Gray v. Goode

Mr. Presiding Justice Harker delivered the opinion of the Court. This suit is based upon a promissory note executed by plaintiff in error to one W. S. Bernard and assigned to defendant in error before maturity. It was tried in the court below upon the following agreed state of facts : “That W. S. Bernard, the original payee of the note in controversy, was a patent right vendor of a wire and slat fence, which, with the appliances for making same, were to enable the vendee to build said fence in certain specified territory for a certain consideration from the persons for whom said fence was built; that said note was given for the right to build said fence in the township of North Otter, in said county; that the defendant, after the making of said note received the appliances or machinery for making said fence, and at his own expense built about one-quarter of a mile of said fence on his own farm. Defendant then received knowledge that one Eke Chapman, of said county, had purchased the patent right for building said fence in said township from said Bernard, prior to date of said sale of same to defendant. The defendant, finding that said Chapman had the prior right of said township, ceased to build said fence, and abandoned all further rights therein in said township. It is further agreed that the plaintiff, by his agent, H. C. Hamilton, knew that said Bernard was a vendor of patent fencing rights at the time of the purchase and assignment of said note; and that he bought said note at a discount of twenty-five per cent, soon after its execution. That said note was assigned before it was due and that said plaintiff had no knowledge of the want or failure of the consideration of said note at the time of said assignment, and did not receive such knowledge until shortly before said note was due. That said note was made, executed and delivered by the defendant.” It was tried by the court without a jury and judgment rendered against Gray for one hundred and five dollars and costs. It is the contention of plaintiff in error that there was fraud in- the procurement of the note, want and failure of consideration, 'and facts within the knowledge of the defendant in error at the time he purchased it, sufficient to put him on inquiry of the maker in reference to the consideration. There was no such fraud in procuring the execution of the note as would defeat a recovery by a bona fide assignee before maturity. The fraud or covin necessary to accomplish that must relate to the execution of the note and not to the consideration on which it is based. The fraud must consist of some trick or device that induces the giving of one kind of instrument under the belief of the maker that he is giving one of a different kind. Woods v. Hynes, 1 Scam. 103; Easter v. Minard, 26 Ill. 494; Latham v. Smith, 45 Ill. 25. Whether the taking of negotiable paper for value before maturity, under circumstances sufficient to excite the suspicions of a prudent man, takes the purchaser out of the pale of “ bona fide holder,” has been a mooted question in this country and England. About seventy years ago it was the prevailing doctrine of English courts that the purchaser of negotiable paper for value before maturity was not entitled to the privileges of a “ bona fide holder ” when he took the paper under circumstances that should have excited the suspicions of a cautious man. And the Supreme Court of Illinois at an early day recognized that doctrine, as will be seen from an examination of Eussell v. Hadduck, 3 Gilm. 233. It receded from it several years ago, however, and is now planted upon the furthermost limit of the opposite doctrine. It is now held as the law of this State that the assignee of commercial paper before maturity, for value, who takes without knowledge of any defense, and in good faith, will be protected against the defenses of the maker, even though he purchased under circumstances sufficient to excite suspicion in the mind of a prudent man and was guilty of negligence in not making inquiry. Commercial paper has become such an important factor of exchange and trade that its sanctity and integrity as a medium of exchange can not be successfully attacked in the hands of a purchaser before maturity by anything short of bad faith, and the burden of showing bad faith rests with the party attacking. Comstock et al. v. Hannah, 76 Ill. 530; Shreeves v. Allen, 79 Ill. 553; Murray v. Beckwith, 81 Ill. 43; Matson et al. v. Alley, 141 Ill. 284. Under the authorities above cited defendant in error was entitled to recover. Judgment affirmed.