Skinner v. Raynor

Rothrock, J. The note and mortgage which are the subject of the action were executed on the sixteenth day of October, 1889. The following is a copy of the note: “October 16, 1889. On or before October 16, [537] .1892, after date, for value received, I promise to pay to J. E. Hill, agent for F. M. Morris, or order, the sum of one thousand dollars, with interest from date at eight per cent, per annnm, payable annually. Should any of the interest not be paid when due, it shall bear interest at same rate as principal per annum. If the note is not paid when due, and suit is brought thereon, the holder shall be allowed to recover reasonable attorney’s fees. Laura Raynor, Joseph Raynor, by Laura Raynor, His Attorney in Fact.” The mortgage was drawn, in the usual form, and with the same signatures as were made to the note. Hill, the alleged agent for Morris, held the note until July 21,1892, when he indorsed the same to D. H. Skinner, the plaintiff herein. The indorsement was in these words: “For value received, I hereby sell and assign the within note to D. H. Skinner, without recourse. F. E. Morris. J. E. Hill, Agent for F. M. Morris.” The defendant did not deny her signature to the note and mortgage. Her defense is that they were wholly without consideration, and that the plaintiff Skinner is not an innocent purchaser for value, but that he took the instruments with knowledge that they were executed without any consideration. It appears from the evidence in the case that at the time the note and mortgage were executed the defendant was the wife of Joseph Raynor, and that an action for a divorce was contemplated or about to be commenced by her husband. Hill, who claims to be the agent of one Morris, was defendant’s attorney and adviser. The note and mortgage were made for the purpose of protecting defendant’s property as against her husband. The instruments were prepared by Hill, and he took the same with the signatures as above shown. The defendant claims that no money was paid to her by Hill, but that he executed a release of the mortgage and delivered it to her to protect her from any liability on the same, and that long afterwards Hill wrongfully [538] obtained possession of the release' and. destroyed it. Hill’s contention is that after be sent the mortgage to the recorder’s office to be recorded defendant requested him to make out a release of the mortgage, which he did, and delivered it to her, and that afterwards defendant changed her mind and wanted the money on the mortgage, and he paid it to her, but defendant did not return the release. The fact is that the defendant removed to Chicago and took the release with her, and Hill went there more than a year after the mortgage was executed, obtained possession of the release, and destroyed it. There is a conflict in the evidence as to whether the release was destroyed with the consent of the defendant. The very great preponderance of the evidence is to the effect that Hill obtained possession of it, and thrust it into a stove and burned it, against the protest of the defendant. If he had paid the one thousand dollars for the note and mortgage,-, his act in destroying the release was not particularly reprehensible: We have examined the evidence fully upon the question whether Hill paid the money to the defendant,, and we concur with the district court in the finding that no money was paid, and that the transaction was á ■mere 'sham intended to protect the property of the defendant. We will not set out the testimony of the witnesses. The testimony of the defendant that no-money was paid is strongly corroborated by many facts- and circumstances connected with the transaction. The very form of the execution of the note, for which an attorney at law claims he paid one thousand dollars for a principal who intrusted him with money to loan, is suspicious. No claim is made that the annual interest on the note was either demanded or paid. And it does not appear that Morris, the alleged principal, knew of the transaction, or that he has at any time since had notice of it. Hill testified on the hearing as [539] follows, in reference to that fact: “I don’t know that he [Morris] knows-that this transaction took place.” Hill testified that-he paid ,the -one thousand dollars to, defendant in currency which he had in a safe in his law office, and that he wrote letters to defendant requesting a return of the release, but that he kept no copies of the letters. The defendant denied-that she received any such letters. These and many other circumstances which are developed in the case, not the least of which' is the. fact that Hill was the defendant’s attorney and .confidential adviser in her business affairs, leave but-little doubt that the note was without consideration. II. As w-e have found that the note and mortgage were given without consideration,.the remaining ques-< tion is, was the plaintiff herein an innocent purchaser of the note,.without notice of the want of consideration? It will be observed that the assignment or indorsement was made before the note became due. But it has long been a universal .rule that where it is shown that a note or bill is tainted with fraud in its inception, or that it was wholly without consideration, the burden is on the party who seeks to enforce payment to show that he gave value for the instrument, and that he had no notice of its invalidity as 'between the maker and payee. Lane v. Krekle, 22 Iowa, 399. Plaintiff testified that he had no notice, of the infirmity or want of consideration of the note, and that he paid a full and valuable consideration therefor. The defendant testified that, at or about the time of the original transaction, she related the whole affair to- the plaintiff and advised and counseled him about it. We are satisfied that the finding of the court below on this-question was' correct. The plaintiff claims that he paid Hill one thousand one hundred and fifty dollars in cash for the note. As we read the -evidence, which we need not repeat here, it is extremely doubtful if the plaintiff had at or about that time any such sum of [540] money to invest in the purchase of the note and mortgage. The case demands no further consideration, and the decree of the district court is affirmed.