Totten v. Bucy

Alvey, J., delivered the opinion of the Court. This action is brought upon a promissory note for $180, •dated October 10, 1879, payable six months after date, to H. K. White & Co., or bearer. By the terms of the note, it was made payable at the- First National Bank of Cumberland. ' • . The plaintiff claims to have acquired title to the note for valuable consideration, before its maturity; and the defendant pleads and insists that the note was obtained from him by the.fraud and deceit of the payees named in the note, through their agent; and that the plaintiff took the note with full knowledge of the facts under which the same was procured from him, the defendant. And, at the trial below, under the instructions of the Court, the jury appear to have so found. ■ It appears from the record, that the note was given for the deferred payment on a certain number of washing — 449 — machines, that were to he furnished to the defendant, at a certain price, to he disposed of by him as agent of the payees of the note. According to the evidence on the part of the defendant, which was not controverted at the trial, only a small portion of the machines were furnished, and they were found to he utterly worthless, and could not he disposed of: That the whole transaction, according to the testimony of the defendant, upon which the note was obtained, was a fraud and a deception, practiced by the agent of the payees of the note upon the defendant ; and that similar frauds were practiced upon others, to whom sales of the machines were made, by the same agent. The terms of the arrangement were reduced to writing at the time, and executed in duplicate form, each party retaining one of the duplicate originals thus executed. This contract, while it prescribed the number and price of the machines to he furnished, and the terms upon which they were to be supplied to the defendant as agent for sale, contained no stipulation in reference to the making of a negotiable promissory note for the deferred payment on the machines, before they were received by the defendant. It simply stipulated that for the five dozen machines to he furnished at $5 each, the defendant should pay $30 on each dozen ordered, as they toere sold, and the balance of $180 was to be paid in six months. The defendant, however, in his testimony, states that the party acting for the payees of the note, suggested and urged certain reasons why a note should he given for this $180, and that it would he placed in the bank where payable, “and .that the money realized from the sales of the machines could be applied to the payment; but that he, (the defendant,) had better not move around much for a few days, until he had thoroughly tested the machines.” That the agent left one dozen of the machines, and they were thoroughly tested, and found to he entirely worthless, and none of them could he disposed of, though efforts — 450 — were made to sell them. It appears that the note in question, instead of being placed at the bank where payable, was, with other notes of a similar character, disposed of to the plaintiff, a broker in Piedmont, West Virginia, on the 21st of October, 1819. 1. The first question raised by exception, is that upon the admissibility in evidence of the contract. This was offered by the defendant for the purpose of showing the nature of the transaction, and it was objected to by the plaintiff, upon the ground, as it would appear, that the duplicate held by the payees of the note was not produced as well as that held by the defendant. But there is noth-, ing in this objection, and the Court was right in overruling it. Where a contract is executed by the parties thereto in duplicate or triplicate form, the parts are denominated duplicate or triplicate originals, and they are all primary evidence, the one as much so as the other. It does not require, in order to introduce one of the duplicates, that notice should be given to produce the other 1 Tayl. Ev., p. 425, sec. 396; 1 Greenl. Ev., seo. 558. 2. With respect to the prayers offered by the respective parties, we think the Court below was entirely right in its ruling thereon. The first prayer offered by the plaintiff, and which was rejected by the Court, was clearly erroneous, and the Court was therefore right in rejecting it. It sought to deprive the defendant of all defence to the note, upon the ground of fraud in its inception, and of notice thereof to the plaintiff, by obtaining from the Court an instruction that there was no evidence legally sufficient to charge the plaintiff with notice of the fraudulent character of the note. But there was evidence, and it was properly left to the jury. In granting the second and fourth prayers offered by the plaintiff, the law was as favorably stated for the plaintiff as he could possibly require to be stated ; and we think those two instructions embraced the whole case, — 451 — so far as the plaintiff’s claim as a bona fide holder for value was concerned. If he could not maintain his right to recover under those instructions, it must have been because the evidence was against him on the question of notice or want of bona fides in obtaining title to the note. The instruction given at the instance of the defendant was simply the converse of the propositions contained in the instructions given at the instance of the plaintiff; and upon all the instructions given, the case was fully and fairly placed before the jury, and they found for the defendant. By the third and fifth prayers of the plaintiff, which were rejected by the Court, different questions were made from those embraced by the instructions actually given. By the third prayer, the Court was invoked to say, that if the plaintiff obtained the note in good faith and for value, then the verdict of the jury must he for the plaintiff, although it should he found that the note was obtained from the defendant by fraud, and that the plaintiff “ had notice of facts which should have put him on inquiry.” The terms of the prayer, as will he observed, are somewhat inconsistent, and fail perhaps to express with accuracy the legal proposition in the mind of the draftsman. It is true, the transferee of the note was not hound to show that he had acted vigilantly or even cautiously in inquiring into the origin and history of the instrument, in order to sustain his position as bona fide holder for value. The question is not what facts the knowledge of which will or will not be sufficient to put the party on inquiry ; hut the question is, whether the party had knowledge of the infirmity of the note at the time of the transfer to him; or, in other words, whether lie procured the note in good faith for valuable consideration. Maitland vs. The Bank, 40 Md., 568 ; The Bank vs. Hooper, 47 Md., 88. If he had such knowledge of the infirmity of the note, whether it was obtained upon inquiry or otherwise — 452 — was quite immaterial; and with such knowledge the • transfer could not have been bona fide. To have instructed the jury in the form proposed hy the prayer would have been misleading, to say the least of it. But the prayer failed to put to the jury to find that the note was transferred to the plaintiff before its maturity; and this omission was, of course, a fatal defect. By the fifth prayer, the Court was asked to instruct the jury, that if the note was transferred to the plaintiff before its maturity, then the onus was on the defendant to show by evidence that the plaintiff had notice of the want of consideration for the note, and the fraud in its procurement from the defendant, and that, in the absence of such evidence of notice to the plaintiff, he was to be presumed to be holder of the note for value, without notice. This is clearly not in accordance with the law. It is true that the indorsee or transferee, in an action against the maker of a negotiable note, has nothing to do in the opening of his case hut to prove the signatures to the instrument, and introduce it in evidence; for the instrument goes to the jury with the legal presumption that the plaintiff became the holder of the same for value at its daté, or before maturity, in the usual course of business, without notice of anything to impeach his title. He is at liberty to rest upon this presumption, and is not hound, in the first instance, to show the circumstances under which he obtained the note, or that he paid value for it. But if the defendant shows by such proof as may be properly left to the jury to consider, that the instrument was procured by fraud, or was fraudulent in its inception, or that the consideration was illegal, or that it had been lost or stolen before it came to the possession of the holder, the burden of proof is changed, and it is then incumbent upon the plaintiff to show that he acquired the note bona fide for value, in the usual course of business, before maturity, and under circumstances that create — 453 — no presumption that he knew of the existence of the facts that impeached the validity of the instrument. This is a well established rule as applicable to negotiable instruments; and it is said to be wise and salutary in the protection that it affords. It proceeds upon the presumption that the person who has been guilty of the fraud or illegality in obtaining the instrument would dispose of it, and would place it in the hands of another person to sue upon it; and it is because of such presumption, that the proof of fraud, illegality, or loss, casts upon the holder the burden of showing that he is a bona fide holder for value, or under what circumstances, and/or what value, he became the holder 0/ the note. (Decided 19th January, 1882.) The authorities in support of this proposition are numerous, and they will be found collected by Daniel, in his valuable work on Negotiable Instruments, Vol. l, p. 664, sec. 815, 2nd Ed.; and also in 2 Greenl. Ev., sec. 172, (10th Ed.,) and 1 Taylor Ev., p. 376, sec. 341, (6th Ed. ;) Ellicott vs. Martin, 6 Md., 509; Smith vs. Braine, 14 Q. B., 244; Bailey vs. Bidwell, 13 M. & W., 73 ; Hall vs. Featherstone, 3 H. & N., 284 ; Commissioners vs. Clark, 94 U. S., 278, 286; Collins vs. Gilbert, Ib., 753; Worcester Co. Bank vs. Dorchester & Milton Bank, 10 Cush., 488. It is clear, therefore, that the third prayer of the plaintiff was properly rejected, because it sought erroneously to maintain the presumption in favor of the title of the plaintiff to the note, notwithstanding it had been impeached by the evidence on the part of the defence, and after the onus of proof had been changed to the plaintiff. Finding no error in the rulings of the Court we shall affirm the judgment. Judgment affirmed.