109 Neb. 86 | Neb. | 1922
This is an action brought by appellee on a promissory note for the sum of $12,500, dated May 19, 1919, due one year from date, with interest at 8 per cent, from its date, executed by the appellant, H. E. Vansyckle, in favor of the Missouri Valley Cattle Loan Company. The plaintiff alleged that before maturity of said note the Missouri Valley Cattle Loan Company, for a valuable consideration paid by plaintiff in the regular course of business, sold, indorsed, transferred and delivered it to plaintiff. The defendant, Vansyckle, denied that the Missouri Valley Cattle Loan Company sold, indorsed, transferred and delivered said note to plaintiff; denied that plaintiff was the owner and holder for value of said note; and alleged that
‘ The question now to b.q determined is whether or not. the purchase of said note, in good faith, for a valuable consideration, by plaintiff, and its- indorsement and delivery before it became due by the payee thereof to plaintiff, was established by the evidence to such an extent that there was nothing for the jury to pass upon. ' If each and all of said facts were not so establishéd, then such of them as were not so established were for the jury to determine, and not the. court, and there was ,errpr in not submitting the same to the jury. ,.; ■ ■
To prove that it was an innocent holder of the note for value, in good faith, before the same became due, plaintiff called as a witness F. P. Elmore, its cashier. He. testified that he had general conduct of the affairs of plaintiff,-and had been making the loans of the bank and. purchasing notes for the bank since June 1, -1919; that nobody else during that time made loans for or purchased notes.for the. plaintiff. He testified that during the fall and summer of 1919 he purchased for plaintiff proniissorv. notes given to the Missouri Valley Cattle Loan Company to the amount of about $68,000, and that included-.therein
“You understand .the Mo. Valley Cattle Loan Co. indorses all . this, paper & you will see by the statement I sent you their assets are liquid. Unless you write me to the contrary Monday, I will write the Cattle Loan Co. to send notes to you with S. U. attached for par & accrued interest less 5% which you apply on my note for following: Vansyckle note $12,500; you have reports.” And after listing several other notes, amounting in the aggregate, with said Vansyckle note, to $31,592.75, said letter proceeds: “& accrued interest less 5% of face to apply on my indebtedness. * * * Your friend Shaffer has taken another $10,000 this week.”
Previous to this time said Elmore had received a letter from said Huttig, which is in evidence, bearing date July 3, but which he testifies as July 30. This letter is as follows:
“Dear Mr. Elmore: I am inclosing you a list of notes I have for sale. The first list from same parties Shaffer Bros, bought entire, viz., $70,000 of them. This list shows maker, net worth, rate (8%), maturity & amount. All notes are indorsed with full recourse by the Missouri Valley Cattle Loan Co. whose statement I inclose. The sale of these notes will wipe out their notes & accts. payable. Will sell you the notes at face & accrued interest & my 5% commission off the face will go to you to apply on my interest note. I have until Aug. 10th to sell these, and T hope you can handle from $30,000 to $50,000 of them. Will be here until Saturday, so write me here fully. Shaffer Bros, will take $50,000 of this lot also. These- men are all well-to-do farmers & bankers. Yours truly, H. W. Huttig.”
Elmore also testified that before the purchase of the Vansyckle note plaintiff had been furnished with a finan
It would seefn that the , paying of a commission of. 5 per cent, by the payee of said note for selling the same would not be in the ordinary course of business unless some reason therefor is shown. . The name of payee, Missouri Valley Cattle Loan Company, would imply that: it was engaged in loaning money on cattle security or to farmers. The note bore interest-at 8 per cent, and was due in one year. It was'sold within about three months after its date, and 5 per cent, of the face-value paid as a commission for making the sale. This would make the cost to the Missouri Valley Cattle Loan Company for tlm money it received for the note such that, had it been paid as-interest on that amount,of money to the maturity -of the note it sold, the interest would be usurious.
Negotiable, notes bought by. a bank cashier cannot as a matter of law be said to have been purchased in good faith in the usual course of business, so as to cut off the defense of fraudulent inception on. the part of the maker, a farmer, known to the cashier, who had never engaged in any business requiring the discounting of paper to the extent represented by the notes which were executed, 200 miles from home, if they were purchased at a usurious rate of interest from the payee, a stranger, without inquiry-on the part of the cashier as to their origin or the existence of equities in favor of the maker; the question of good faith is. for the jury. Canajoharie Nat. Bank v. Diefendorf, 123 N. Y. 191. The cashier of a bank, who is also an owner of its capital stock, is-not a disinterested witness when testifying as to the good faith of his' purchase of
■ We -do not think all of the facts set up in the rule above announced are necessary to make the question of good faith in the purchase of a note a question for the jury..
“Imán action against the maker upon promissoi’y. notes, when it is shown that they were obtained by fraud practiced .upon the maker and were without consideration, the Dlaintiff in order to recover must allege and prove that he tQok the notes in good faith in the usual course of business and paid value, without notice of any defense thereto;” Ostenberg v. Kavka, 95 Neb. 314. “In such case the question of the good faith of the plaintiff is for the jury, and their, verdict: cannot be' controlled and directed by the court, if one might reasonably derive inferences from the character .and circumstances of the transaction which would lead -ordinary minds to a different conclusion.” Ostenberg v. Kavka, supra.
. The plaintiff had notice before it purchased the note in suit that the payee of the note was paying a commission Of 5. per cent, for selling notes amounting to at least f80,000. This with the notes then offered plaintiff would make fill,592,75. It would seem strange that the Missouri Valley Cattle Loan Company, after loaning its money at 8 per cent, interest, should pay 5 per cent, for selling its notes due within nine months from the time of their sale. It could not be for the purpose of raising money to again loan out at 8 per cent. The transaction is not shown by the evidence of plaintiff to be in the ordinary course of business on the part of the payee of a note which is engaged in the business‘of loaning money and taking notes therefor. • No attempt is made to show that plaintiff sought any explanation as to why the Missouri Valley Cattle Loan. Company was selling its paper out of the ordinary course, of business of legitimate concerns of its character. The ambiguous financial statement of Missouri Valley
“Whether plaintiff has sufficiently satisfied the burden resting upon him and made good his claim to be an innocent purchaser of a note is a question of fact for the jury, save in those instances where the testimony is not only consistent with the good faith of such purchase, but is such that no fair-minded person can draw any other inference therefrom.” In the opinion in said case it is said: “Although lack of knowledge, suspicious circumstances, failure to make inquiry, and negligence will not in themselves establish bad faith in the plaintiff, such facts, where the burden is upon him to establish the innocent character of his purchase, and the only evidence offered was his own testimony, constitute evidence of bad faith sufficient to take the question to the jury. Ostenberg v. Kavka, 95 Neb. 314.”
This court in Central Nat. Bank v. Ericson, 92 Neb. 396, said: “Reasons for this conclusion were recently stated by the supreme court of Iowa as follows: ‘It is ordinarily to be expected, in these cases, that the purchaser will testify to his good faith and want of notice, and that defendant is compelled to rely upon circumstantial evidence to rebut such showing. Whether plaintiff has sufficiently satisfied the burden resting upon him and made good his claim to be an innocent purchaser is therefore a question for the jury, save in those instances where the testimony is not only consistent with the good faith of such purchase, but is such that no fair-minded person can draw any other inference therefrom. A categorical denial of notice or knowledge is something which in many, if not in most, instances cannot be opposed by direct proof; and the credibility of the witnesses, their interest in the case,
The plaintiff herein had notice of all these facts herein-before stated, and without knowing the signature of the maker of said note, nor that of the person by whom the alleged indorsement of said note purports to have been made, not even knowing that such person was an officer of the payee nor that he had authority as such officer to make such indorsement, purchased the same. Reasonable minds might say that a note purchased with such knowledge and under such circumstances was not purchased in the ordinary course of business. Whether the purchase with such knowledge and under such circumstances was a purchase in. the ordinary course of business was therefore a question for the jury. A purchase in the ordinary course of business is not proved by proof that the purchase was made in the manner that the purchaser usually transacts such business. It must be shown to have been purchased in the manner that such business is generally transacted by persons engaged in that business who have due regard for the interests of all persons affected by the transaction.
A purchaser in good faith should be one who has purchased with due regard for the rights of the maker, and not one who, relying wholly upon paying value for the note and purchasing before maturity without knowledge of any defense, is indifferent as to whether or not the same was honestly obtained from the maker. Where the evidence tends to show such indifference the question of good faith is for the jury. We think from the foregoing facts and circumstances in evidence the question of the good faith of plaintiff in purchasing said note, and whether it
.The' defendant/. Vansyckle, testified that Elmore, the cashier of plaintiff, called at his home in 1920, and told him he was out trying to make settlement for tile, notes that they had purchased from the Missouri Valley Cattle Loan Company, and'told him that Huttig had-owed him a large amount of money and he was'-getting his money from this'man Huttig in the sale and purchase of -these notes-; that this man Huttig was getting 10 per cent., commission. He-'further said he knew there was something wrong with rhe notes; that he: knew they were obtained through fraud, and that they were discounting the notes 25 per cent., to him. The witness, Elmore, on rebuttal, denied making the foregoing statements- to' the defendant, Vansyckle, and denied making, each' of them. However improbable, the previous facts ■ testified to by the defendant, Vansyckle, the- weight and credit to be given to him as a. witness, and tó his said testimony, was for the jury. The-.court could not-take it from the jury. If true, they should be ¡considered by the jury in determining the good faith ’of plaintiff and whether its purchase of said note was in the ordinary course, of business.
In addition-to the foregoing reasons'for'finding error in taking the case from the jury, we find in the record'no evidence nor offer off evidence to prove that said-note was indorsed by the . payee at any time. The note ■ was'introduced in evidence, but the indorsement on the back thereof purporting to be that of Missouri Valley Cattle Loan Company was not offered'in evidence, nor was there "any'attempt to prove that-the indorsement was made- by the Missouri Valley ■ Cattle Loan Company or by any- officer thereof, .Or to prove- the authority of any person to make such.indorsement; The offer and reception in evidence of
The appellee quotes from First Nat. Bank v. McKibben, 50 Neb. 513: “In an action by an indorsee of a negotiable promissory note against the maker, its mere production by the plaintiff, duly indorsed, raises a presumption of law that it was transferred before maturity and for value, and the burden is on the defendant to show that plaintiff is not an innocent holder.” The foregoing does not say that the mere production of a note raises a presumption of law that the note was duly indorsed. Before the presumption of laAV therein set forth arises, the indorsement of the note, if denied, must be proved. The provision of the statute that eArery holder is deemed prima facie a holder in due course is held to refer tó a holder by genuine indorsement. Vickery v. Burton, 6 N. Dak. 245. It cannot be said that the indorsement by payee Avas admitted by the defendant, Vansyckle, by his plea of fraud in the inception of the note, nor by any other act during the trial. While possession by plaintiff was prima facie evidence of ownership of the note, indorsement of such note before the same is due by the payee must be proved, where the same is denied in the answer, to constitute one a holder in due course, so as to cut off all defenses thereto. Britton v. Berry, 20 Neb. 325.
The possession of the note by plaintiff, being prima facie evidence of the OAvnership thereof, if there had been no fraud in its inception, plaintiff would haA-e been entitled to recoArer without proof of indorsement by the payee. But upon the admission by plaintiff of fraud in the inception of the note, the burden of proof Avas cast upon plaintiff
The evidence shows that the cashier of plaintiff Avas the only person connected with plaintiff bank participating in the purchase of said note. It Avas unnecessary, therefore, for plaintiff to prove that no other officer of plaintiff had notice of defenses to the. note.
The court erred in not submitting to the jury the question of good faith of plaintiff in purchasing said note and its purchase in the ordinary course of business. The judgment is therefore reversed as to the defendant, H. E. Vansyckl'e, and remanded for new trial as to him.
Reversed.