172 Mich. 31 | Mich. | 1912
Plaintiffs, copartners, doing business under the name of Exchange Bank, Birmingham, Mich., brought suit in this case in justice’s court in Oakland county upon a promissory note given by defendant to the Detroit & Bay City Traction Company for $100, one year after date, with interest at 6 per cent., payable at the Exchange Bank of plaintiffs, afterwards sold and indorsed by the payee for a valuable consideration, being the sum of $100, to the plaintiffs. After a trial and determination in justice’s court, the case was appealed to the circuit court of said county, where the trial resulted in an instructed verdict in favor of plaintiffs. The case is here for review upon a writ of error. ,
The note in question was given by the defendant to the payee, which at that time was proposing to build an electric* railway from Bay City to Detroit, the survey of which had been made, passing some distance from the village of Birmingham, Oakland county. Thinking it desirable that the road should go through Birmingham, some of the residents of that village and vicinity, among them the defendant, were willing to contribute certain sums to that end. At the time the note in suit was procured from him, there was an agreement read to him, by the terms of which the payee agreed within twelve months to build, or cause to be built, this electric railway, and to have the
This transaction, briefly, amounted to this: That defendant and others were willing to give their promissory notes, each for $100, to secure the change in the course of this railway, so as to bring it to Birmingham. These notes were given by them relying upon the agreement of indemnity and reimbursement for any sums paid by them on their notes in case of the failure of the traction company to fulfill its agreement to construct and put the railway into operation within one year. At the time of the purchase of the notes in question by plaintiffs for value, it was impossible to determine whether or not the road would be built within the year, and at that time there was no forfeiture of the terms of the agreement between the traction company and the makers of these notes. The
“A failure of the consideration, in whole or in part, after bona fide transfer, does not affect the character of the purchaser, although he had full knowledge of the original consideration for which the note was given. There is no evidence of notice, or knowledge of the breach of this contract, in so far as the failure of the horse to comply with the warranty is concerned, before the transfer of these notes.” Hakes v. Thayer, 165 Mich. 476, at page 487 (131 N. W. 174), and cases cited.
In the instant case, plaintiffs, at the time of purchasing the note, had full knowledge of the contract of indemnity given by the payee to the maker. They also knew that at that time no breach of said contract by the Traction Company had occurred. In this case, by the express terms of this indemnity agreement, there could be no default under it in favor of this defendant until he had paid this note. Full knowledge of this agreement, therefore, could not impair the bona fides of plaintiffs as purchasers of this note.' The case under consideration presents a much stronger case in favor of plaintiffs than the case of Hakes v. Thayer, supra.
Other questions do not require consideration. The judgment of the circuit court is affirmed.