Link v. Jackson

COX, J. Action upon a promissory note executed by .defendants to A.. H. Willard and by him assigned to plaintiff. The defense was fraud in procuring the note and against that defense plaintiff asserted that he was an innocent holder for value without notice. The note was given in payment for an interest in a stallion by defendant Jackson and the fraud alleged in procuring the note consisted in representations that the horse was a sure foal getter, which defendants alleged was false, and that for the purpose of inducing [200] defendant Jackson and others to purchase an interest in the horse, Willard, the payee in the note, and his agents entered into a fraudulent scheme by which they pretended to have sold certain shares in the horse to certain men of wealth and influence in the community and had these men give to Willard their checks apparently in payment for these shares and then Willard and his agents exhibited these checks to defendant and others and represented that these men had purchased shares in the horse, which was not true, and that the checks were afterwards returned to their makers and never collected. There was a trial by jury, judgment for defendants and plaintiff has appealed. This is the second appeal in this case. The first is reported in 158 Mo. App. 63, 139 S. W. 588, to which reference is made for a full statement of facts. The errors assigned relate to giving and refusing instructions. The refused instructions asked by plaintiff amounted to a peremptory direction to find for plaintiff and were based upon the premise that the proof did not show fraud in procuring the note or if there was fraud in the first instance there was no evidence that plaintiff had any knowledge thereof when he purchased the note. These were properly refused as to the first proposition because there was abundant evidence of fraud in procuring the note. They were also properly refused as to the second proposition because not properly declaring the law, for the reason that they impliedly placed the burden upon defendant to prove notice of the fraud on the part of plaintiff at the time he purchased the note. If the note was procured by fraud,,the burden was then upon plaintiff to show that he purchased it for value before maturity and without notice of the fraud as we held in this case on the former appeal. The instructions given on behalf of defendant to which plaintiff objects are as follows: [201] No. 1. “The court instructs the jury that if you believe and find from the evidence that the note in suit was obtained from the defendant Jackson by fraud on the part of the said A. H. Willard and his agents, then the burden is on the plaintiff and he must show by the greater weight of the evidence that he bought said note before it was due, that he gave a valuable consideration therefor and that at the time he bought said note from the said Willard he had no actual knowledge of the fraud of the said A. H. Willard or his agents in procuring the said note from the said Jackson and that if the plaintiff has not made such proof by the greater weight of the evidence, then your verdict should be for the defendant.” No. 2. “The court instructs the jury that the words ‘actual knowledge’ as used in these instructions do not mean that the plaintiff must have known the truth of the fraud, if any, in procuring of the note in question from the defendant Jackson, in the sense which would enable him to testify to the facts of said fraud, if any, in this trial; but do mean that the plaintiff Link had such knowledge of said fraud, if any, as satisfies you that the said Link acted in the purchasing of said note in the belief, and not merely the suspicion, that said note, at the time he purchased the same, was procured by fraud.” No. 1 is assailed because the word fraud is not defined; that is, that the court should have told the jury what facts they would be required to find in order to find that the note was procured by fraud and not have left it to the jury to say what would constitute fraud. Generally spealdng, plaintiffs’ contention on this question is correct. A party basing an action or defense upon fraud cannot plead it in general terms but must allege the facts upon which he relies as constituting the fraud. He must then prove his case- as he has pleaded it and the instructions should follow the proof. In this case, however, the evidence of fraud [202] was not contradicted, and if believed by the jury, is so conclusive that it is apparent that the jury could not have been misled by the instruction. Furthermore no instruction was asked by plaintiff which submitted the issue in any other form than that contained in defendant’s instructions but the instructions asked by him and given, as well as those refused, were open to the same objection which he now makes against the instructions given in behalf of defendants and he therefore cannot now complain. [Gordon v. Park, 219 Mo. 600, 612, 117 S. W. 1163; Christian v. Insurance Co., 143 Mo. 460, 467, 45 S. W. 268; State ex rel. v. Fidelity Co., 94 Mo. App. 184, 196, 67 S. W. 958.] The objection to instruction No. 2 for defendants is that “belief” and “knowledge” are not synonymous and no matter what plaintiff may have “believed” as to whether or not the note was procured by fraud, yet, if he did not have actual knowledge of it, he was not bound by it. If a fact exists and a party has such knowledge of it as to cause him to believe that it exists and he acts upon that belief, the result is the same as if he had actual knowledge of the fact and acted upon that. If the note in suit was procured by fraud and the plaintiff had such knowledge bearing upon that question as to cause him to believe that it was procured by fraud, then as far as his action in purchasing the note is concerned he knew ’that the note was procured by fraud. Belief is the conviction that arises in the mind as a result of knowledge of facts calculated to produce that conviction. If, as a matter of fact, the note was procured by fraud, then knowledge of facts bearing on that question which go no farther than to arouse suspicion are not sufficient, but when the impression made upon the mind by knowledge of facts relating to such fraud passes from the realm of suspicion and grows to belief, it then becomes knowledge. Knowledge of fraud to bind a party is knowledge of such facts as would cause a reasonably [203] prudent man to believe in the existence of the fraud, and if such facts were brought home to plaintiff in this ease, he would be chargeable with knowledge whether he actually believed that the note was procured by fraud or not. If he actually believed in the existence of the fraud at the time he purchased the note, then it is immaterial how meager the facts may be which induced that belief. The evidence tending to show plaintiff’s knowledge of the fraud was circumstantial and consisted of plaintiff’s knowledge of the horse sold and his intimate association with Willard and in the fact that the note was endorsed “without recourse” and, in addition, it was shown that at one time, after defendant Jackson discovered the fraud, he went to Springfield to see Willard to try to get his note back and during the negotiations, plaintiff and Willard had a secret conversation together; and at the trial plaintiff testified that when he purchased the note he asked Willard why he endorsed it “without recourse” and Willard said he had a reason for it but refused to tell what it was. Since the burden was on plaintiff to show his want of knowledge of the fraud, and considering the peculiar condition of the testimony in this case, we think the instruction relating to plaintiff’s knowledge of the fraud was warranted in this case, though we would say that, as a general rule, the better practice would be not to undertake to define the word “knowledge” in an instruction. Ordinarily the .jury will need no assistance from the court in determining what the word “knowledge” means. Judgment affirmed. All concur.