First National Bank v. Warsaw Drug Co.

BeowN, I. The principles of law presented on this appeal have been so frequently adjudicated that a further discussion of them would seem to be useless. Where the maker of a negotiable paper establishes that it has been obtained from him by fraud or deceit, a subsequent transferee must, before he is entitled to recover thereon, show that he is the bona fide purchaser, or that he derived his title from such a purchaser. It is not sufficient to show simply that- he purchased before maturity and paid value, but he must show that he had no knowledge or notice of the fraud. Bank v. Fountain, 148 N. C., 590; Bank v. Branson, 165 N. C., 344. The defendant in his answer alleges fraud in obtaining the note sued on, and false and fraudulent misrepresentation in regard to the quality of the articles of jewelry and other things for which the note was given. There is abundant evidence in the record to justify the finding of the jury upon that issue. We also think that there is sufficient evidence in the record to show that the plaintiff is not a bona fide holder of the note in due course. The burden of proof rests upon the plaintiff after fraud is established to show that the plaintiff was such bona fide purchaser, and not upon the defendant to negative that position. Bank v. Exum, 163 N. C., 199; Myers v. Petty, 153 N. C., 462; Bank v. Fountain, supra; Trust Co. v. Ellen, 163 N. C., 45. The burden of proof being thus placed upon the plaintiff to show that it was a bona fide holder in due course, the credibility of the testimony of Ilrouth, assistant cashier, upon whose evidence the plaintiff relies, was necessarily subject to attack be-fo're the jury and also to be discredited upon cross-examination. There are some circumstances which have cropped out in the testimony from which the jury might well infer that the plaintiff was not the bona fide owner of the note sued on, but had *101 taken it for collection for tbe benefit of tbe payee, tbe Equitable Manufacturing Company. These circumstances and indicia of fraud it is useless to recount. Upon a review of tbe whole record, we are of opinion that tbe judge below tried it in accordance with tbe well settled decisions of this Court. No error.