Shattuck v. Reed

221 Mich. 155 | Mich. | 1922

Fellows, C. J.

(after stating the facts). Defendant’s counsel discusses the question of whether plaintiffs are bona fide holders of the note and whether the note is a negotiable instrument. We are unable to perceive that this discussion is pertinent to the issue. Obviously the note itself is a negotiable instrument, but plaintiffs make no claim of rights as bona fide purchasers. Mr. Shattuck, who handled the deal for the bank, frankly states that he knew the plan under which the association was financed and the purpose for which the note was given. What plaintiffs do claim is that the defendant gave this note to the association under an agreement known to defendant, plaintiffs and everyone else connected with the transaction, that it was to be used as collateral at plaintiffs’ bank, and that the note was used for the exact purpose defendant knew it was to be used for when he gave it and strictly in accordance with his contract with the association.

Defendant’s counsel seeks, to bring this case within Toledo Scale Co. v. Gogo, 186 Mich. 442, and Stevens v. Venema, 202 Mich. 282 (L. R. A. 1918F, 1145). Neither case is applicable. In both cases defendants were induced to sign a contract which, cunningly concealed, contained a promissory note capable of being detached from the balance of the contract. In neither case did the defendant understand he was signing a promissory note. In the instant case defendant signed both a note and a contract with the knowledge so far as this record discloses that he was signing a note and contract, the note to be detached and used as collateral, the contract expressly providing that it should be so used. Whether the contract was detached and given to him when he signed the note or was detached by the association of which he was a member afterwards does not appear and defendant has not seen fit to enlighten us, but the note was used by the association of which he was a member exactly as he deliberately agreed it should be used. The cases cited and the instant one are not comparable.

Manifestly the plaintiffs may not recover beyond the amount of their lien. But the amount of their lien was upwards of $10,000, while the judgment was for $104.17. It must be equally manifest that plaintiffs are not precluded from proceeding to collect from defendant the amount of his note because they hold other collateral. If such were the law it is difficult to perceive how they would be able to realize on any of the collateral held by them. Plaintiffs’ action was upon the note, not upon the contract between defendant and the association, and it was proper to count upon the note alone.

By a series of innuendos unjustified by the record but running through several pages of the brief, plaintiffs are charged with in some way perpetrating a fraud on defendant. The trial judge did not find any fraud in the case and would not have been justified in finding it. There is not a scintilla of evidence to sustain a claim of fraud. The plain, cold facts of this lawsuit demonstrate that defendant and others entered into an unsuccessful business enterprise and that defendant is now seeking to compel plaintiffs to stand the loss of his ill-starred venture.

The judgment will be affirmed.

Wiest, McDonald, Clark, Bird, Sharpe, Moore, and Steere, JJ., concurred.