Harrell v. National Bank of Commerce

Evans, J. (After stating the facts.) The note declared upon was a negotiable instrument, and before the defendant would be let into his defense of want of con-' sideration it was necessary for him to show that the plaintiff was not a bona fide holder for value before maturity. Our code declares that “the holder of a note is presumed to be such bona fide, and for value; if either fact is negatived by proof, the defendants are let into all their defenses; such presumption is negatived by proof of any fraud in the procurement of the note.” Civil Code, §3696. It was held in Robenson v. Vason, 37 Ga. 66, that fraud in the procurement o'f a note means fraud in its procurement by the holder thereof, and has no reference to fraud [506] in the contract out of which the note arises. This construction of this code section has been steadfastly adhered to in many later cases. Pate v. Allison, 114 Ga. 651, and cases cited; Johnson County Savings Bank v. Roberts, 125 Ga. 41. Mr. Justice Lumpkin, in Grooms v. Olliff, 93 Ga. 790, in discussing this section of the code, gave certain instances illustrating that the phrase “fraud in the procurement of the note” meant fraud in the procurement by the holder thereof, and not fraud in the procurement of the note as between the original parties, of which the holder for value had no notice. He said: “If, for instance," one should make and execute a promissory note, intending not to deliver it except in a certain contingency, and another should fraudulently get possession of the note before the contingency arose, this would be a case of fraud in the procurement of the note. . . So, also, a thief who stole a promissory note, or a robber who took it by force from the possession of another, would b,e guilty of fraud in the procurement.” Counsel for plaintiff in error misapply these illustrations when they contend that if an intermediate indorser, by theft or fraud, gets possession of a note and transfers it before due, - and for a valuable consideration, to a bona fide purchaser, such purchaser would not be a bona fide holder. The context clearly shows-that the learned Justice meant that if the holder fraudulently got possession of the note he would not be a bona fide holder. Mr. Daniel, in his admirable work on Negotiable Instruments, Volume 1, chapter XXVI, says, in substance, that if a bill or promissory note has been fully completed in form, and signed by the maker, and before delivery is stolen from the possession of the party who has signed it, and passed by the thief to a bona fide holder for value in the usual course of business, the purchaser would be a bona fide holder and entitled to recover against the maker. In addition to numerous decided 'cases sustaining the text, the learned author demonstrates its soundness by convincing reasoning. The maker’s signature, says he, “is itself an assurance that his obligation has been perfected by delivery; and it being necessary that the loss should fall upon one of two innocent parties, it should fall upon the one whose act had opened the door for it to enter.” A fortiori, if the note has passed out of the possession of the maker into the hands of the payee, and been indorsed by the pay^ee, and surreptitiously abstracted from the [507] payee’s possession, or the possession of some one holding it for the benefit of the payee, and has been by such person .transferred for value, before due, 'without notice of dishonor, and in the usual course of business, the holder would be protected against any defense which the maker might have against the original payee. The only effect of the excluded testimony could have been to prove that an intermediate indorser had fraudulently obtained the note. This alone would not serve to impeach the bona tides of the holder to whom it was transferred by the person fraudulently obtaining possession of the note. The plaintiff bank offered evidence to show that the defendant had purchased the note in good faith, in the usual course of' business, for a valuable consideration, before .due, without notice of any dishonor. It could have relied upon the presumption afforded by the code section above quoted, and re-. quired of the defendant proof that it was not a bona fide holder, in order to defeat its right to recover. Johnson County Bank v. Roberts, supra. The defendant, however, further contends that there was evidence that the National Bank of Commerce took the note from the Bank of Americus in payment of a pre-existing debt, and for that reason he should be let into his defense against the note. This contention is not sound. A note in the hands of a holder for a valuable consideration; transferred before due and without notice of any equities between the maker and the payee, either as payment or as collateral security for an existing debt, is not liable to the equities between the maker and the payee. Gibson v. Conner, 3 Ga. 47; Kaiser v. U. S. National Bank, 99 Ga. 258; Lee v. Johnson, 110 Ga. 286. From what has been said, it will be seen that the court properly excluded the evidence about which complaint is made; and as there was no evidence to show that the plaintiff was not a bona fide holder for value before due, the direction of a verdict in its favor was the only legal and logical result of the trial. Judgment affirmed. All the Justices concur.