have passed to him, and he could have recovered the full amount due upon them."
When the holder has given for the paper his promise which he must perform, as, for instance, when he has incurred liability to a third person, it is quite clear that he is in the same position, and entitled to the same protection, as one who paid for the paper in money or property at the time of the transfer. Citizens Bank v. Shaw,
In the California case just cited, speaking of the effect of section 54 of the Negotiable Instruments Law, the court said:
"In our opinion this provision is applicable only where the obligation incurred by the holder of the note is such *329 that, on discovering the infirmity in the instrument, he is relieved from all further legal obligation to make any further payment, as, for example, where the note has been transferred to him in consideration of his promise to make future payments to his transferer. In that case, if it should turn out that, by reason of fraud on the part of the transferer, the maker of the note had a defense thereto, the transferee would be under no legal obligation to pay the balance of the amount that he had agreed to pay to his transferer as a consideration for the transfer."
We think this comment may be taken as a reasonable interpretation of the statute. How, then, does it affect the plaintiff who gave for the notes its negotiable certificates of deposit which were outstanding when plaintiff received notice of the defect in the title to the notes? There can be no doubt that when the plaintiff gave the certificates of deposit for the notes it took the notes for "value" within the meaning of sections 52 and 25 of the Negotiable Instruments Law — the other conditions necessary to make it a holder in due course being present — and if it was under a legal obligation to pay the certificates of deposit when they became due, its right to protection as a holder in due course was the same as if it had paid money for the notes when it acquired them.
It may be argued that when the plaintiff received notice of the fraud it could have protected itself from liability on the certificates of deposit by enjoining their transfer or having them impounded by the court to await a decision on the question of fraud. We believe the duty of bringing proceedings for such a purpose was on the defendant. It was he who had put the notes in circulation, and it was he who contended that the notes had been procured by fraud. If he expected to defend on the ground that plaintiff had not paid for the notes at the time they were transferred, he ought to have inquired as to the nature of the consideration, and would then probably have *330
learned that plaintiff had given for the notes its own negotiable certificates of deposit. If the defendant then thought that an action should be brought to prevent a transfer of the certificates of deposit, it would seem that such an action ought to have been commenced by the defendant who was prepared to assert and prove the fraud. Adams v. Soule,
We come now to consider what was necessary to be proved by the plaintiff to show that it was not affected by section 54 of the Negotiable Instruments Law. *331
When the notes matured and plaintiff's cause of action accrued, the certificates of deposit were still outstanding and not yet due. If plaintiff's status were to be determined by the conditions at that time, there would be authority for holding that it was a holder in due course, and not affected by Section 54. Duncan v. Gilbert,
But there is authority for holding that the plaintiff, to avoid the effect of section 54, and to sustain the burden of proving that it was a holder in due course, was required to prove that the certificates of deposit had been negotiated and that the plaintiff had either paid or become liable to pay them to some one other than the payee. This seems to have been held or assumed to be the rule in the following cases: Rush v. Mitchell,
Under any rule that can be gathered from the cases, both before and since the Negotiable Instruments Law, the plaintiff's evidence met the burden of proof if it was sufficient to establish that the First National Bank of Cody, to whom the certificates of deposit were paid by the plaintiff, was a holder in due course of such certificates. By section 3978, C.S. Wyo. 1920, N.I.L. Sec. 45, the *332 negotiation of the certificates of deposit to the First National Bank of Cody is deemed prima facie to have been effected before the certificates were overdue. By section 3992, C.S., N.I.L. Sec. 59:
"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 other person under whom he claims acquired the title as a holder in due course."
If the plaintiff was entitled to the benefit of the presumptions declared by these statutes particularly the presumption stated in the first clause of section 59 of the Negotiable Instruments Law, there can be no doubt that proof that the First National Bank of Cody was the endorsee and holder of the certificates of deposit was a prima facie
showing that it was a holder in due course, and sufficient to justify a finding of that fact, there being no other evidence to require a different finding. The fact that the notes in suit had been procured by fraud, when established, or assumed, as it must be in this case, destroyed the presumption that plaintiff was a holder in due course of the notes (Glendo State Bank v. Abbott,
We have deemed it proper to give to the last point most careful consideration, and to state our views at some length, because a different view, in which we regret we cannot concur, was reached by the Supreme Court of Michigan in the recent case of Carter v. Morrison,
We think the finding of the trial court that the plaintiff was a holder in due course of the notes was supported by the evidence, and cannot be disturbed.
The judgment will be affirmed.
Affirmed.
POTTER, Ch. J., and BLUME, J., concur. *334
