Bank of Ozark v. Hanks

NIXON, P. J. (after stating tbe facts.) — I. The jury was undoubtedly justified in finding that tbe notes were conceived and brought forth in fraud, and that Lowtborp and company were an organized gang of professional swindlers, traversing tbe country to entrap tbe unwary by a fraudulent sasblock scheme and by specious and fraudulent representations, obtaining promissory notes for tbe purpose of negotiating them, and then moving on to other counties to reap another harvest from the unsuspecting people. Our Negotiable Instruments Act (Session Laws, 1905, p. 213) provides: “Sec. 59. Every bolder is deemed prima facie to be a holder in due course; but when it is shown that tbe title of any person who has negotiated the instrument was defective, tbe burden is on tbe bolder to prove that be or some person under whom he claims acquired tbe title as bolder in due course.” A “bolder in due course” is defined in section 52 of tbe same act to be a bolder who has taken tbe instrument under the following conditions: “(1) That it is complete and regular on its face; (2) that be became tbe bolder of it before it was overdue, and without notice that it bad been previously dishonored, if such was tbe fact; (3) that be took it in good faith and for value; (1) that at the time it was negotiated to him be bad no [117] notice of any infirmity in the instrument or defect in the title of the person negotiating it.” It will he seen from these provisions of the law that when the respondent had shown that his notes were procured by fraudulent representations and were without consideration, the burden of evidence was on the appellant bank to show that it took the same in good faith and for value and without any notice of infirmity in the instrument or defect in the title of the person who negotiated it. It is. assigned as error that the trial court erred in failing to state the above law correctly in giving the following instruction as to the burden of evidence: “If the jury believe and find from the evidence that the notes in suit were obtained by fraud on the part of C. S. Lowthorp and his agents, then the burden is on the plaintiff and it must show by greater weight of the testimony that it bought said notes in good faith, in due course of business, without notice of the fraud by which Lowthorp obtained said notes, and if the plaintiff has not made such proof, then your verdict must be for the defendant.” This instruction was a full compliance with the Negotiable Instruments Law. Numerous decisions from this and other jurisdictions have been cited to sustain the proposition of law thus stated, but the language of the law in relation to negotiable instruments is so clear and unambiguous that it speaks for itself and authorities are unnecessary. It may be added in this connection that the weight of credibility of this evidence was a question for the determination of the jury; that there was substantial evidence to put the question to the jury, and the Constitution has forbidden us to enter their sacred precincts. There was substantial evidence to show that plaintiff had actual knowledge of the fraudulent scheme and fraudulent practices by which notes were being procured by Lowthorp and his conspirators. [118] II. Further. complaint is made by appellant against instruction numbered four given by the court, which is as follows: “If you believe that the consideration for the notes sued on was the purchase by defendant of the right to sell the safety sashlock in the county of Texas, State of Missouri, and also the right on the part of defendant to appoint other agents with the same power which he possessed, as shown by the power of attorney offered in evidence, then the question as to whether or not the transaction was fraudulent would depend upon what was the real consideration for the execution of the notes. If the right to sell the safety sashlochs in the county of Texas, State of Missouri, constituted any substantial part of the consideration, then the transaction was not fraudulent and your verdict should be for the plaintiff. “The power of attorney in evidence which was given defendant at the time of the execution of the notes by him is void as against public policy, and if you believe that such power of attoimey was the real consideration for the execution of the notes, and the right to sell the sashlochs in Texas county, Missouri, was only an incident and given only for the purpose of giving the transaction the color of legality and not as a substantial part of the consideration, then the entire transaction in the execution of the notes was fraudulent, and whether plaintiff can recover or not in this case will depend upon whether or not it purchased the notes for value, before maturity, and without notice of the fraud in their execution. . . .” The trial court correctly declared that the power of attorney to appoint other managing agents on the same terms and furnish them with similar contracts to appoint yet other managing agents in an endless chain to be void as contrary to public policy. [Twentieth Century Co., v. Quilling (Wis.), 110 N. W. 174.] The evidence as shown by the contracts themselves amply justified the court in giving this instruction. And in [119] ascertaining the meaning of these contracts, the subsequent acts of the parties tending to show what construction the parties themselves put on these contracts may be considered in case their meaning is doubtful. [St. Louis Gaslight Co. v. St. Louis, 46 Mo. 121; Ellis v. Harrison, 104 Mo. 270, 16 S. W. 198.] The law has shown its consideration for the honest purchaser of negotiable paper and has surrounded bona tfide purchasers with every reasonable safeguard. The procuring of negotiable paper by fraudulent practices — • as in the present case — has been carried on systematically by many swindling schemes. It is, of course, a part of the “game” to market their fraudulent paper, for without such an opportunity, the scheme could not be carried into consummation. The legal maxim, caveat emptor, applies as well to purchasers of negotiable paper as to the purchaser of any other species of property. Under all the circumstances in this case, the jury was well warranted in believing that the officers of the plaintiff bank had at least sufficient notice to put them on guard as to the fraudulent scheme and they were therefore duly warned not to give any aid, directly or indirectly, to the swindle that was being perpetrated on their neighbors and customers. The law will not stamp its approval upon such transactions, offensive with the odor of corruption and foul with the taint of fraud. The judgment was so manifestly for the right party that it should not be disturbed. [State ex rel. v. Jones, 131 Mo. 194, 33 S. W. 23; Cass County v. Bank of Harrisonville, 157 Mo. 133, 57 S. W. 736; S. Albert Grocery Co. v. Grossman, 100 Mo. App. 338, 73 S. W. 292; Carmody v. Hanick, 99 Mo. App. 357, 73 S. W. 344.] The judgment is accordingly affirmed. Gray, ■/., concurs. Goce, J., having presided as judge in the trial court, did not sit.