56 Iowa 559 | Iowa | 1881
The intervenor averred in his petition tha'l he purchased the notes of the payee through one Twogood as his-agent; that Twogood retained the notes for collection; that while they were so held by Twogood, one Elliott, a partner of Twogood, wrongfully obtained possession of the notes, and wrongfully and fraudulently indorsed and transferred the same to the plaintiff. He further averred that the plaintiff has no right or interest in them, but that they belong to him. He did not aver that the plaintiff is not a bona fide holder for value. But the plaintiff for answer to the petition for intervention not only denied the allegations of the petition, but ayerred that it was a bona fide holder for value, and this averment the intervenor by reply denied.
Upon the trial the plaintiff introduced in evidence the notes. The intervenor then introduced evidence which proved very clearly all the allegations of his petition. The plaintiff then introduced evidence showing that it took the notes from Elliott as collateral security for indebtedness due from Two-good & Elliott, and without notice of the true ownership. Upon cross-examination of the plaintiff’s witnessess it was
The rule enunciated finds support also in numerous analogous decisions where the maker proves that the note was procured from him by fraud. Listerman v. Field, 9 Gray, 33; Perrin v. Noyes, 39 Me., 384; Smith v. Sac County, 11 Wall., 139; Devlin v. Clark, 31 Mo., 22; Perkins v. Prout, 47 N. H., 387; Harbison v. Bank of Indiana, 28 Ind., 133; Bailey v. Bidwell, 13 M. & W., 73; Fitch v. Jones, 32 Eng. Law and Eq., 134. The same doctrine is recognized by the'text writers. Chitty on Bills, 260; Byles on Bills, 190; 2 Parsons on Bills and Notes, 438; Story on .Promissory Notes, 196.
The principle upon which the rule is based is said in 1st Daniel on Negotiable Instruments, 611, to consist in the fact . -that- “ there is a natural presumption that an instrument so -Issued — that is, by fraudulent procurement — would be quickly ■transferred to another, and unless he gave value, which could 'be easily proved if given, it would perpetrate great injustice .and reward fraud to allow him to recover.”
Why for the same reason the holder' of a negotiable note which he had received from a person who had stolen it, or .otherwise wrongfully obtained it and made (a fraudulent ■.transfer of it, should not upon an issue as to title have the '.burden of proving, otherwise than merely presumptively by .evidence of possession, that he paid value, we are unable to
It is true that in Kelly v. Ford, 4 Iowa, 140, a different doctrine might seem to be held. That was an action upon a promissory note in which the maker pleaded fraud. Stockton, J., said: “A jury would not be authorized by any evidence of fraud to infer that the note was assigned after maturity, or that no consideration was paid for it by the holder.” The view which the learned judge took of the law is further shown by a remark made concerning an instruction which the. defendant asked and which was refused. The instruction was in these words: “ "Wherefraud or illegality is established there is a presumption of law that there was no consideration paid by the assignee to the assignor for the transfer of the note; but the presumption of law is that the payee not being able to sue in his own name has handed it over to another person to sue upon it for his benefit. This presumption, so raised by law, must be rebutted by the holder showing that he gave value for the note.”
After holding that the instruction was t properly refused because there was no evidence of fraud, the learned judge proceeded to remark that the instruction was incorrect and properly refused, because it did not rightly state the law. In support of his view he cites Morton v. Rogers, 14 Wend., 580; and Vallett v. Parker, 6 Wend., 621. An examination of these authorities, we think, will show that the learned judge did not apprehend their full import. Besides, as no fraud was shown it was unnecessary to consider the question as to what the correct rule would have been if it had been shown. We can hardly think, therefore, that the attention of the court was drawn to this question.
It was certainly not incumbent upon the plaintiff to .aver in its petition that it paid value. As against the maker having no. defense the plaintiff was entitled to recover even if it held the notes wholly as collateral security for an antecedent indebtedness and without other consideration. It would, indeed, as against the maker having no defense, have been entitled to recover if it had held the notes as a gift. The intervenor, in order to affect the plaintiff’s right to recover, was obliged to rely upon a fact not material prior to intervention. It is possible, therefore, that the petition for intervention was demurrable. That it was would seem tobe indicated by Clapp v. Cedar County, 5 Iowa, 15, an authority cited by the plaintiff and relied upon by it with great confidence. In that case it was held in substance that in order to let in the defense of fraud in the procurement of a negotiable instrument as against a holder who has taken the instrument before maturity without notice, it is incumbent upon the maker to aver that the holder did not pay value.
We have no occasion now to express an opinion as to the correctness of that ruling. If it should be conceded to be correct it would not change the rule of evidence above expressed. The averment that the holder did not pay value would be presumptively supported by proof by the defendant of the frnud, where that was the defense, or, in a case like the present, by proof by the intervenor of the true ownership, and wrongful abstraction and transfer.
The important consideration, in determining the correctness of the decree below, is, that while it may be that the intervenor should have averred in. his petition for intervention that the plaintiff did mot pay value, yet the petition for inter
Affirmed.