Weant v. Southern Trust & Deposit Co.

Pearce, J., delivered the opinion of the Court. On January 13th, 1906, the appellant, J. Prank Weant, gave to Stephen W. Peck his check for $825.00 on the First Nat. Bank of Baltimore and the latter on the same day deposited this check to his own credit with the appellee, the Southern Trust and Deposit Company where he kept his account. On the same day, the appellant, by a written order to the First Nat.

Bank, stopped payment of this check, which was presented for payment at said bank in the regular course of business, and was returned, unpaid, to the appellee by the runner of the Nat. Bank of Commerce through which the appellee cleared, and marked “payment stopped.” The appellee paid the amount of the check to the runner of the Nat. Bank of Commerce, and took up the check which thereafter remained in its possession, and has never been paid, except that a credit of $85.56 has been given for several small sums on account. On May 25th, 1908, the appellee went into the hands of receivers, under an order of Circuit Court No. 2 of Baltimore City which gave authority to the appellee to maintain this suit which was instituted June 29th, 1908.

The declaration contained the common counts, and a special count on the check setting forth the stoppage of payment as the reason for its non-payment. There were five pleas filed. The first and second were the general issue; the third was payment; the fourth was a release upon the cheek in consideration of the giving of certain notes for the amount of said check by said Peck and his wife, upon which notes the ⁴⁶⁸ plea alleged the full amount of said check had been collected by the appellee; and the fifth, that the check was given by the appellant without consideration and was procured by fraud and misrepresentation by the plaintiff and payee, known to the plaintiff before the endorsement of the check to it, and issue was properly joined on all these pleas, the verdict being for the plaintiff for $873.17 on April 7th, 1909. Mr. Taylor, the paying and receiving teller of the appellee, testified to the signature of the appellant on the check and of Peck as endorser, and to its deposit on January 13th, 1906, by Peck to his credit; also that concurrently with its deposit, Peck withdrew the larger pari of that deposit, and the whole balance of the account was drawn out on other checks, and that this check had never been paid.

It was proved by Mr. Wilcox, secretary and treasurer of the appellee, that when the check was returned unpaid he telephoned Peck about it who came the same day, and said he would see the appellant about it; and that he then and there wrote a waiver of protest upon the check, which Peck signed, and that on the next day, or the day after that, two notes were executed by Peck and wife to the order of the appellant, both dated January 16th, 1906, one for $425 at two-months, and one for $400 at four months, and were delivered to him, and that he received them from Peck with the understanding between them that the appellant would endorse them, and with directions from his board of directors, that if, and when, so endorsed, they should be accepted in lieu of the cheek, hut that the appellant refused to endorse them, and they were never accepted in lieu of the check. He also testified that the directors were anxious to avoid suit against the-appellant, as he was very vindictive and was talking abusively about the bank, and that suit was delayed in the hope that Peck would be able to arrange the matter without suit. When the two months note matured on March 16th, 1906, a new note was made by Peck and wife to his order for $339.44, being for the difference between the original note for $425 and the $85.56 paid by Peck, and the original $425 note was ⁴⁶⁹ stamped “replaced by new note;” that the understanding with Peck was that this note should not be accepted until indorsed by the appellant, and that it never was so indorsed, and was never accepted as part payment of the check. There was some confusion arising out of the assumption by the appellant that two new notes were executed on March 16th, but it-is abundantly clear from all the evidence that the only new note executed was the one for $339.44 payable four months after date.

Peck testified “that when he deposited the check with the appellee he drew some of that money but could not tell how much,” it varied from $100 to $200 or $300, and that “he took the money he withdrew that day to the appellant.” It is not clear from his testimony whether there was any consideration for the check but we shall treat it as given for Peck’s accommodation. He testified that he and his wife executed the two notes of January 16th, 1906, and “that Mr. Wilcox’s view of it was that they were to have been’ indorsed by the appellant,” and that “he intended Mr. Weant to indorse them,” and asked him to do so, but he refused. He could not give any definite statement as to the execution of any renewal notes, but he identified the note of $339.44 as signed by himself and wife, but that “he could not recognize at ¿11 what it was for, or deliberately connect it with that transaction.” This was all the plaintiff’s testimony. The appellant testified in his own behalf that Peck had been getting a check from him almost every day for sometime, three or four months; that he owed Peck nothing on January 13th and received no consideration for the check of that date; that the payment made by Peck to him that day “was possibly money on account of the previous check,” and that he stopped payment of that check of the 13th because the thing had been going on so long, and that Wilcox knew that these checks were being deposited during all that period and told him he was satisfied this particular check was an accomodation check, but this was after the deposit of the check; that ⁴⁷⁰ Wilcox wanted him to endorse the notes of January 16th and he refused, and that he had several telephone talks with Wilcox “who wanted to make him fix up that check, and told him if he would indorse the notes of January 16th he would release him on the check.” He also said that Wilcox told him in reference to the notes or note of March 16th, that if ■he would indorse them-it would release him on the check, hut on cross-examination he said he was not asked hy Wilcox to indorse any second notes, and that he had never stopped payment of any check before.

He also said that sometime in March Wilcox talked with him over the telephone “in regard to a set of notes that had been given hy Peck and his wife, or rather made to S. W. Peck and indorsed hy them and that it released me. I so understood it.” This closed the defendant’s testimony, whereupon the plaintiff offered five prayers, of which the third and fifth were granted and the others were refused, and the defendant offered one which was refused. After reading to the jury the plaintiff’s fifth prayer, the Court gave a verbal direction to the jury, in explanation of the reference in the prayer to the allowance of interest, and after the argument of the case, hy reason of something said in the argument the Court, upon its own motion, gave an additional instruction, designated “Court’s Instruction,” all of which will he set out in the report of the case. The only exception is to the ruling on the prayers offered and to the Court’s own instructions.

The plaintiff’s third prayer was framed to meet the issue joined on the fifth plea which alleged want of consideration for the cheek, and fraud and misrepresentation hy the plaintiff and payee in procuring it, which was known to the plaintiff before the check was indorsed to it, and the prayer was carefully drawn with reference to the provisions of the Negotiable Instrument Act, to challenge the legal sufficiency of the evidence to sustain that defence. The plea apparently relies upon want of consideration, and fraud and misrepresentation in procurement of the check, as separate valid defences. ⁴⁷¹ Section 48 of Article 13 defines an accommodation party as “one who has signed the instrument as maker, drawer, acceptor or indorser, without receiving value therefor, and for the purpose of lending his name to some other person.” And the section further declares that “such a person is liable on the instrument to a-holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party.” The mere fact therefore that this note was an accommodation note, would not constitute a defense against a holder in due course, and section 78 declares that “every holder is deemed prim a facie to be a holder in due course.” Section 71 defines a holder in due course: (1) The instrument must be complete and regular on its face. (2) He must have taken it before it was overdue, and without notice of previous dishonor, if so dishonored. (3) It must have been taken in good faith and for value.

(4) At the time he took it he must have been without notice of any infirmity in the instrument, or defect in the title of the person negotiating it. Section 75 of Article 13 provides that: “To constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith.” Section 76 provides that “a holder in due course hold's the instrument free from any defect of title of prior parties, and free from defenses available to prior parties among themselves, and may enforce payment for the full amount thereof against all parties liable thereon.” This check is complete and regular on its face; it was negotiated to the appellee for value the same day it was issued; there is no evidence of any previous dishonor, nor of any infirmity in Peck’s title to the check, nor of knowledge by the appellee of any such facts that its taking of the check amounted to bad faith. ⁴⁷² The appellant testified that he had been giving similar checks to Peck, that is, “lending him his name,” for a long period before, and that he had never stopped payment of any check before, and that