Atlantic & Gulf Fertilizer Co. v. Coats

Buford, C.J. The plaintiff in error was plaintiff in the court below and sued the defendant on a promissory note dated November 1, 1928, payable five months after date to the order of Indian River Yegetable Union, Inc., and the plaintiff alleged in its declaration that for a valuable consideration before maturity thereof the payee *325 therein endorsed said note to the plaintiff and that the note was past due and unpaid. The defendant filed several pleas. It is only necessary for us to state here, however, that one of such pleas was that of failure of consideration. The note sued on was a negotiable instrument and the record shows that it was endorsed, transferred and delivered to the plaintiff by the payee before maturity and, therefore, the defense of failure of consideration could not be maintained as against the plaintiff, unless it could be shown that the plaintiff at or before the endorsement and delivery of the note to it had actual knowledge or notice of the alleged failure of consideration. The endorsee of a negotiable promissory note before maturity becomes the holder thereof in due course and the burden is on the defendant to show that any infirmities incident to the note which would constitute a defense to an action brought thereon by the payee were known to the endorsee at the time of endorsement and delivery thereof. Otherwise such infirmities could not be interposed as a defense against such endorsee. It appears from the record that the case was tried in the court below upon the theory upon the part of the defendant, and so accepted by the trial judge, that a plea of failure of consideration verified under oath east upon the plaintiff the burden of proving such consideration, although such plaintiff was holder in due course of the negotiable instrument, having acquired the same prior to maturity. The judgment should be reversed upon authority of the case of Roess Lumber Co. vs. State Exchange Bank, 68 Fla. 324, 67 Sou. 188, 327; L. R. A. 1918-E, 297, and eases there cited; and Mullen vs. Bank of Pasco County, decided March 11, 1931, 101 Fla. 1097, 133 Sou. 323. It is so ordered. *326 Reversed. Whitfield, Ellis and Terrell, J.J., concur. Brown, J., dissents.