68 Md. 590 | Md. | 1888
delivered the opinion of the Court.
The cause of action in this case is a promissory note dated February the twentieth, eighteen hundred and eighty-four, signed by the appellant and payable in fifteen months after its date to Andrew J. Guise and Company, for twenty-five hundred dollars. It was endorsed by the payee to the order of W. H. Harrison, from whom the appellee claims to have purchased it in good faith, without knowledge or notice of any infirmity, two months before its maturity, for eighteen hundred and fifty dollars. Harrison endorsed the note in blank. Upon the trial in the Court below after all the evidence had been submitted, the appellee presented one prayer and the appellant three. The Court of Common Pleas granted that of the appellee and rejected all of the appellant’s. From these rulings, the judgment being against him, the defendant has appealed.
By the instruction granted at the instance of the appellee the jury were directed that if they should find that the defendant signed the note ; that Guise endorsed and passed it to Harrison ; that Harrison passed it to the plaintiff, for a valuable consideration before said note became
At the trial it was'shown that this note, together with two others, each for the like amount, and another for eight hundred dollars, had been signed by the appellant and made payable to Guise, and that they had been delivered to the latter without any consideration whatever. According to one version of the transaction Guise was to raise the money on these notes, and after deducting five per cent, commissions, he was to pay the net proceeds to the appellant; hut according to Guise’s own testimony the appellant was indebted to him in the sum of twenty thousand dollars for alleged services rendered the appellant in some other business affair. The nature of these services is best stated in the language of Guise himself: He says, “ On several occasions 1 had occasion to go into Mr. Williams’ office, and I there met him” (the appellant) “one day, and he picked up off the table a piece of paper which afterwards proved to he a deed ; I read it over; it was a very short paper, and he said his father and Mr. Orville Horwitz wanted him to sign that deed; I read it carefully and I said ‘Ernie, if. you do that you will sign away your patrimony.’ • He said he would never do it unless he was crazy or drunk; the result was that they did spirit him away to Europe; when he came back he came-right back to me; I advanced some more money; he told me about the young lady he was about to marry, and I think they both came to see me frequently.” “ And these are the services for which you claim twenty thousand dollars ?” “I
It has been explicitly decided by this Court in Totten vs. Bucy, 57 Md., 452, that where the defendant shows that the note sued on had been tainted in its inception or indorsement with fraud, or had been procured without consideration, or lost or stolen before it came to the possession of the holder, the burden of proof is shifted, and it then is “ incumbent upon the plaintiff to show that he acquired the note bona fide, for value," in the usual course of business, before maturity, and under circumstances that create no presumption that he knew of the existence of the facts that impeached the validity of the instrument.” It is obvious from the brief statement which we have made of the facts bearing upon this branch of the case, that there was evidence before the jury tending to show that the note was obtained without any consideration whatever,
, Inasmuch as the first-prayer presented hy the appellant placed the burden of proof upon the appellee to show bona fides x in his purchase of the note, in the event of the jury finding the circumstances indicative of the existence of imperfections in its indorsement, we think, for the reasons already assigned, that it correctly presented the law of the case in this respect, and that it should, consequently, have been granted. It places the burden of proof where the law requires it to rest, under such circumstances, and forbids a recovery unless the holder of the note satisfied the jury that he was the bona fide owner for value before maturity, without notice or knowledge. There is no room to doubt the correctness of this prayer under the authority of Totten vs. Bucy and the cases there referred to. The refusal of the Court to grant it was such an error as requires a reversal of the judgment.
By the second'prayer of the appellant the Court was asked to instruct the jury, to the effect that in determining whether the plaintiff acted in good faith in purchasing the note, the jury might consider the circumstances in the knowledge of the plaintiff at that time, and if they should find that there was anything in those circumstances calculated to excite the suspicion of a reasonable man, who desired to avoid participation in the circulation of a fraudulent note, and calculated to cause such a man to make proper inquiry as to its bona fides, and that plaintiff failed to make such inquiries, that then they might infer want
■ By the third prayer the Court- was asked to instruct the jury, that if they should find that the note was procured by fraud or was fraudulenly negotiated, then, even though they should find that the plaintiff purchased the note before maturity in good faith, for value, without notice as to such fraud, the plaintiff would only be entitled to recover the amount actually paid for the note, with interest in the discretion of the jury.
There was no error in the rejection of this prayer. It must be admitted, however, that there is some diversity of opinion with respect to the legal proposition it asserts. That proposition is broadly stated in 1 Dan. Neg. Instruments, sec. 758, and in 2 Randolph on Com. Paper, sec. 452 ; but it séems to us that the authorities quoted or referred to by these authors do not, with a few exceptions, support the text. In our opinion the weight of authority and the reason of the law are decidedly the other way. It would protract this opinion to an unreasonable length if we were to review each of the cases relied on by tbe appellee, and each of those referred to by the text-writers; but it may be stated as the result of a careful examination
Of the first class the case of Allaire vs. Hartshorne, 1 Zab., 663, is an illustration. In that case Hartshorne sued Allaire on a note of fifteen hundred dollars at ninety days, made by Allaire. The note had been misapplied by one Pettis, to whom it had been intrusted. He pledged it to the plaintiff as a security for seven hundred and fifty dollars borrowed on Hartshorne’s check, and also as security for a four hundred dollar acceptance. The Court charged the jury that if any consideration was given by the plaintiff for the note, “they should not limit their verdict to the amount so given, but should find the whole amount due on the face of the note.” The case was carried to the Court of Errors and Appeals of New Jersey. The Court reversed the judgment and held that, although a bona fide holder, Hartshorne could recover only the amount of his advances. The case of Dresser vs. Missouri and Iowa Railway Const. Co., 93 U. S., 92, belongs to the second class. In this class of cases the Courts have limited the recovery to the sum paid before the purchaser was chargeable with notice of the infirmities of the note; and have refused to allow a recovery of the sum paid after obtaining such notice, upon the ground that as to the sum last paid he was not a bona fide purchaser without notice.
Neither of these classes of cases is applicable here. Those which are directly in point are so opposed to the fundamental principles governing the transfer of and the acquisition of title to commercial paper, and are so emphatically repudiated by the very highest authority' that we do not feel warranted in following them. Commercial paper may be-sold and bought for what it will bring. One who buys it' in good' faith before maturity for value, without notice or knowledge of'any defects in it,'acquires a title to it good against the world. Murray vs. Lardner, supra. The title thus purchased is not a title to a part of the note, but to the whole note. Such a purchaser becomes the absolute owner of it with every incident and right of complete ownership. But the doctrine of the prayer we are considering, limits and qualifies the purchaser's title and ownership, and, though he may have acted in the most absolute good faith', restricts his right of recovery to the sum actually paid by him for the instrument. The adoption of such a doctrine would, in a great- -measure, fetter and impede the negotiability of all commercial paper sold at a discount, and would require the purchaser, for his own protection, to make inquiry in regard to the origin and transfer of the note—or to take it, without such inquiry, at his peril. This would be disastrous in its consequences, and is in direct opposition to the best considered cases. In the case of Dresser vs. Missouri & Iowa Railway Const. Co., supra, suit was brought by a bona fide indorsee against the maker, and it was shown that the holder agreed to purchase before maturity and in good faith; that he paid part of the purchase money but before paying the residue he was made aware of the fraud through which the note was procured, but notwithstanding that knowledge he paid the residue. He claimed, however,
For the errors indicated in granting the instruction oí the appellee taking from the jury the question of the appellee’s bona fides in acquiring the note, and in rejecting the first prayer of the appellant, the judgment must be reversed and a new trial will he awarded.
Judgment reversed, and new trial awarded.