Florence v. Commercial Bank

Bell, J. (After stating the foregoing facts.) The contention of the defendant (referring to Mr. Florence, the only one of the defendants who is complaining) is that under the foregoing facts it was for the jury to say whether or not the plaintiff took with “notice,” and therefore subject to the defense which the defendant would have had against the payee. He insists, that, in view of the testimony of Mr. Bernstein, the jury could have found that the bank, at the time it bought the note, had knowledge of sufficient circumstances to put it upon its guard as to whether the notes were uncollectible. This contention finds its strongest support in the fact that Mr. Bernstein, in reply to the question, “What is the general collectibility of accounts of an auto supply company?,” testified that they were “pretty bad, pretty weak.” But since it further appeared, without dispute, that he “knew nothing whatever of the character of the accounts of the Auto Supply Company” (italics ours in both instances), we think that the evidence was insufficient to show that the bank took with notice that the consideration would fail. The mere fact that the accounts of others in similar lines of business were “pretty bad” or “pretty weak” would not indicate that the accounts of Mr. Moss were of the same character. There is nothing to show that he dealt with párties who were not good for their obligations, or that he himself was a person who would pad his accounts or make unjust charges. The fact that Moss may have been insolvent, and that the bank knew it, can not affect the matter; for if the accounts were uncollectible for any reason, the defense to the note would have been the same whether the payee was financially strong or insolvent. The breach of the guaranty as to the correctness and collectibility of the accounts would have been a mere failure of consideration, regardless of the payee’s financial circumstances. Mere insolvency, of course, does not affect a man’s character, and there was no presumption against the accounts on that score. The presumption was that the contract [332] of sale was made in good faith and that the accounts were as represented. “Knowledge on the part of holder of a negotiable note that it was given in consideration of an executory contract or based upon an executory agreement with the payee, even though such consideration or agreement should be expressed in the instrument itself, will not deprive the indorsee of the character of a bona fide holder, unless he had notice of the breach of such agreement by the payee; and while-the rule is that ‘any circumstance which would place a prudent man upon his guard in purchasing negotiable paper shall be sufficient to constitute notice to a purchaser of such paper before it is due’ (Civil Code (1910), § 4391), and while in a particular ease the character and sufficiency of the circumstances which would place a prudent man on his guard are to be determined as questions of fact by the jury, and not by the judge as questions of law (Fidelity & Deposit Co. v. Mays, 142 Ga. 821, 83 S. E. 961; Park v. Buxton, 10 Ga. App. 356, 73 S. E. 557), still in the application of these rules, the question is . not whether the circumstances were such as might reasonably put the indorsee upon notice that the consideration could fail, but whether they were sufficient to put him on notice it must fail or actually had failed.” Reece v. Citizens Bank of Roswell, 22 Ga. App. 519 (1) (96 S. E. 452). “The fact that the consideration of a note is set forth on its face does not carry with it notice of the failure of consideration, if it has failed, to a person taking it bona fide; nor is he ipso facto put upon inquiry and bound to inquire whether the consideration has failed.” Bank of Commerce v. Barrett, 38 Ga. 126 (95 Am. Dec. 384). “The fact that the consideration of a note is set out in its face does not carry with it any notice of a failure of consideration, if in fact it has failed; and one who buys the note bona fide, for value before maturity, is not bound to make inquiry whether there is a failure of consideration.” Simmons v. Council, 5 Ga. App. 386 (63 S. E. 238). See also, in this connection, Bank of Commerce v. Knowles, 32 Ga. App. 800 (124 S. E. 910). Under the evidence adduced, the indorsee was a holder without notice. The verdict for the plaintilf being demanded, the court did not err in directing it, nor in thereafter refusing a new trial. Judgment affirmed. Jenkins, P. J., and Stephens, J., concur.