Smith v. Jansen

Maxwell, Ch., J. In January, 1876, the defendants applied to one B. E. Perkins, agent of P. D. Cheney and others, for a loan of $200.00. A loan for the above amount was obtained on five years time, the interest thereon to be 20 per cent, per annum, the defendants paying Perkins $150 out of the $200.00 for his services in effecting the loan. Eleven notes, one for $200.00, and ten for $20.00 each appear to have been taken, but the note for $200.00 and five of the interest notes appear, to have been paid, at least are not directly involved in this case. Five of the interest notes amounting to $100.00, were secured by a separate mortgage, and on the 3rd of January, 1877, were transferred to the plaintiff. He claims to have purchased the same for $30.00, and to be a bona fide purchaser. The court below found that he was not a bona fide purchaser and dismissed the action. He appeals to this court. The only question presented by the record is whether or not he is a bona fide purchaser. The rights of a holder of negotiable paper purchased before due are to be -determined by the simple test of honesty and good faith on his part in making the purchase. In determining whether the purchaser has acted in good faith or not the amount of the consideration may become a material inquiry. In Dewitt v. Perkins, 22 Wis., 474, it was held that purchasing a note of $300.00 for $5.00 against a solvent maker was very strong if-not conclusive evidence of bad faith. And a like decision was rendered in Hunt v. Sanford, 6 Yerg., 387, where a note for $333,33 was purchased for $125.00, and in Gould v. Stevens, 43 Vt., 125, where a note for $300.00 was purchased for $50,00. In , some of the cases it is said that the consideration must [127] be full and fair as well as valuable. Goldsmid v. Lewis Co. Bank, 12 Barb., 410. Hall v. Wilson, 16 Id., 548. In the ease at bar, notes for $100.00 secured by mortgage upon real estate, and presumably worth their face less the interest, were purchased for $30.00, one of the notes being then due in a few days. Was this not sufficient to put the plaintiff upon inquiry as to the inception of the notes? Suppose the notes had been stolen and transferred to the plaintiff, would not the fact that he had purchased them for less than one-third of their face value have been sufficient to put him upon inquiry as to the title he acquired? Courts have gone quite far enough when they protect purchasers in good faith. In Miller v. Race, 1 Burr, 452, the action being for a bank bill that was stolen, Lord Mansfield said: “ Here an innkeeper'took it bona fide in his business, from a person who made the appearance of a gentleman. Here is no pretense or suspicion of collusion with the robber, for this matter was strictly inquired into at the trial, and it is so stated in the case.” “ Indeed, if there had been any collusion, or any circumstance of unfair dealing, the case had been otherwise. If it had been a note for £1,000 it might have been suspicious; but this was a small note for £21 10s. only, and money given in exchange for it.” The same principles were afterward applied by the same judge to negotiable paper, and Miller v. Race may be regarded as the leading authority upon this branch of the law. Again the holder must have taken the paper in the usual course of trade in order to be protected, which does not appear to have been the case with the plaintiff. We have carefully read the entire testimony, and in ■our opinion it clearly sustains the finding of the court ■below. The judgment is therefore affirmed. Judgment Affirmed.