Johnson County Savings Bank v. Roberts & McClure

Fisi-i, C. J. (After stating the facts.) A bona fide holder of a negotiable promissory note, receiving the same before due, for value, is protected against a plea of failure of consideration. “The holder” of a negotiable promissory note “is presumed to be such bona fide, and for value; if either fact is negatived by proof, the defendants are let in to all their defenses; such presumption is. negatived by proof of any fraud in the procurement of the note.” Civil Code, §3696. “Fraud in the procurement of the note” means fraud in its procurement by the holder thereof, and has no reference to fraud in the contract out of which the note arises. Pate v. Allison, 114 Ga. 651, and cit. The defendants in the present case admitted they executed the note sued on, and that the plaintiff was [43] the owner thereof. Not only was there a presumption that the plaintiff was the bona fide holder and for value, but there was positive and uncontroverted evidence that the plaintiff purchased the note for value, before maturity, and without notice of the transaction in which the note was given, or of any 'failure of its consideration, or of any other defense to it. The ‘mere fact that the cashier of the plaintiff bank was, at the time he discounted the note for the benefit of the bank, treasurer and cashier of the Equitable Manufacturing Company, the payee of the note, was not of itself sufficient to impute notice to the bank of the failure of consideration of the note. Even assuming that such cashier, by reason of the relation he held toward the bank, should have known what its consideration was, there was no evidence that the consideration had failed when he discounted the paper as cashier of the bank; and if there had been, there was no evidence that he had notice of the fact. Nor was there any evidence that the bank had fraudulently procured the note. We are quite clear, therefore, that the verdict was without evidence to support it and that a n'ew trial should have been granted. Judgment reversed. All the Justices concur.