73 P.2d 393 | Okla. | 1937
This is a suit on a check. Defendant orally agreed to loan Horn and Faulkner a sum of money to "help them out in some oil drilling," and they agreed to issue to him "some trust stock that would guarantee the repayment." Defendant then wrote a check and designated "Horn Faulkner Oil Trust" payee as directed by them. The next day defendant stopped payment on the check before it was presented to the bank. The stock was never delivered and the drilling operations proceeded only as far as the cement foundation.
The check, without being presented for payment, was then indorsed "Horn Faulkner, by L.H. Horn," and delivered to plaintiff in part payment for labor and materials furnished to "Horn Faulkner Oil Trust." Plaintiff made no investigation regarding the check when he received it, but there was nothing on its face to indicate payment had been stopped. After two unsuccessful attempts to cash it, he brought this action. Judgment was rendered for plaintiff, and the defendant, the maker of the check, brings this appeal.
The first question is whether plaintiff is a holder in due course. In order to be a holder in due course, where the instrument is payable "to order," plaintiff must plead and prove that the check was indorsed by the payee. Where the indorsement is not proved to be that of the payee, or where there is no indorsement at all, plaintiff takes, not as an innocent purchaser, but subject to the defenses that might have been interposed against the payee. Phelps v. Womack (1917)
Plaintiff further claims that "Horn Faulkner Oil Trust" was a fictitious name, which fact was known to defendant, and therefore the check will be considered payable to bearer (section 11308, O. S. 1931) and requires no indorsement to constitute the transferee a holder in due course. But a fictitious payee is where none in fact exists. There is no evidence that the Oil Trust was in fact fictitious. Both Horn and Faulkner were actual persons known to the defendant. If there are actual persons or a firm who have chosen the name "Horn Faulkner Oil Trust" to designate themselves in a particular enterprise, the use of that name as payee is not fictitious. Edgerton v. Preston (1884)
The action here is on the check, upon which payment had been stopped. A check is merely an order to pay money, and the maker has the right to stop payment. 5 Rawle C. L. 526, sec. 46. The bank must respect the order stopping payment, but that does not destroy the contractual liability that may exist between the maker and the payee. Bond v. Krugg (1925)
The judgment is therefore reversed, with directions to enter judgment in favor of the defendant.
OSBORN, C. J., and RILEY, CORN, and GIBSON, JJ., concur. *204