212 F. 56 | 8th Cir. | 1914
These are appeals from a judgment rendered in an action brought by the Cattle Company against George H. Smith et al., for the purpose of having certain promissory notes, a mortgage securing the same, and assignments of certain land contracts and certificates executed for the same purpose canceled. Smith filed a cross-bill, asking to have the amount for which he held the notes,
“$1600.00 Sharon Springs, Kan., November 19, 1907.
“On or before one year after date, we, or either of us, promise to pay to IS. H. Luikart or order, at the State Bank of Sharon Springs, Sharon Springs, Kansas, the sum of one' thousand six hundred dollars, for value received, with interest at 7 per cent, per annum from date. Interest payable annually, and defaulting interest to bear same rate of interest as principal. The makers, indorsers and guarantors of this note hereby severally waive presentment of payment, notice of nonpayment, protest and -notice of protest, and diligence in bringing suit against any party hereto, and sureties consent that time of payment may be extended without notice thereof.
“The Nelson Land & Cattle Co.,
“Fred P. Nelson (Pres.).
“Gust A. Nelson (Sec. and Treas.).
“Celia M. Nelson.
“Hugo E. Nelson.”
The remaining four.notes were of the same tenor and effect, except that they were for the sum of $3,350 each, and became due in two, three, four, and five years from date. The Cattle Company also executed and delivered a mortgage on real estate and assigned in blank and delivered to Luikart certain land contracts and certificates to secure the payment of the notes. The Cattle Company was a corporation, and signed the notes before delivery without any consideration therefor passing to it. On or about May 19, 1908, Luikart, the payee of the notes, for value received indorsed and delivered the notes in due course to .Roy C. Smith and Albert Anthes, doing business under the firm name of Anthes & Smith. The indorsement on each note was as follows:
“Without recourse; pay to the order of Anthes & Smith — E. H. Luikart.”
The’mortgage was duly assigned by Luikart to Anthes & Smith, and the land contracts and certificates transferred to them by delivery. Subsequent to the indorsement of the notes to Anthes & Smith, but. before maturity, they were transferred by them to the defendant and cross-complainant, George H. Smith, in part payment of an antecedent debt owing to Smith by’ Anthes & Smith. The mortgage, land contracts, and certificates were also transferred with the notes. The note for $1,600, due November 19, 1908, was indorsed to George H. Smith in blank by Anthes & Smith. None of the other notes were indorsed by them. No attack is made upon the mortgage or assignments of the land contracts and certificates, except through the attack on the notes; hence they need not be further considered in this opinion. George H. Smith was not a party to any illegality affecting the notes, and fraud is not claimed on the part of any one.
It is claimed that the notes are not negotiable in form by reason of the following language found therein:
“The makers, indorsers and guarantors of this note hereby severally waive presentment of payment, notice of nonpayment, protest and notice of protest, and diligence in bringing suit against any party hereto, and sureties consent that time of payment may be extended without notice thereof.”
“(1) Must be in writing and signed by tbe maker or drawer; (2) must contain an unconditional promise or order to pay a sum certain in money; (3) must be payable on demand, or at a fixed or determinable future time; (4) must be payable to order or to bearer.”
“And sureties consent that time of payment may be extended without notice thereof.”
The notes, in our opinion, being negotiable in form, it remains to inquire as to the-rights of George H. Smith. What we have said so far in this opinion must result in an affirmance of the judgment below, so far as it was in his favor, as the $1,600 note was received by him in due course by the indorsement of Anthes & Smith. We think that, if George IT. Smith must stand on the character of his own title, and cannot claim protection by virtue of the title of Anthes & Smith, then the ruling of the tidal court as to the other four notes was right. An indorsee of negotiable paper in due course may obtain a better title than his indorser, and in that event may stand upon such title; but is it necessary that he be an indorsee in order to claim the title of a trans-ferror, who was an indorsee in due course? In other words, cannot George H. Smith, although the notes were transferred to him by delivery, use the Anthes & Smith title to insulate the ultra vires attack
“See. 5302 — Wliei'e the holder of an instrument payable to his order transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferror had therein, and the transferee acquires, in addition, the right to have the indorsement of the transferror; but for the purpose of determining whether the transferee is a holder in due course, the negotiation takes effect as of the time when the indorsement is actually made.”
“Sec. 5311 — In the hands of any holder other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were nonnegotiable; but a holder who derives his title through a holder in due course, and who is not himself a party to any fraud or illegality affecting the instrument, has all the rights of such former holder in respect of all parties prior to the latter.”
“Definitions and meaning of terms. In this act, unless the context otherwise requires: * * * ‘Holder’ means the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof.” Gen. St. 1909, § 5248.
The same section provides that the word “bearer” when used in the act means the person in possession of a bill or note which is payable
The result of what we have said is that we are of the opinion that George H. Smith has the same title ,to the four notes in controversy that was possessed by Anthes & Smith, by virtue of the statutes of Kansas, and that, possessing such title, he is entitled to enforce payment of the same against the Cattle Company. We have thus far considered the question last discussed with reference to the statutes of Kansas, and we think our interpretation of the same is in line with the decision of the Supreme Court of Kansas in Underwood v. Fosha, 89 Kan. 768, 133 Pac. 866; and we think the weight of authority, independent of statute, is in favor of the views hereinbefore expressed. Section 803, 1 Dan. Neg. Inst. (5th Ed.); Gunnison County Commissioners v. Rollins, 173 U. S. 255, 19 Sup. Ct. 390, 43 L. Ed. 689; Town of Fletcher v. Hickman, 165 Fed. 403, 91 C. C. A. 353; Cromwell v. County of Sac, 96 U. S. 51, 24 L. Ed. 681; Bodley v. National Bank, 38 Kan. 59, 16 Pac. 88.
The case of the First National Bank v. McCullough, 50 Or. 508, 93 Pac. 366, 17 L. R. A. (N. S.) 1105, 126 Am. St. Rep. 758, is relied upon by counsel for the Cattle Company. This case may be said to be contrary to the views hereinbefore expressed. It has been reported in 17 L. R. A. (N. S.) 1105, and an interesting note accompanies the report of the case, in which the annotator does not agree with the conclusion reached in the case cited.
We place our decision upon the statutes of Kansas as construed by the Supreme Court of that state, and as we construe them. We cannot see how the ruling thus, established can work any injustice. The Cattle Company could not have avoided the notes on the ground of ultra vires in the hands of Anthes & Smith, and they are in no worse position now than they would have been if Anthes & Smith still owned them.