144 Minn. 410 | Minn. | 1920
Plaintiff appeals from a judgment rendered for defendant. F. A. Horstman and H. M. Heuring were, during July and August, 1912, the president and assistant cashier respectively of plaintiff, a state bank. The court found that on July 31, 1912, Horstman, with intent to defraud defendant, represented that he was the owner of certain land in Florida, and, if defendant would sign a contract for its purchase, Horstman would
We have examined the evidence and find ample support for the findings that Horstman procured the notes through fraud, that he had no authority to fill the blanks therein, and that they were negotiated in breach of faith.
There is no quarrel with appellant’s law that an innocent holder, in due course, of negotiable paper has nothing to fear from the fact that, when it left the maker’s hands, it had blank spaces which have been filled contrary to instruction and that it has been put in circulation without authority. If plaintiff is a holder in due course there is no defense.
Hence the appeal must turn upon whether the evidence sustains the findings to the effect that plaintiff was not an innocent purchaser in good .faith for value and without notice. In determining this it must be remembered that the title of Horstman to the notes was defective within the meaning of section 5867, G. S. 1913. He obtained them by fraud and negotiated them in breach of faith, so that the burden was on plaintiff to prove that it wa's a holder in due course. Section 5871, G. S. 1913.
Heuring knew that the notes were not received in the course of the collections Horstman had made for the bank. He also knew tha-t defendant had had no transaction with the bank which could have involved the giving of these notes. How then did the notes come to name the bank as payee ? And how did Horstman come to use them as cash for the money he had collected for the bank? Satisfactory answers to these questions-must have suggested themselves as quite important to Heuring before he could venture to take the notes. “To establish good faith there must not only be an absence of knowledge of any invalidity, but an absence of circumstances which would put an ordinarily prudent man upon inquiry. If there are such circumstances, and he makes no attempt to ascertain the truth, he cannot claim good faith in accepting the instrument.” Pennington County Bank v. First State Bank of Moorhead, 110 Minn. 263, 125 N. W. 119, 26 L.R.A.(N.S.) 849, 136 Am. St. 496. Heuring made no inquiry, and, reading between the lines of his testimony, the inference is that the president’s wish was law to the assistant cashier.
The findings of fact require the conclusion of law that plaintiff take nothing. In addition to the evidentiary finding concerning Heuring’s knowledge that the notes were not the proceeds of the collections made for the bank, the court found as a fact that they were taken in bad faith by plaintiff. The evidence warrants an inference of bad faith, because, although the transaction between the bank officers was unusual- and the form of the notes to Heuring’s knowledge did not represent the truth, namely, that defendant had for value executed them to plaintiff, Heuring made no inquiry.
The judgment is affirmed.