Moore v. Johnson County Savings Bank

Cook, J., delivered the opinion of the court. The appellants, Moore & Tabb, were engaged in the drug business in Houston, Miss., and carried jewelry as a side line. A persuasive salesman from Iowa City, Iowa, called upon the firm, and spread before them alluring pictures and circulars advertising the high grade and valuable line of jewelry manufactured by the Puritan Manufacturing Company, of Iowa City, Iowa. This line of jewelry was strictly first-class, and the attractive contract offered to buyers seemed to guarantee the selected few, who were privileged to handle the goods of the Puritan Company, against all loss or damage which could result from slow sales or any other possible contingency. Of course, this sure thing could not be overlooked, and a contract was unhesitatingly signed up. The goods were promptly forwarded to the purchasers, and drafts were signed and returned to Iowa City, Iowa. The drafts read as follows: [876] “Puritan Mfg. Co. No. 3,591. Iowa City, Iowa, Mch. 29, 1904. Ten months after date pay to the order of the Puritan Mfg. Company, Iowa City, Iowa, ninety-five dollars ($95.00), value received, and charge to the account of Puritan Mfg. Company, per-. To Moore So Tahb, Houston, Miss. [Signed.]” Customer’s acceptance: “Accepted. Moore So Tabb. [ Copy. ] Accepted. ’ ’ Indorsements: “3|27|05. May 24, 1904. Pay Johnson County Savings Bank, Iowa City, Iowa, or order. Puritan Mfg. Co;” “Puritan Mfg. Company. [Copy.] Iowa City, Iowa, Mch. 29, 1904. Ten months after date pay to the order of the Puritan Mfg. Company, at Iowa City, Iowa, ninety-five dollars ($95.00), value received, and charge to account of Puritan Mfg. Company, per M -. To Moore So Tabb, Houston, Miss.” Customer’s acceptance: “Accepted. Moore So Tabb, Accepted. ’ ’ After these goods had arrived, they were offered to the customers of Moore & Tabb, some of whom were unlucky enough to buy. Time disclosed that Moore So Tabb had been swindled. The goods of quality were brass and altogether worthless. In the meantime two payments had been made; but when the two, which are the foundation of this suit, were presented, appellants refused to pay. Therefore this suit. Upon the trial, appellants offered to show failure of consideration for the acceptances and fraud on the part of the sellers of the jewelry and drawers of the drafts sued on. The court below refused to permit this testimony to go to the jury. It was claimed by appellee, the Johnson County Savings Bank, of Iowa City, Iowa, that they were purchasers for value of the acceptances; that they knew nothing about the fraud, or failure of consideration; that they had bought this paper in good faith; that the acceptances were payable to bearer. Appellants claimed [877] the protection of onr anticommercial statute; hut the court could not see it that way, and appellants, feeling injured, appeal to this court. Counsel for appellee cites in support of the action of the trial court the following decisions of this court, viz.: Bank v. Wofford, 71 Miss. 711, 14 South. 262; Gillespie v. Oil Mill, 76 Miss. 406, 24 South. 900; National Bank v. Rhodes, 96 Miss. 700, 51 South. 717. These cases are said to uphold the contention that the acceptances sued on are, in legal contemplation, payable to bearer. The first case cited, Bank v. Wofford, was a suit upon notes made by the defendants and payable to the order of themselves, and after being indorsed in blank by the maker fell into the hands of innocent purchasers for value. The court held that the notes were made payable to bearer by the indorsement in blank of the maker, the maker and payee being one and the same person; that this indorsement made them transferable by delivery, and therefore the defense of failure of consideration was not available. In Gillespie v. Oil Mill, W. A. Drenman drew a draft on the Oil Mill, payable to his own order, and indorsed it in blank. Of course, this draft became payable to bearer, because of the indorsement in blank by the maker. This indorsement in blank, when accepted, formed a part of the original note. The case of Bank v. Rhodes, supra, 96 Miss. 700, 51 South. 717, is not applicable to any phase of the case at bar. The note in question in that case was in its terms payable to bearer, and the maker undertook to avail himself of the defense that he did not intend to sign the note as it was drawn, and that he was misled into signing it. Visibly the circuit judge misconceived the facts in the cases cited. In Bank v. Wofford, above referred to, the suit was against the drawer, or maker of paper payable to his own order, which had by him been indorsed in blank. In the instant case the acceptance which is the subject of this lawsuit was not indorsed in blank by any [878] body. This case is clearly distinguishable from the cases relied upon by appellee. In those cases this court announced the law to be that notes or drafts payable to the order of the maker, or drawer, and indorsed in blank by the maker, or indorser, when negotiated, would be treated as commercial paper payable to bearer, because they were negotiable and the holder obtained title by the mere delivery. The acceptances sued on here were not “indorsed in blank,” as the term is understood in commerce and as defined by the law. An indorsement in blank is made by the mere writing of the indorser’s name on the back of the bill, without mention of the name of any person in whose favor the indorsement is made. Indorsement in blank «is contradistinguished from indorsement in full, or special indorsement, and they are all technical terms, well understood by the business world. If the Puritan Manufacturing Company had merely written its corporate name across the back of the acceptances, it may be conceded for the purposes of this case that the acceptors could not avail themselvesof the defenses afforded by our anticommercial statute. This court seems to have so held in Gillespie v. Oil Mill, supra. Let it be noted that the instrument construed in that case was indorsed in blank, while in the instant case the indorsement mentioned the name of the indorsee and directed the paper to be paid to the order of the indorsee named. The special indorsee still owns the acceptances, and so long as they remain unindorsed by the Johnson County Savings Bank, who was plaintiff below, title to same will remain in the bank. A mere delivery to a third party of the acceptances with only the present indorsements would not carry ownership, and the party so holding them could not maintain a snit for their collection. When Moore & Tabb wrote their acceptance upon the face of the drafts, they agreed to pay them accord [879] ing to their terms; and following this court in Gillespie v. Oil Mill, as construed by appellee, we may agree that "the Puritan Manufacturing Company could have made the paper payable to bearer, in legal effect, by simply writing its name upon the back. This would have been an indorsement in blank. Fortunately, for appellants, this was not done. It is altogether probable that appellee is not the owner of the paper, but simply holds it for collection; but, however that may be, the special indorsement does not make the acceptances negotiable by delivery. They cannot be so negotiated, until they are indorsed by the Johnson County Savings Bank, and have never assumed the characteristics of notes payable to bearer. The appellants should have been permitted to plead any defenses which they could have properly made .against the Puritan Manufacturing Company. It will be noted that we have adopted appellee’s construction of Gillespie v. Oil Mill. We think, however, That the record shows that the drawer of the draft construed in that case indorsed it in blank before it was presented and accepted by the Oil Mill, which makes a ■different case from the one here, even if the indorsement of the Puritan Manufacturing Company could be termed an indorsement in blank. Reversed and remanded.