Park v. Johnson
Park v. Johnson
Opinion of the Court
This is an action to recover upon a promissory note for $1,125, dated Coeur d’Alene, Idaho, March 26, 1906, and due three years from date, and executed jointly and severally by respondents to McLaughlin Bros, and by McLaughlin Bros, indorsed and transferred before maturity for value received, to the plaintiff, appellant herein, who claims to be the owner of the same. The answer admits the execution of the note sued on and puts in issue the plaintiff’s ownership of said note and the transfer to plaintiff by
The appellant assigns fifty-two errors, many of which have been discussed and passed on by this court in the case of Winter v. Nobs et al., 19 Ida. 18, 112 Pac. 525, a case almost identical with the one now under consideration. In fact, the Winter-Nobs ease was upon one of four promissory notes given by the respondents to McLaughlin Bros, in the same transaction in which the note sued upon in this action was given, and the only material difference between the facts of the two cases is that in the Winter case McLaughlin Bros, indorsed and transferred the note to Winter, and in the present case McLaughlin Bros, indorsed and transferred the note to the appellant Park. The evidence in the present case is even stronger and more convincing than the evidence in the Winter case, but is of the same general nature and kind and proves the same state of facts; and in the opinion above referred to this court held that the evidence was sufficient to justify the verdict. With that decision we are still in full accord, and apply the rule there laid down to the present ease.
It is contended upon this appeal, however, that the trial court erred in permitting certain questions to be propounded to the appellant on cross-examination. The evidence of plaintiff was taken by deposition. The appellant was asked many questions with reference to his acquaintance with McLaughlin Bros, and the transaction he had with them at the time the note was purchased, and whether he had bought other notes from McLaughlin Bros, previous to the purchase of the note in controversy in this case, and whether payment of the notes so purchased was refused and suit brought, and the defendants made the same answer made in the present case. These questions were all objected to upon the ground that they were
Sec. 3509 of the Rev. Codes provides:
“A holder in due course is a holder who has taken the instrument under the following conditions: First, that the instrument is complete and regular upon its face; second, that he became the holder of it before it was overdue and without notice that it had been previously dishonored, if such was the fact; third, that he took it in good faith and for value; fourth, that at the time it was negotiated to him he*555 had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.”
So the inquiries made of the plaintiff with reference to his acquaintance with McLaughlin Bros., and the many transactions he had had with such firm in handling other notes made payable to McLaughlin Bros, and given for other stallions sold by McLaughlin Bros., and the knowledge the plaintiff had of McLaughlin Bros., business, and that they had had litigation upon notes purchased by him from them in which breach of warranty and fraud in the inception of the notes was made a defense, and the same was sustained by the highest courts of other'states upon the same state of facts as involved in this case; and the fact that the plaintiff pursued the defendants in the state of Idaho and took no steps to hold the indorsers upon the note, — were circumstances and facts which tended to show that he did not take the note in good faith or for value, and that at the time it was negotiated he had notice of infirmities in the note and the defect of the title of McLaughlin Bros., and with such facts before him, made no inquiries as to the truth of the same. He places himself in the position where he canfiot claim as a holder in good faith without notice. (Schmueckle v. Waters et al., 125 Ind. 265, 25 N. E. 281; State Nat. Bank v. Bennett, 8 Ind. App. 679, 36 N. E. 551; 2 Ency. of Ev. 526; Winter v. Nobs, 19 Ida. 18, 112 Pac. 525.)
The court gave to the jury an instruction defining a holder in due course and in addition to the provision found in see. 3509, added to subd. 4 the following: “And the court instructs the jury that if you find from the evidence in this action that the title of McLaughlin Bros, to the note in controversy was defective by reason of fraud, illegal consideration, or for any reason, then it becomes incumbent upon the plaintiff to prove that he was a holder in due course, and in order for him to do so he must prove sufficient to show that he is a holder within the meaning of the definition above given.” This addition to the statutory definition was intended and in fact states the rule with reference to the burden of proof shifting to the plaintiff from the defendant, where
Serious complaint is made against instruction No. 11. This instruction reads as follows:
“The court instructs the jury that the term ‘good faith’ means not only honesty of intention, but the absence of suspicious circumstances, or, if such circumstances exist, then such inquiry as will satisfy a prudent man of the validity of the transaction, and the court instructs the jury that if there were such circumstances surrounding the alleged purchase of the note in controversy by the plaintiff, as would put an ordinarily prudent man upon inquiry and lead him to believe that there was or might be a defect in the title of the person negotiating the note, or a good defense to the note by the maker in the hands of the person negotiating the same, and the purchaser, under such suspicious circumstances, makes no attempt to ascertain the truth, he cannot claim ‘good faith’ in accepting the instrument.”
This instruction is clearly erroneous in that the court instructs the jury that the term “good faith” means the “absence of suspicious circumstances.” The existence of suspicious circumstances will net destroy the good faith of a transaction, but it is such circumstances as would charge the purchaser of a note, as an ordinarily prudent man, with bad faith, or notice of the infirmity in the instrument, or defect in the title of the person from whom he makes the purchase.
We have examined the other instructions given, and we think they state the law as announced by this court in Winter v. Nobs, supra, and that there are no grounds for reversing the judgment. The judgment is affirmed; costs awarded to respondent.
Reference
- Full Case Name
- HOWARD C. PARK v. J. T. JOHNSON
- Cited By
- 14 cases
- Status
- Published
- Syllabus
- Negotiable Instrument — Examination of Plaintiff — Burden of Proof — Suspicious Circumstances. (Syllabus by tbe court.) 1. The case of Winter v. Nobs, 19 Ida. 18, 112 Pae. 525, approved and followed. 2. Evidence in this case examined and held sufficient to support the judgment. 3. In an action upon a promissory note where the plaintiff testifies in chief and in support of his complaint that he purchased the note before maturity and paid therefor a consideration, and that the plaintiff was well acquainted with the payee of the note and had been for many years, and that the note purchased was one of a number of the same kind, it is proper on cross-examination to interrogate the plaintiff fully as to all facts connected with the transaction involved in the purchase of said note in order to aid the jury in determining whether the note was in fact purchased in good faith before maturity and for value. 4. Where action is brought upon a promissory note, and it is alleged that the plaintiff purchased the note before maturity in due course of business and paid therefor a consideration, and an answer is made denying the transfer before maturity, or at all, for value or otherwise, and that the note was fraudulent from its inception, the jury may take into consideration all the circumstances surrounding the transaction in determining whether the purchase was made in good faith, and whether such circumstances were sufficient to give notice to the plaintiff or to lead an ordinarily prudent man to make inquiry as to whether the note possessed any infirmities which would affect its collection, and if the jury conclude that the circumstances surrounding the purchase of the note were sufficient to cause an ordinarily prudent man to make inquiry or investigate the eireumstanees under which the note was executed and the plaintiff refrained from making such inquiry, then and in sueh ease such facts were sufficient to authorize a jury to find that such holder was not a holder in good faith -and without notice. 5. An instruction which covers the provisions of sec. 3509, Rev. Codes, and adds thereto, “And the court instructs the jury that if you find from the evidence in this action that the title of McLaughlin Bros, in controversy was defective by reason of fraud, illegal consideration or for any reason, then it becomes incumbent upon the plaintiff to show that he was a holder in due course, and in order for him to do so he must prove sufficient to show that he is a holder within the meaning of the definition above given,” is erroneous by reason of including the words, “or for any reason.” 6. An instruction which directs the jury that the presence of suspicious circumstances means bad faith is erroneous. The existence of suspicious circumstances alone will not destroy the good faith of a transaction, but it is such circumstances as would charge the purchaser of a note, as an ordinarily prudent man, with bad faith or notice of the infirmity in the instrument, or defect in the title of the person from whom he makes the purchase. This error, however, taken in connection with other instructions covering the same subject and the strong and conclusive evidence, was not of such prejudicial character as to warrant a reversal.