Reeper v. Greevy

Opinion by Reeder, J., After the defendant had introduced proof that the note in suit was obtained by Mr. Grube from him fraudulently, the burden was shifted upon the plaintiff to show that he had obtained the note without notice of the fraud for a valuable consideration. ' That this is the well-settled law of Pennsylvania, there can be no question. “ Where a negotiable note was obtained from the maker under false pretense, and fraudulently put in circulation by the payee, the holder of the note, in order to recover, must show a purchase for value before maturity, without notice of the fraud: ” Smith v. Popular L. & B. Assn., 93 Pa. 19. “ To support an action by the endorsee of negotiable paper against the maker, in the first instance it is only necessary for the plaintiff to put the paper in evidence. Then if the defendant proves that the paper was put in ’ circulation by fraud or undue means, his defense will prevail unless the plaintiff establishes that he acted fairly and paid value. This was decided more than twenty years ago in Holme v. Karsper, 5 Binn. 469, and has continued an accepted rule:” Lerch Hardware Company v. Bank, 109 Pa. 240. In the case under consideration, the course indicated by the last cited case was partially pursued. The note was put in evidence by the plaintiff, and the defendant interposed his defense that the note had been obtained of him by fraud and false representations. Had the defense gone no further, the plaintiff would have been bound in rebuttal to prove that he was an innocent holder for value. He was, to a certain extent relieved of that necessity by the defense calling him for cross-examination, during which he testified that he obtained the note without notice of the fraud, and for a valuable consideration paid by him to Grube. [319] The burden to establish this was upon the plaintiff, and the jury should have been instructed to render a verdict in favor of the defendant if they did not believe Keeper’s statement that he was an innocent holder for value; and there was certainly enough proof in the cause to carry the question of his credibility to the jury. The first assignment of error will also have to be sustained. The theory of the defense was that Reeper, the plaintiff, was not a bona fide holder of the note; that he was acting for Martin Grube, who was the original payee of the note. When upon the stand, he testified that everything that had been done in regard to the inception and conduct of this action had been done by Martin Grube — he had employed attorneys, retained the custody of the note, and had done all other things that were necessary for the purpose of bringing this suit. At the time it was alleged the note was transferred from Grube to Reeper, no money passed; but Reeper testifies that he accepted it for wages due him from Grube. In this aspect, as to the theory of an arrangement or conspiracy between them for the purpose of obtaining for Grube the proceeds of a note which he could not recover in an action in his own name, the declarations of Grube as to his ownership of the note at a time subsequent to its alleged transfer from him to Reeper, were certainly admissible as evidence in the cause to go to the jury for their consideration in the determination of their verdict. Therefore, the exclusion of the testimony of W. W. Saupp was error, and the first assignment of error will have to be sustained, as well as the second, third and fourth. Judgment is, therefore, reversed, and a venire facias de novo awarded.