101 Minn. 470 | Minn. | 1907
The Union National Bank of Columbus, Ohio, brought an action against Samuel Winsor and eleven other persons to recover the sum of $840 and interest thereon, alleged to be due upon a certain promissory note dated June 11, 1902, due July 1, 1905, signed by the defendants, payable to McLaughlin Bros., and by said payees claimed to have been transferred, sold, and assigned for a good and valuable consideration to the bank before maturity. The answer denied that the bank was a bona fide purchaser of the note for value before maturity, and alleged that the note was obtained by McLaughlin Bros, through fraud and false representation. When the case came to trial it was conceded, for the purposes of a motion to direct a verdict in favor of the plaintiff on the ground that it was a bona fide purchaser of the note for value, that the note was obtained by fraud, and that as between McLaughlin Bros, and defendants a defense existed, or at least that the evidence was such as required the issue to be submitted to the jury.
The question is whether the evidence required the court to direct a verdict in favor of the plaintiff. McLaughlin Bros, were dealers in "horses, and through their agents sold a stallion to the appellants. The note upon which this suit w<*s brought was one of three given as a con•sideration for a horse. McLaughlin Bros., who resided in Ohio, assigned and delivered the note to the Union National Bank of Columbus. It appears that the bank took the note in good faith without knowledge of the fraud; but it also appears, that the bank paid McLaughlin Bros, nothing for the note. John R. McLaughlin, a member of the firm of McLaughlin Bros., testified that he sold the note to the Union National Bank and that the money received therefor was placed to the credit of McLaughlin Bros. The cashier of the bank testified as follows:
Q. How much, if anything, did the bank pay McLaughlin Bros, for this note ? A. Eight hundred forty dollars. Q. How was this amount paid? A. It was credited to their account in the ledger. * * * Q. You may state from your personal knowledge, if you can, how soon after credit was given to McLaughlin Bros, for this note that they drew the money out of' the bank? A. The only answer I could give to that question would be that all of the deposits of McLaughlin Bros, are checked out from time to time in the regular course of business. This, as all others, was checked out in the regular course of business. Q. Can you state what their balance was on April 24, 1905 ? A. Yes, Lean; $19,002.66 is the amount of their balance after this credit was given them on April 24, 1905. Q. Can you state from your personal knowledge what their balance was on July 1, 1905? A. $6,927.16.
It does not appear that the account of McLaughlin Bros, was at any time less than the sum last mentioned. This does not show that the bank was a purchaser for value.
The burden was upon the plaintiff to show that it paid a valuable consideration for the note. This it failed to do. The evidence shows that when the note was discounted the bank was the debtor of McLaughlin Bros, to a large amount, and that the only effect of the discount of the note was to increase the indebtedness by the amount of $840. So long as McLaughlin Bros, did not reduce their account to less than $840, the bank was not a purchaser of the note for value. Upon receiving notice of the fraud, it had the right to charge the note to McLaughlin Bros.’ account and leave them to contest the validity of the note with the makers.
The order is therefore reversed, and a new trial granted.