Shaffer v. Bond

⁶⁴⁹ Boyd, C. J., delivered the opinion of the Court. George M. Bond, the appellee, sued E. Wayland Shaffer, the appellant, on the common counts and a special one on a promissory note purporting to be dated January 2nd, 1915, payable to the order of the appellee on demand for $4,250.00, with interest, at the Citizens’ National Bank of Laurel, Md. The defendant pleaded the general issue pleas of never promised as alleged and never indebted as alleged; and issue having been joined, a trial was had, resulting in a verdict in favor of the plaintiff for $4,578.30, being the amount of the note with interest. From a judgment entered on that verdict this appeal was taken. There are seven bills of exception in the record—the first six presenting rulings on the admissibility of evidence, and the: seventh embracing the rulings on the prayers.

The plaintiff offered none, but the defendant offered five prayers—the first, and fourth of which were granted with amendments made by the Court, the second was conceded, and the third and fifth were rejected. Although that was not necessary, as the defendant had not by his pleadings denied the execution of the note, as required by sub-section 108 of section 24 of Article 75 of the Code, the plaintiff proved the signature of the defendant and offered the note in evidence. He also: proved demand on the defendant for payment. The plaintiff having rested his case, the defendant went upon the stand.

He denied signing this note in January, 1915, admitted his signature, but contended that in December', 1913, he wanted to borrow $25.00 from the plaintiff, who said he did not have the money, but thought he could get it on his note; that defendant told him if he could not get $25 to get $20, and he signed his name to a blank note for the plaintiff to get the money on it; that the plaintiff started out to get it and later the plaintiff told him he could not get the money, and he then asked for the note he had signed in blank, but plaintiff claimed he had lost or mislaid it; that he called for it a number of times, but plaintiff said he had not been able to: find it; that being anxious ⁶⁵⁰ about it he took his "wife with him to plaintiff’s office in February, 1914, explained, the transaction to her in the presence of the plaintiff, and the latter, after again looking in his safe, said he could not find it, but told him if he came across it he would return it, and assured him that he would never have any trouble about it. . He said that he then went away satisfied, and never heard anything from the plaintiff about any note from that time until about the middle of June, 1915, when he received a letter from him telling him he had deposited his note for $4,250.00 in bank, and requested him to attend to it. He swore that he had never given the plaintiff any note whatever excepting the one in blank. It was admitted that the body of the note sued on was in Mr. Bond’s handwriting, and that the signature was that of the defendant.

The theory of the defendant was that the note sued on was the one he had signed in blank to enable the plaintiff to get for him the $25 or'$20, and that he owed plaintiff nothing in January, 1915. The evidence of his wife tended to corroborate him as to the interview in February, 1914. The plaintiff testified that the note sued on was given for loans made by him to the defendant at various times from the year 1907 until some time in January, T914; that the defendant was about seventeen years of age when the loans began, and at first he would take an order from the defendant on his guardian when he loaned him money, and then when he loaned him more he would destroy that and take another; that after defendant became of age he would take a note for money due’ him up to that time, and when he made him another loan he would take a new note for the amount then due and destroy the other one. He swore that the note sued on was for money loaned before and after the defendant became of age; that he had had another note for the same amount, but he wanted one payable on demand, and defendant agreed to come to his office on January 2nd, 1915, and sign a new note; that he did not come then, but did about ⁶⁵¹ the middle of January, when he signed this note, which plaintiff said he drew and dated on January 2nd, 1915, the time defendant promised to come to his office.

The testimony of the plaintiff’s sister tended to corroborate bim as to the signing of the note on or about January 15th, 1915, and the destruction of the one plaintiff previously had. His wife also testified as to a loan made by the plaintiff to the defendant for about $1,000 in June, 1908. The first five exceptions were taken to the action of the Court in permitting 1he plaintiff to ask the defendant on cross-examination questions which were objected to. Without deeming it necessary to repeat them or to refer to them in detail, we are satisfied that there was no reversible error in any of these exceptions.

In the first places, none' of them seemed to have been answered, unless what is stated in the beginning of the sixth bill of exceptions was an answer to the question in the fifth. The object in asking them seems to have been to show the intimate relations which existed between them, and to have the jury infer that the defendant would probably want money, as reflecting on the evidence of the defendant, in which he had positively denied borrowing from the plaintiff, but to the only one which can be claimed to have been answered, the answer was calculated to injure the plaintiff more than the defendant, if it had any effect. There was nothing in that answer, or either of the questions, which could be held to be sufficient grounds for reversing a judgment. The plaintiff handed to the defendant, while still under cross-examination, eleven checks drawn by the plaintiff to the order of “Myself,” endorsed by him, and then by the defendant, who admitted his signatures, but explained that the plaintiff would send him to bank to get checks cashed for him and would draw them in that way; that the bank would require his endorsement to show who had received the money, but he denied getting any of the money on them for his own use.

The plaintiff offered the checks in evidence, with the ⁶⁵² proffer to follow them tip by proving that they were a part of the consideration of the note. The defendant objected on the ground that there was no connection shown between them and the note^ and because they showed upon their face mutilation. ■ The plaintiff’s attorney explained that the checks had been pasted on stubs, and that in tearing them off Mr. Bond’s signature had been a little mutilated on some of them, but he admitted that his endorsements were on them. They were then' admitted in evidence, after the assurance that the evidence would be followed up as stated above. There is no force in the objection that the stubs were not offered with them, as they were not admissible on behalf of the plaintiff, if there were any entries on them, and later Mr. Bond testified that there were no such entries.

As the defendant called upon the plaintiff to produce the stubs, his failure to do so might have prejudiced the plaintiff before the jury, but we are not aware of any authority or practice which would have justified the Court in excluding the checks because the stubs were not introduced with them. The testimony already given by the defendant made the checks relevant, in connection with the proffer of the plaintiff. If the plaintiff failed to connect them with the note, according to the proffer, the proper course to have pursued was to have moved that the checks be excluded, unless they became in some other way relevant. There was, then, no error in admitting them.

This brings us to the rulings on the prayers. As will be seen from what we have said above, the evidence of the two parties was very conflicting. There was no middle ground or room for claim of mistake as to the important questions of fact in controversy. The defendant’s first prayer as offered .was as follows: “The defendant prays the Court to instruct the jury that if the jury find from the evidence in the case that there was no consideration moving from the plaintiff to the defendant for the note, which is the cause of the action in this case, then their verdict must be for the defendant.” ⁶⁵³ The Court modified that by adding to it: “but the burden of the proof is on the defendant to show want of consideration,” and granted that prayer as modified, to which modification an exception was taken.

The defendant’s fifth prayer, which was rejected, asked the Court “to- instruct the jury that under the pleadings and evidence in this case, the burden of the proof is upon the plaintiff to show that he gave value for the note the cause of action herein sued on.” Those rulings present the important question in the case— namely, upon which side was the burden in reference to the alleged want of consideration, under the circumstances. The Negotiable Instruments Act was passed in this State in 1898—being Chapter 119 of the Acts of Assembly of that year, and now included in Article 13 of the Annotated Code. Section 43 of that Article provides that: “Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration; -and every person whose signature appears thereon to have been a party thereto for value”; and section 47 is: “Absence or failure of consideration is a matter of defense as against any person not a holder in due course; and partial failure of consideration is a defense pro tanto, whether the failure is an ascertained and liquidated amount or otherwise.” See also section 77. Section 33 of that Article provides- that: “Where the instrument is wanting in any material particular, the person in possession thereof has a prima facie authority to complete it by filling up the blanks therein'.

And a signature on a blank paper delivered by the person making the signature in order that the paper may he converted into a negotiable instrument operates as a prima facie authority to fill it up- as such for any amount. In order, however, that any such instrument, when completed, may be enforced against any person who becomes a party thereto prior to- its completion, it must he filled up- strictly in aeordanee with the authority given, and within a reasonable time/’ etc. ⁶⁵⁴ The second prayer, which was conceded, instructed the jury that “if the jury shall find that said note was filled in for the sum of $4,250 by the plaintiff or other persons other than the defendant, without the knowledge of the defendant, and without the authority of the defendant to so fill in the same, the verdict of the jury must be for the defendant.” The appellee contends that as the conceded prayer covered the defense made by the appellant, he could only have obtained a verdict under it, and hence, even if there was error in the action of the Court as to the first and fifth prayers, concerning the burden as to the want of consideration, the defendant could not have been injured, and therefore it can not be said that there was any reversible error. But manifestly that is not correct, for the defendant had the right to ask instructions on-both theories of the case. The plaintiff did not contend that he was authorized to fill up a note which had been signed by the defendant in blank—on the contrary, he denied that this paper had been left with him signed in blank, and claimed that the defendant signed it after it had been filled up as it now is.

If the defendant was right in his contention, then there was no consideration for this note, and, as the plaintiff claimed there was, the defendant had the right to ask the Court to instruct the jury as to the burden of proof. The appellant cited McCosker v. Bank, 84 Md. 292 , to show that where there is fraud or illegality in the inception of the note, the burden of proof is upon the holder to show that he is a bona fide holder for value, but he did not state the reason for such ruling given by the Court. That was an action by the endorsees against the makers of a note, who pleaded the general issue and that the note was procured by fraud, of which the plaintiffs had knowledge when it was endorsed to them. The Court amended a prayer offered by the plaintiffs as to the alleged fraud by adding, “and the burden of proof is upon the plaintiffs to show that they had no knowledge of the fraud/1 After stating the law of this State ⁶⁵⁵ as to the legal presumption that the plaintiffs became holders for value before maturity, etc., tbe Court said: “But if tbe 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 boen lost or stolen before it came to tbe possession of tbe bolder, tbe 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,” etc. The Court then added: “This is a well established rule as applicable to1 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 for what value he became the holder of the note.” That ease cited Totten v. Bucy, 57 Md. 446, 452 , and other cases where the rule had been announced, in none of which, however, was the suit by a payee or original party to a note. The appellant referred to tbe definition of the word “holder,” as given in section 14 of Article 13, that it “means the payee or endorsee of a bill or note, who is in possession of it, or the bearer thereof”; hut when McCosker v. Banks and the other cases referred to, in which that term was used, were decided, the Act was not in force in this State and the word was used in connection with endorsees. Moreover, the reason for the rule; as quoted above, does not apply to an original party to a suit—the onus put on the plaintiff in such case is only to show that he is a bona fide holder for value, etc.—not that there was no fraud, nor that the consideration was illegal in the inception of the note, etc. ⁶⁵⁶ It is only when fraud is shown on the part of the payee or someone other than himself that the endorsee is called upon to prove that he was not aware of it in that class of cases, and then by reason of the presumption which is raised as stated above. There is therefore nothing in the case of McCosker v. Banks which aids us in determining the question presented by the first and fifth prayers as to the burden of proof.

The only case in Maryland which it is claimed has directly passed on the question of burden of proof when there is an alleged want of consideration is Eckels v. Cornell Economizer Co., 119 Md. 107 . The two notes there sued on represented the contract price, with interest added, of two1 “Cornell Patent Economizers and Smoke Consumers” with which the plaintiff had equipped two bailers in defendant’s plant, under the terms of a written contract. That contract contained four guarantees, one of which was to effect a saving of not less than 3 5%, or a proportional increase, in boiler capacity, etc., and was the breach relied on. The plaintiff' proved the execution and delivery of