Houston v. Keith

McLean, J. delivered the opinion of the court. This is a suit brought by appellant against the appellees-on a promissory note, dated Decatur, Mississippi, September 7, 1907, for twelve hundred and fifty -dollars, payable on or before November 1,1907, to the Farmers’ & Bankers’ Warehouse Building Association, of Houston, Texas, or order, payable at Houston, Texas. The note recites that it “is given in payment for the construction of certain improvements upon that certain lot or parcel of land situated in Decatur, Newton county, Mississippi, this day contracted to be erected by the Farmers’ & Bankers’ Warehouse Building Association, for [87] Farmers’ E. & O. Union W. H. S. Company, and to secure the payment therefor an express contract and mechanic’s lien is given by said contract upon said land and improvements.” The defendants pleaded, first, the general issue; second, that said stipulation in the note was part of an executory contract, entered into between the Farmers’ & Bankers’ Warehouse Building Association, and that the plaintiff was put on notice by the stipulations contained in said note; and, further, that said plaintiff, at the time that he bought said note, had notice. Defendants further aver that they, on their part, performed all and singular their parts of said contract, but that neither the said Farmers’ & Bankers’ Warehouse Association nor the plaintiff performed or carried out said contract, but that they wholly and persistently failed and refused to do so. Defendants further say that plaintiff did not in good faith acquire said note in due course, but that he well knew that the Farmers ’ & Bankers ’ Building Association had not and would not construct and make said improvements, and that the plaintiff well knew that it, by reason of its insolvency and bankrupt condition, could not perform the same, and that he, the plaintiff, fraudulently colluded with the said Farmers’ & Bankers’ Warehouse Building Association to prevent defendants pleading and showing herein their said default. In short, defendants pleaded total failure and want of consideration, to all of which the plaintiff made replication, denying each and every allegation in defendants’ plea. The plaintiff introduced in evidence the note sued on, and rested. The defendants then introduced in evidence the written contract made between the payee of said note and the makers of the note, who were representatives and trustees of the subscribers to the capital stock of the Farmers’ E. & C. Union W. H. S. Company, and proved that the payee of said note wholly failed to carry out and execute his part of said contract. The defendants placed [88] on the stand one W. L. Williams, by whom, among other things, they sought to prove that plaintiff offered to compromise this suit. The testimony was this: One Mr. West, who was the attorney for the plaintiff, went over to Decatur to see the makers of the note, for the purpose of collecting the note, the same having been placed in his hands for collection; and he (West) said that Houston, the plaintiff, had purchased this note for fifty cents on the dollar, and would compromise it that day for the same amount. This evidence was objected to by the plaintiff, but the court made no rulings thereon. Thereupon the plaintiff moved the court for a peremptory instruction, which was overruled, and a peremptory instruction was given for defendants. The only question presented is whether or not the rights of the parties are to be governed by the laws of Mississippi, where the note was made, or the law of Texas, where the note was expressly made payable. When we say “rights of the parties,” we refer to' the defenses set up in this case. The genera.1 rule is that matters bearing upon the execution, the interpretation, and the validity of the contract are determined by the law of the place where the contract is made. Matters connected with its performance, such as payment, are regulated by the law of the place of performance. Matters respecting remedy, such as bringing suits, admissibility of evidence, and statutes of limitations, depend upon the law of the place where the suit is brought. But we are only discussing in this opinion the lex loci solutionis. Scudder v. National Bank, 91 U. S. 406, 23 L. Ed. 245. It is not now a debatable question as to this proposition. Under'the repeated decisions, of this court, beginning as far. back as Fellows v. Harris, 12 Smedes & M. 462, and extending down to Lienkauf Banking Company v. Heney, 93 Miss. 613, 46 South. 626, the rule is firmly established that the lex loci, solutionis is to govern, to-wit, in this case, the law of Texas; and under the Texas law it is well [89] settled that, appellant having become the owner of the note for a valuable consideration before maturity, in order for appellees to defeat appellant’s right to recover thereon, it was necessary for appellees to show that appellant had notice of the failure of consideration. This is not only the statutory law of Texas, but the ruling of the Texas court. First National Bank of Wamego, Kansas v. Oliver, 16 Tex. Civ. App. 428, 41 S. W. 414; Texas Revised Statutes, 265. It is also equally well settled in this state, and elsewhere, that the holder of negotiable paper, indorsed to him, is presumed to have a bona fide title, and to have parted with value for it; and it devolves upon the maker of the note, who sets up the defenses and equities between himself and the payee, to lay the foundation for the rights claimed, by showing that the indorsee, parted with no valuable consideration, or that he took the paper when discredited and after it became due, or some other fact which throws suspicion upon his title which would put him upon his guard and enjoin inquiry. Such is the law merchant. Harrison v. Pike Bros. & Co., 48 Miss. 47. There is nothing in this record to show that the indorsee in this case did not pay value for the note, that he was not the bona fide holder, or that he had any notice of any equity or of any defense, or that he took the paper after maturity; and the result follows that, under the evidence in this case, the appellant was entitled to a peremptory instruction. The fact that the note recited the consideration for which the note was given could, under no circumstances, affect the rights’ of the plaintiff, as it did not put him upon inquiry in the least. This stipulation shows that the note was given for the construction of certain mprovements thereafter to be made — purely executory in its nature ; and the purchaser had the right to presume, in the absence of knowledge to the contrary, either that the [90] payee had performed his part of the agreement, or that it would be performed. It was clearly error to permit the statements made by West to go to the jury. Dufour v. Chapotel, 75 Miss. 659, 23 South. 387. Reversed, and new trial awarded.