Williams v. Huntington

McSherry, J., delivered the opinion of the Court. The cause of action in this case is a promissory note dated February the twentieth, eighteen hundred and eighty-four, signed by the appellant and payable in fifteen months after its date to Andrew J. Guise and Company, for twenty-five hundred dollars. It was endorsed by the payee to the order of W. H. Harrison, from whom the appellee claims to have purchased it in good faith, without knowledge or notice of any infirmity, two months before its maturity, for eighteen hundred and fifty dollars. Harrison endorsed the note in blank.

Upon the trial in the Court below after all the evidence had been submitted, the appellee presented one prayer and the appellant three. The Court of Common Pleas granted that of the appellee and rejected all of the appellant’s. From these rulings, the judgment being against him, the defendant has appealed. By the instruction granted at the instance of the appellee the jury were directed that if they should find that the defendant signed the note ; that Guise endorsed and passed it to Harrison ; that Harrison passed it to the plaintiff, for a valuable consideration before said note became ⁵⁹⁶ due, and that plaintiff purchased the note without notice of any fraud in the detention of said note or in the indorsement, or of any failure of consideration ; then the plaintiff would be entitled tq recover the full amount of the note, and that “there is no,evidence in the case legally sufficient from which they can find that the plaintiff had any knowledge or notice of fraud or want of consideration in the making of said note, or in the indorsement thereof to said Harrison.” At the trial it was'shown that this note, together with two others, each for the like amount, and another for eight hundred dollars, had been signed by the appellant and made payable to Guise, and that they had been delivered to the latter without any consideration whatever.

According to one version of the transaction Guise was to raise the money on these notes, and after deducting five per cent, commissions, he was to pay the net proceeds to the appellant; hut according to Guise’s own testimony the appellant was indebted to him in the sum of twenty thousand dollars for alleged services rendered the appellant in some other business affair. The nature of these services is best stated in the language of Guise himself: He says, “ On several occasions 1 had occasion to go into Mr. Williams’ office, and I there met him” (the appellant) “one day, and he picked up off the table a piece of paper which afterwards proved to he a deed ; I read it over; it was a very short paper, and he said his father and Mr. Orville Horwitz wanted him to sign that deed; I read it carefully and I said ‘Ernie, if. you do that you will sign away your patrimony.’ • He said he would never do it unless he was crazy or drunk; the result was that they did spirit him away to Europe; when he came back he came-right back to me; I advanced some more money; he told me about the young lady he was about to marry, and I think they both came to see me frequently.” “ And these are the services for which you claim twenty thousand dollars ?” “I ⁵⁹⁷ do.” It appeared further that Guise was destitute of means, a borrower of small sums of money, and a man without any business occupation ; though at one time he had been a Court bailiff. Before he indorsed this note to Harrison he was warned by the appellant and by others, not to negotiate it, and a demand was made upon him to surrender all of these notes because the whole transaction was a swindle, and because the appellant “ had been trapped—tricked into giving these notes without any due consideration.” He even entered into negotiations with the wife of the appellant for the return of these notes in consideration of the payment by her to him of the sum of one hundred and fifty dollars. After this he made the indorsement to Harrison, but upon what consideration, if any, does not appear; and subsequently the appellee, after first being shown the note on the street, and after making inquiries from Guise in regard to it, purchased it.

The appellee says that Harrison was “a kind of real estate broker, agent, and so on,” and that he, the appellee, was engaged in the business of making books on horse races, and that he bought paper and notes. It has been explicitly decided by this Court in Totten vs. Bucy, 57 Md., 452 , that where the defendant shows that the note sued on had been tainted in its inception or indorsement with fraud, or had been procured without consideration, or lost or stolen before it came to the possession of the holder, the burden of proof is shifted, and it then is “ incumbent upon the plaintiff to show that he acquired the note bona fide, for value," in the usual course of business, before maturity, and under circumstances that create no presumption that he knew of the existence of the facts that impeached the validity of the instrument.” It is obvious from the brief statement which we have made of the facts bearing upon this branch of the case, that there was evidence before the jury tending to show that the note was obtained without any consideration whatever, ⁵⁹⁸ and further establishing the fact, without contradiction, ■that the note was passed by Guise fraudulently, without authority, and, indeed, contrary to the express protest of the appellant. The appellee was, therefore, obliged, before he could legally recover, to establish by proof that he was the bona, fide owner of the note ; that he acquired it for value before maturity, and without notice or knowledge of any infirmities in its origin or its transfer. In discharge of the burden thus cast upon him, the appellee offered his own testimony and none other.

Its-credibility was wholly for the jury to determine. They were at liberty to disregard it altogether, if in their judgment it was intrinsically improbable, -or if it was stamped with, or inherently furnished, indications of its unreliability. But the Court in instructing the jury that to entitle the plaintiff to recover they must find that he was such bona fide purchaser before maturity for Value, without notice ; at the same time also explicitly told them that there was no evidence from which they could find that he had any notice or knowledge of fraud, or want of consideration in the making of said note or in the indorsement thereof. The last clause of this instruction was erroneous, because there was evidence before the jury from which they might have legally inferred that the appellee was not the bona fide, owner of the note, for value, before maturity and without notice.

He was hot engaged in the business of buying notes, and he did not acquire this one in-the usual course of business. Gambling was his occupation; he bought hut one other note about the same time he purchased this one, and it also was a note made by the appellant. He purchased both at very heavy discounts, one at nearly thirty per cent, only two months before its maturity, and the other at over fifty per cent. Whilst the mere fact that a note has been purchased at a discount, will not, ordinarily, he evidence of had faith; yet where that discount is very large, the circumstance may be considered, ⁵⁹⁹ in connection with all the other facts, in determining the question of the purchaser’s good faith.

Stewart vs. Town of Lansing, 104 U. S., 505 . The appellee knew, he says, when buying the note purchased at a discount of over fifty per cent, that he was buying a law suit; though why he knew this he does not explain further than to state that it was a note payable on demand. But that fact did not, of itself, involve or imply a law suit. This statement of his is only capable of explanation upon the assumption that he liad received information from Guise that there were such infirmities attaching to the note as would naturally cause payment to be resisted.

He knew Guise and he was aware that he was a man without means and without occupation, and that he was entirely unlikely to have honestly in his possession such a large amount of negotiable paper; or, having it, equally unlikely to dispose of it honestly so near its maturity at such ruinous rates of discount, at the very time he was assuring the appellee that the note ‘‘ was as good as gold.” The appellee also knew Harrison, and he knew him likewise to be so devoid of means as to be compelled to borrow small sums of money, and he must therefore have known that it was wholly improbable that he would or could be the owner of a promissory note for so large an amount of money. The peculiar and unusual manner in which, and the place where, he was first approached by Harrison to buy the note, and the subsequent interviews at the appellee’s house, and the visit by the latter to Guise before the purchase, strongly impress upon the wholé transaction the characteristics of a fraudulent confederacy. And this is made more striking by the failure to produce Harrison as a witness or to account for his absence. It was perfectly competent for the jury by bringing these three parties together—the payee, the indorsee and the holder—as the record presents them, to find, from the evidence before them, that the transfer of the note by Guise was a mere ⁶⁰⁰ scheme and device to place the note in a position where it would be difficult to assail it; and to further find that Harrison and the appellee were participants in and parties to that scheme and that device.

We, therefore, think that the concluding portion of the instruction was erroneous. The jury should have been allowed to pass upon the question of the appellee’s bona fides, and upon the further question as to whether he had noticé or knowledge of fraud in the inception and in the transfer of the note. , Inasmuch as the first-prayer presented hy the appellant placed the burden of proof upon the appellee to show bona fides x in his purchase of the note, in the event of the jury finding the circumstances indicative of the existence of imperfections in its indorsement, we think, for the reasons already assigned, that it correctly presented the law of the case in this respect, and that it should, consequently, have been granted. It places the burden of proof where the law requires it to rest, under such circumstances, and forbids a recovery unless the holder of the note satisfied the jury that he was the bona fide owner for value before maturity, without notice or knowledge. There is no room to doubt the correctness of this prayer under the authority of Totten vs. Bucy and the cases there referred to.

The refusal of the Court to grant it was such an error as requires a reversal of the judgment. By the second'prayer of the appellant the Court was asked to instruct the jury, to the effect that in determining whether the plaintiff acted in good faith in purchasing the note,