88 N.W. 567 | N.D. | 1901
This is an action upon a promissory note executed and claimed to have been delivered by the defendants to the Leeds Importing Company. As amended, the complaint states a cause of action upon a promissory note in the ordinary form with the following allegation appertaining to the tranfer of such note to the plaintiffs, viz.: “That on the 24th day of June, 1893, the Leeds Importing Company being indebted to these plaintiffs in a sum largely in excess of the amount due on the promissory note above described, indorsed said note as follows: “The Leeds Importing Company, by E. Cooper, Secretary;” and transferred the same to these plaintiffs as collateral security to said indebtedness due these plaintiffs from said Leeds Importing Company, upon the consideration that the date of the maturity of said indebtedness be extended by these plaintiffs for the period of four
The errors specified and assigned are that the court erred in not granting- plaintiffs’ motion for a directed verdict, and that there was error on the part of the court in not granting plaintiffs’ motion for a new -trial. Upon a careful consideration of the evidence, we are satisfied that there was no error in submitting to the jury the question whether there was an extension of the time of pa)rment of the indebtedness from plaintiffs to the bank at the time that the note in suit was transferred to them. One witness testified that it was his “recollection and belief” that June 24, 1893, was the time when the plaintiffs received the note, and the time
Members of the plaintiffs’ firm testified that the note was transferred to them as collateral security for the indebtedness due from the Leeds Importing Company to their bank, without any mention of the extension of the time, and without furnishing any data as to the precise time of such transfer. From all of these considerations, we do not think that the • secretary’s testimony was of that character that entitled it to such absolute weight that a verdict should have been directed upon it. The weight of it under the circumstances, was properly submitted to the jury in connection with the other testimony, and the court did not err in refusing to direct a verdict for the plaintiff.
The next question to be determined on this appeal is, was there such a delivery of the note in suit to the payee as to bind the makers thereof when in the hands of the plaintiffs, under the circumstances under which the plaintiffs received it-? The facts pertaining to the delivery of the note to the payee were stipulated by the attorneys at the trial and are as follows: “It is now stipulated that the note was signed by the several parties who did sign the same upon the understanding and promise of the payee that same should be deposited with T. R. Peart, and not delivered to. the payee or any other person until $800 more of the stock should be subscribed for, and the subscribers of such additional stock should have signed said note; that said note was never signed by any other subscribers, and never delivered according to the terms of the agreement, but was clandestinely taken by the agent of the payee out of the state; and that no delivery of said note was ever made by any of the parties who signed the same.” From this stipulation it appears that delivery to the payee -was unauthorizd at the time made. This note was therefore delivered and put into circulation in fraud of the'rights of the makers, and recovery thereon could not be hád in an action by
It now remains to be considered whether the plaintiffs are holders of the note in suit in due course of business for value, without notice of any defenses claimed ‘thereto. Under the verdict of the jury, there was no extension of the time of pajunent of the the indebtedness from the payee of the note to-the plaintiffs. No mone}'- or property was paid or delivered to the payee at the time of the transfer. There was no new contract entered into in express terms between the payee and plaintiffs at the time. The indebtedness from the payee to the plaintiffs was a pre-existing one, and there was no change in the status of such indebtedness by virtue of such transfer. The plaintiffs parted with nothing nor did the payee
The question is therefore presented whether the plaintiffs are indorsees in due course, the3r having taken the note simply as collateral to a pre-existing debt, without entering into any new contract whatever, save such as devolved upon them, if aity, by operation of law, by virtue of becoming holders thereof under the guaranty of pa3mient indorsed thereon and duty signed by the payee. The fact that this note was transferred under a guaranty of payment, and not by indorsement in blank or to another’s order, is immaterial, as the holders, b3r virtue of the transfer by a guaranty of payment, are indorsees in due course in either case, if they bring themselves within the provisions of the statute defining indorsees in due course. Dunham v. Peterson, 5 N. D. 414, 67 N. W. Rep. 293, 36 L. R. A. 232, 57 Am. St. Rep. 556.
Upon the question of the rights of holders of negotiable paper taken in due course before maturity as collateral security for a pre-existing debt, there is a radical conflict of authority. The courts sustaining the right of the holders to recover in such cases as against equities or defenses in favor of the holders, do so, generally, upon the ground that, by becomng holders of such negotiable paper through indorsement, they become parties to it, and as such assume
A different question, not necessary to be decided in this case, would be presented had plaintiffs acquired this note by guaranty or indorsement, where prior indorsements had been made of the note. In such case the duty would devolve on the plaintiffs to see that such prior indorsers were duly charged by demand notice,
The order of the district court is affirmed.