118 P. 508 | Idaho | 1911
This action was brought to recover on a promissory note dated May 21, 1908, for $873, principal, with interest, and $125 attorney’s fees and costs of suit. The note was given to the Great Western Beet Sugar Company of Mountainhome as partial payment on a water right. It is alleged that prior to the maturity of the note, on the 29th day of May, 1908, said sugar company for a valuable consideration transferred and delivered said promissory note to the plaintiff; that the plaintiff now is, and ever since said note was indorsed to him has been, the owner and holder thereof; that no part thereof has been paid. The answer admits the execution of said note and on information and belief denies that said note was assigned to respondent on the 29th day of May, 1908, or at any time, for a valuable consideration or for any consideration, and denies that the plaintiff is the owner or holder of said note; admits that said promissory note has not been paid, but avers that the same was given without consideration, and was obtained for the sale by the payee named therein to the defendant of an alleged water
Upon the issues thus made the cause was tried by the court with a jury and verdict and judgment rendered and entered in favor of the plaintiff as prayed for in the complaint. Numerous errors are assigned and a reversal of the judgment asked.
We will first consider the sufficiency of the evidence to shift the burden of certain proof to the plaintiff. The respondent was sworn and testified on his own behalf, that he procured the note on which this suit was brought on the 29th day of May, 1908, and was at the time of the trial its holder and
Witness was then handed a paper, which is in words and figures as follows:
“DEFENDANT’S EXHIBIT 1.
“Boise, Idaho.
“Rec’d from J. H. Garrett the following collateral to be held for guarantee for payment of a certain note of even date given said Geo. H. Shellenberger by the Great Western Beet Sugar Co. for $1523.85.
“Water right deed from L. I. Herz for 320 acres of land.
“One note of R. L. Nourse for $866.00 due in one yr.
“One note of R. L. Nourse for $873.00 due in 6 months.
“One note of Mary O. and Jas. A. Baker for $300 due in one yr.
“GEO. H. SHELLENBERGER.
“5/29/08.”'
The respondent then identified a letter written to the appellant on November 2, 1908, in which he states that the note sued on in this action was transferred to him as security for a loan. Said letter is as follows:
*328 “Boise, Idaho, ll-2-’08.
“Dr. R. L. Nourse:
City:
“Dear Sir: — Tour note for $873.00 with interest at 6% from May 21st, 1908, will be due November 21st. This note is my property and I shall be obliged if payment is promptly met.
“This note was given the Great Western Beet Sugar Co. of Mountainhome, Idaho, and was transferred to me as security for a loan now past due.
“Tours very truly,
“GEO. H. SHELLENBERGER.”
The witness also testified as follows: “All.this property mentioned in this receipt, Exhibit 1, T took as security for the payment of $1523.85.” This evidence clearly shows that the respondent took said note as security and that he did not purchase it as stated. It also appears from the record that at the time the note was given, John H. Garrett, on behalf of the Great Western Beet Sugar Co., made the following statement in writing to the appellant Nourse:
“Boise, Idaho, May 21-08.
“R. L. Nourse, Esq.,
Boise, Idaho.
“Dr. Sir: — Respecting a certain water right that you have this day purchased from this Company, I will say that if at any time within one year from this date you should decide of desire to cancel a certain amount of said water right for the one hundred and sixty acres of land and for which you have given one note for $873.00 and another for $866.00, you can have the option to so do and retain the pro rata share you have this day paid in cash.
“Tours truly,
“GREAT WESTERN BEET SUGAR CO.,
“JOHN H. GARRETT,
“Ch. Ex. Brd.”
This letter gives the appellant the option to cancel a certain amount of said water right within a year from the time of executing said notes. Other evidence shows and tends to
This court held in Winter v. Nobs, 19 Ida. 18, 112 Pac. 525, that where the indorsee of a promissory note sues the makers and on the trial they establish the fact that the note was given in payment of the purchase price of an animal sold under fraudulent misrepresentations as to the character and condition of the property sold, and under a false and fraudulent guaranty, by sec. 3516, Rev. Codes, the burden of proof shifts from the defendants to the plaintiff to show that he acquired the note before maturity in good faith and for value.
All evidence adduced tending to show respondent’s knowledge of any facts and circumstances in regard to any defect in the title to said promissory note should have been admitted. His knowledge need not necessarily be proved by direct and positive evidence, but, on the contrary, it may be shown from facts and circumstances. (See Merrill v. Hole, 83 Iowa, 66, 52 N. W. 4.)
During the course of the trial, the respondent was called for cross-examination by the opposing counsel, under the provisions of Sess. Laws, ’09, p. 334. Respondent had testified that he had been in the employ of the sugar company and that prior to coming to Boise in 1908 he had lived in Payette, Idaho. He was asked the following question: “Mr. Shellenberger, what business were you in in Payette prior to coming to Boise?” Counsel objected to said question on the ground' that it was not proper cross-examination, immaterial and not permissible under the law referred to, and the objection was
In order to show the interest of the respondent in the affairs of the company, he was asked on cross-examination as follows: “Did you make any effort to interest St. Paul parties and bring them here at the last of June or the 1st of May, 1908?” This was objected to as being long after the transaction had occurred, and the objection was sustained. Said promissory note was assigned to respondent as collateral on the 29th day of May, 1908, and whether respondent was endeavoring to interest St. Paul parties to purchase water rights in May and June of that year was proper to show the relation he bore to the company at about the time the transaction occurred, and the objection should have been overruled for that reason. Any evidence tending to show the relation which the respondent bore to the company about the time said note was assigned to him was proper.
During the trial the witness Herz had testified that he had been an employee of the company at the time respondent received the note sued on in this action and for a number of months before; that the question was pretty thoroughly aired in the newspapers down there (Mountainhome) that the Great Western Beet Sugar Company had a pretty bad reputation. Counsel for respondent thereupon asked him the following question: “Would that reputation affect the validity of the notes it took for water deeds?” Counsel objected to said question as incompetent and calling for a conclusion from the witness, and the court overruled the objection and the witness testified that he did not suppose that reputation would affect the validity of the note. The court erred in permitting the witness to answer that question. The validity of the note was the very question which the court and jury were called upon to decide. The witness having been an employee of the company, the jury might look upon him as being more capable of determining whether the note was valid than the jury was
The giving of instruction No. 3 is assigned as error. Said instruction is as follows:
“Under the statutes of this state a promissory note is presumed to have been given for a valuable consideration, and where indorsed by the payee without showing the date on which such indorsement was made, the law presumes that such indorsement was made before such note became due by its terms, and that such indorsement was for a valuable consideration, and where, as in this case, the answer admits the giving of the note sued on by the defendant, the burden of proving the defense of want of consideration is on the defendant, and he must not only prove a total want of consideration for the giving of such note, but must also prove by a preponderance of the evidence that the plaintiff had knowledge of such want of consideration at the time of taking such note, and failing to do so you will find for the plaintiff. ’ ’
Under the provisions of see. 3516, Rev. Codes, the giving of said instruction was clearly error. Under the provisions of that section', every holder of a promissory note is deemed prima facie to be a holder in due course of the negotiable instrument, but when it is shown that the title of anyone who has negotiated the instrument is defective, the burden is on the holder to prove that he acquired the title as a, holder in due course. The evidence on behalf of the defendant showed that the said promissory note was given without consideration, and that there was a written agreement between Garrett, the manager of the sugar company, and the appellant to the effect 'that if the appellant desired to cancel a certain amount of the water right purchased, and for which he had given the note sued on and' another note, he was given the option to do so and retain the pro rata share of said water right which he had paid for in cash. It not only appears from the evidence that the transfer of said note to respondent constituted a breach of faith amounting to fraud on the appellant, but it also appears that the pretended water right, for which said notes
“First. That the instrument is complete and regular upon its face;
“Second. That he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact;
“Third. That he took it in good faith and for value;
“Fourth. 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.”
It was held in German-American Bank of Rochester v. Cunningham, 97 App. Div. 244, 89 N. Y. Supp. 836, that where a maker of a note sued on by the indorsee testified that it had been negotiated in violation of an agreement under which it was given, such negotiation constituted a breach of faith amounting to fraud upon the maker, and required proof on the part of the holder, before recovery could be had, that the note was received in the ordinary course of trade for a valuable consideration and without the knowledge of such agreement. In the case at bar, it became the duty of respondent to show that he had no knowledge of such agreement, and ■that he had no knowledge or information that the same was obtained by fraud, in that no consideration whatever was given therefor. By that instruction the court said to the jury that the appellant must prove by a preponderance of evidence that the plaintiff had knowledge of such want of consideration at the time of taking such note, and that failing to do so they must find for the plaintiff. Under the law it was only necessary for the defendant to first show that Garrett negotiated said note in violation of his option contract with him, and under such circumstances as to amount to a fraud upon the appellant, or that he obtained his signature thereto without consideration. It was not necessary for the appellant to
It is contended that the giving of instruction 14 cured the vice contained in instruction 3. The correct rule of law is laid down in instruction 14, but it is in direct conflict with the rule laid down in instruction 3, and the jury evidently followed the erroneous instruction and disregarded the correct one.
The giving of instruction 9 is assigned as error. Said instruction is as follows:
“You are instructed that the holder of such note means the payee or indorsee thereof, who is in possession of such note, or the bearer thereof, and if you find from the evidence that the plaintiff is such a holder, then he is deemed to be the holder thereof in due course, that is, that he became the holder thereof before it was overdue and that he took it in good faith and for value, and at the time it was transferred to him he had no notice of any infirmity in the' instrument or defect in the title of the person transíerimg it to him.”
That instruction is misleading and should not have been given. However, when taken in connection with instruction No. 14, we do not think the jury was misled by it. It conveys the idea that the holder of a note, who is in possession of it, is a holder in “due course,” and while the latter part of the instruction attempts to define a holder in “due course,” it only partly does so. (See sec. 3509, Rev. Codes.)
It is contended that instruction No. 11 is in conflict with the provisions of see. 3516 above cited. Said instruction is as follows:
*335 “You are instructed that the answer having admitted the execution of this note, but denying that the plaintiff is the owner by purchase before maturity, for a valuable consideration, and the defendant, having alleged want of consideration in the plaintiff, if you find from the evidence that the plaintiff is the holder of such note, then the burden of proving such allegation is on the defendant, by a preponderance of the testimony.”
The court there instructed the jury if they found that the plaintiff is the holder of the note, then the burden of proving that the holder had not paid a valuable consideration therefor was on the defendant, whereas under the law, whenever it is shown that the title of any person who has negotiated the instrument is defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as a holder in due course, and in order to show that he is such holder he must show the four conditions prescribed by said sec. 3509. Such instruction apparently ignores said provisions of the statute and advises the jury that although a defect or infirmity is shown in the note, the defendant must show by a preponderance of evidence the want of consideration on the part of the plaintiff, which is not the law.
By instruction No. 15 the jury was instructed that they would be justified in giving weight with caution to rumors, newspaper articles, general statements, conditions of canal system, etc. It appears from the record that the respondent had knowledge and information in regard to rumors, statements and newspaper articles and of the condition of the canal system, and for the court to instruct the jury that they would be justified in giving weight to such testimony with caution might convey to their minds that very little, if any, weight should be given to such evidence. The court, however, failed in that instruction to state to the jury that they were the exclusive judges of all questions of fact and of the weight to be given to the testimony, but did instruct them to that effect in the eighteenth instruction, which we think was sufficient. However, when the court cautions the jury in
For the reasons given, the judgment must be reversed, and it is so ordered, and the cause remanded for a new trial in accordance with the views expressed in this opinion. Costs awarded to the appellant.