Hall v. James T. Latimer & Son

The opinion of the Court was delivered by Mr. Chief Justice Pope. The plaintiff contends that on the 16th day.of October, 1906, he contracted with one Dan Mitchell for his labor on his plantation in working on shares of crop for the year 1907, and that one of the defendants, Ernest L. Latimer, reduced the contract of service between the plaintiff and said Dan Mitchell to writing; that on the 29th day of October, 1906, after repeated efforts had been made by defendants to sell an account to the plaintiff, the plaintiff purchased the account of Dan Mitchell from the firm of Latimer & Son for the year of 1906, together with the note and mortgage accepted as collateral thereto by said defendants from the said Dan Mitchell; the said collateral consisting of a bond payable eight months after date, and dated April 12, 1906, executed by Ben Cobb and O. J. McDade, also at the same time and a part of the same transaction, a mortgage of personal property was executed by Ben Cobb and O. J. McDade unto Dan Mitchell, which is duly attested and recorded in volume 54, in office of R. M. C. for Abbeville county. The plaintiff contends that the defendants assured him that the collateral was bona fide and for all of the account, and the collateral thereto; he paid the defendants the sum of $130. The account called for $134.32. The defendants in their answer set up that they sold the account in question for the amount of the sum set up in the complaint, and that, they assigned the collateral in writing, especially stating' that the same was done “without recourse” upon them. The point of contention between plaintiff and defendants is first, as to the sale of the account and the collateral mentioned ; the plaintiff contends that it was a single transaction, while the defendants contend that they sold the account and transferred the collateral to the plaintiff merely to complete a transaction. *97 The cause came on to be heard before Judge Ernest Gary and a jury; both sides to the controversy introduced testimony in support of their respective contentions. After the testimony was closed each side made requests to charge, and after the charge of the Judge the jury found a verdict for the plaintiff for the whole amount sued for, to wit, $130'. The defendants then appealed. Let the grounds of appeal be reported. The first eight exceptions will be considered together: The Circuit Judge held, in effect, that when one assigns a chose in action, even if he uses the words without recourse to the assignors, that while such assignment must be taken by the assignee with the recognition that the assignors are not responsible to make up the value of the thing assigned, but yet they are responsible for the bona ñdes of the transaction. In other words, that the assignors are responsible for the genuineness of the chose assigned. Now, the Judge in his charge held that while an assignor assigned the chose “without recourse,” that yet they were responsible to the assignee for the bona ñdes of the transaction, that the assignment must be made bona ñde, not in fraud, that the defendants must assign a genuine paper and not a fictitious paper. Now, care must be taken to remember distinctly that the defendants, having hedged about their assignment with the words “without recourse,” are protected against any claim by the plaintiff to respond in value for the thing assigned; that the liability of the defendants arises purely from having assigned something which never, in fact, existed, but was a paper which was not genuine. That is not a new question to this Court, but has been considered in the case of Strange v. Ellison, 2 Bailey’s Law, 385. The Court, in that case, held: “Every one who vends an article impliedly undertakes that it is what its appearance indicates, and that it is not disguised SO' as to make it what it is not. The principle applies to all sorts of commodities in whatever form they may exist. Promissory notes are a" common article of traffic, and their value is measured by the *98 responsibility of the drawer and the indorser. The usual manner of indorsing is by the superscription of the indorser’s name, which constitutes the evidence of his liability. Finding a name so indorsed, one would necessarily conclude that it was placed there for that purpose; and it would as necessarily be looked to as a part of the securty of the debt. If it happens there by fraud or by mistake, and the purchaser takes it ignorant of that fact, he is as much injured and deceived as if he had 'been imposed upon by counterfeit money; and the liability of the seller is the same.” In the case at bar, the integrity of the note and mortgage were submitted to the jury as a question of fact for their solution, both parties to the controversy directed their testimoney to that issue, the charge of his Honor laid down the law in regard to it, and the verdict of the jury unmistakably held that the note and mortgage in question was a counterfeit, and that the defendants had received $130 of the plaintiff’s money for said chose. The case of Ford v. Bank, 74 S. C., 184, 54 S. E., 204, 10 L. R. A. (N. S.), 63, n., aptly lays down the rules of law applying to the conduct of any individual or individuals, whether innocently or advisedly receiving one’s money when fraud or misrepresentation are concerned. We might also refer to 13 Enc., 1240, where it is stated as follows: “It is a general rule that one making a sale or transfer of a chose in action warrants its genuineness, and this is so whether he warrants it in terms or is silent at the time when the sale or transfer is made.” 4 A. & E. Raw, 476; Meyer v. Richards, 163 U. S., 385. In Watson v. Cheshire, 87 Am. Decisions, 352, it is held: “That a party who transfers a paper without recourse is held still to guarantee the validity of the paper.” These exceptions are overruled. 9. We must overrule this exception, for even although the plaintiff did express some dissatisfaction with this paper when the trade was being discussed between the parties, yet the plaintiff relied upon the solemn assurance of the defendants that the papers were all right. *99 10. We hold the defendants were bound to warrant the soundness of the chose in action assigned and there is no evidence that the plaintiff ever voluntarily assumed the risks as to the genuineness of the paper. Strange v. Ellison, supra. These matters were submitted to the jury for their arbitrament, and they have decided adversely to the defendants. This exception is overruled. 11. The Circuit Judge was requested to charge: “That if the jury find from the testimony that the real consideration was for the account which the defendants held against Dan Mitchell, and that the note and mortgage were merely transferred as collateral to secure said account, then the plaintiff could not recover, and the jurymust find for the defendants.” The Judge was right in refusing to charge as requested, because he said: “That I refuse to give you for the reason that if he transferred the account, and with that account transferred a mortgage, and that mortgage purported to be a genuine mortgage as collateral security, the party would warrant the mortgage for genuine, and if it turned out to be fraudulent or a forgery, he could not retain the money under these circumstances.” The Circuit Judge was unquestionably correct, the trend of the testimony submitted established the fact that the account held by the defendants against Dan Mitchell was unsecured except by this chose in action, and it was natural for the jury to hold that the chose in action was taken and held by the defendants at the inception of that transaction with Dan Mitchell as a protection for the lien, given by him to them. This exception must- be overruled. It is the judgment of this Court that the judgment of the Circuit Court be, and the same is hereby, affirmed.