State Savings Ass'n v. Barber

The opinion of the court was delivered by ' Horton, C. J.: Action by the State Savings Association of St. Louis, Mo., against W. H. Barber, upon the following promissory note: “$70. Kirwin, Kansas, June 30, 1883. “On or before the first day of October, 1883, I, of the township of Valley, county of Phillips, state of Kansas, for [492] value -received, promise to pay to the order J. E. Hayner & Co., seventy dollars, with interest at 7 per cent., and if not paid at maturity, with interest at 12 per cent, on the amount then due until paid. Payable at Kirwin Bank. W. H. Barber.” On the reverse side of above note appears as follows: “For value received, I hereby guarantee the payment of the within note. Demand for payment, protest and notice of protest waived. W. H. Barber. “For the purpose of obtaining the within credit, I hereby certify that I own 160 acres of land in my own name, in section 2, township 5, range 16, in the county of Phillips and state of Kansas, which is worth, at fair valuation, $1,600; all incumbrances do not exceed-, and the title is perfect in me in all respects. I have stock and personal property to the amount of $600, and my debts and liabilities do not exceed -. There is no judgment against me. W. H. Barber.” On the back of the note there was also the following written indorsement:, “J. E. Hayner & Co., (dated September 1, 1883:) Pay Kirwin Bank or order, for collection, account of State Savings Association of St. Louis, Mo. J. H. McCau-ley, Cashier.” The defendant filed an amended answer, verified by his affidavit, admitting the execution of the note; that the plaintiff is a corporation; but denied every other allegation, statement and averment contained in the answer. The defendant also alleged in his answer as follows: “4. Said plaintiff did not purchase said note in good faith and for a valuable consideration. “5. The said note was transferred to plaintiff without consideration, and for the pui’pose of cheating, wronging and defrauding the defendant. “ 6. The said note was transferred to plaintiff after maturity of the same.” The defendant also set forth as a defense to the note, that the same was executed for a binding and harvesting machine sold to the maker by J. E. Hayner & Co.; that the machine was warranted to be a good machine and perfect in its construction, [493] but was worthless and wholly unfit for the use for which it was intended; that after a fair trial, it was returned to J. E. Hayner & Co., and therefore there was a failure'of any consideration for the note. The action was tried before the court, with a jury, and the plaintiff offered in evidence the original note, and then offered in evidence the indorsement on the back of the note for the purpose of' proving that the note was duly indorsed by J. E. Hayner & Co. to the plaintiff. To the introduction of the indorsement, the defendant objected, which objection was sustained by the court. To this, exception was taken. Without further evidence, the plaintiff rested his case. The defendant introduced no evidence. At the instance of the defendant, the court instructed the jury upon the pleadings and evidence to return a verdict for the defendant. The plaintiff requested the court to instruct the jury to return a verdict in its behalf. This instruction was refused. Upon the instruction of the court, the jury found the issue in favor of the defendant, and judgment was" entered thereon. In the ruling of the court in refusing to permit the indorsement upon the back of the note to go to the jury, we perceive no error. The plaintiff alleged in his petition that after the note had been executed to J. E. Hayner & Co., and before the same became due, that J. E. Hayner & Co. sold the same to the plaintiff, and that the same was duly indorsed by J. E. Hayner & Co. The alleged indorsement is in words as follows: “J. E. Hayner & Co. Dated Sept. 1, 1883.” The allegation of the execution of the indorsement on the note was denied by the answer, and this denial was verified by the affidavit of the defendant. Before the indorsement upon the note was entitled to Be received in evidence, preliminary evidence of its execution should have been presented. No offer was made to show that the signature of J. E. Hayner & Co. was genuine, and as the defendant had put the existence of the indorsement in issue by denying its execution, the trial court very properly refused to let the indorsement go to the jury, in the absence of the necessary preliminary evidence; [494] but the. instruction to the jury by the trial court to return a verdict for the defendant upon the pleadings and evidence was error. The answer admitted that the note had been transferred to the plaintiff. A note payable to order may be sold and transferred without indorsment, but of course thus transferred it is not. negotiable. Upon the admissions in the answer, and the fact that the .plaintiff was in the possession of the note, the plaintiff was entitled to judgment, in the absence of all evidence that the note was given without consideration. To protect the plaintiff as a bona fide holder and thereby to cut off the defense of the want of consideration, it was incumbent upon the plaintiff to establish that it held the note by written indorsement, and if the plaintiff had offered evidence proving the execution of the indorsement, the burden of proof would have been upon the defendant to establish that the indorsement was made after maturity. Even if there was no written indorsement, none was necessary to enable the plaintiff to sue in its own name. A negotiable promissory note may be assigned orally, and the mere delivery for a valuable consideration will pass the title. Possession of a note—where it does not appear upon the note who the owner thereof is — is prima fade evidence of ownership. (Williams v. Norton, 3 Kas. 295; Eggan v. Briggs, 23 id. 710.) After the plaintiff failed to prove the genuineness of the indorsement of the note, it was still entitled to judgment thereon, unless the defendant had made out his case of the failure of consideration. The latter offered no. evidence to support his defense; and therefore the trial court should not have given the instruction to the jury which appears in the record. The judgment of the district court must be reversed, and the cause remanded for a new trial. All the Justices concurring.