Commercial Security Co. v. Main Street Pharmacy

Hoke, J. Our decisions construing the statute on negotiable instruments (chapter 54 of the Revisal) are to the effect that, except in case of instruments payable to bearer, in order to constitute one a holder in due course, there should be an endorsement, and when such fact is denied, as it is in this instance, the same must be established by proper proof. Bank v. Clark, 172 N. C., 268; Park v. Exum, 156 N. C., 228-230; Myers v. Petty, 153 N. C., 462; Mayers v. McRimmon, 140 N. C., 640; Tyson v. Joyner, 139 N. C., 69. On this subject, the statute in question (section 2179) requires that an endorsement must be written on the instrument itself, or on some paper attached thereto. This attached paper, sometimes termed an “allonge,” was resorted to when, from the great number of signatures or the style of the chirography, there was no longer room on the instrument for writing the endorsement; and while in the better-considered decisions this lack of room is not considered of the substance, it is an essential of the requirement that the paper be physically attached or that it should have been when the endorsement was made, and that an assignment or transfer on a separate paper will not suffice. Midgette v. Basnight, 173 N. C., 18; Crosby v. Roub et al., 16 Wis., 645; Huffcut on Negotiable Instruments, 21, 348, 350; Norton on Bills and Notes, 105; Daniels on Negotiable Instruments (6th Ed., per Calvert), secs. 689a-690. Considering the record in view of these principles, we find no facts in evidence tending to show that there has ever been a valid endorsement of these notes. There is no proof of the endorsements which appear on the back of the notes, nor of the dates when the same may have been made, and the written certificate put in evidence by the plaintiff, purporting to be transfer of the notes from the payee to plaintiff, was not and. does not appear to have been attached to the notes or any of 'them. And even if testimony to the effect suggested has been overlooked by us,, the credibility of the evidence would be for the jury, and his Honor com *657 mitted no error, to plaintiff’s prejudice certainly, in submitting the question to them for decision, and they have found that plaintiff company is not a holder in due course. Bank v. Fountain, 148 N. C., 590. This being true, the notes were open to any equitable defenses existent between the payee and makers; and the verdict having established further that the notes were procured by fraud and misrepresentation, no recovery thereon can be had. Mayers v. McRimmon, supra, and other cases cited. The verdict on the first four issues being fully determinative of,the controversy in defendant’s favor, we do not pass on the question of estoppel presented in the fifth issue. The position, in proper instances, is fully recognized, and on the facts in evidence the authorities cited by defendant appear to support defendant’s view of the matter. It is a doctrine, however, that requires careful restriction, and we deem it advisable to withhold decision upon it till facts in evidence may require it. On the record, the judgment for defendant is affirmed. No error.