Opinion
No. 12,967.
Filed November 17, 1927. Rehearing denied February 16, 1928.
1. BILLS AND NOTES — Fraud — No Consideration — Purchaser in Good Faith. — The holder of a note who purchased it in good faith before maturity, giving value therefor, without notice of any infirmity in it or defect in the title of the person negotiating it is entitled to recover thereon notwithstanding the fact that the maker was fraudulently induced to execute the note without receiving any consideration therefor. p. 71.
2. BILLS AND NOTES — Action — Good Faith — Question for Jury. — In an action on a note by an indorsee, the question whether he was a purchaser in good faith before maturity is a question of fact for the court or jury trying the case. p. 71.
3. BILLS AND NOTES — Bona Fide Purchaser — Question of Fact. — The purchaser of a negotiable note, complete and regular on its face, is not required to make any inquiry as to the transaction out of which the note grew, but the fact that no such inquiry was made may be considered, along with other circumstances, on the question of the purchaser's good faith in making the purchase. p. 71.
4. BILLS AND NOTES — Bona Fide Purchaser — Burden of Proof. — In an action on a negotiable note by an indorsee, when fraud in procuring its execution has been shown, the plaintiff has the burden of proving that he was a purchaser in good faith. p. 71.
5. EVIDENCE — Sufficiency of — Undisputed Testimony. — In an action on a note by one claiming to be a purchaser in good faith, undisputed testimony by plaintiff alone that he purchased it without any knowledge of any infirmity therein, or of any defect in the title of his indorser, did not require a verdict for plaintiff, as the jury may not have believed his testimony. p. 71.
6. BILLS AND NOTES — Evidence — Directed Verdict for Defendant. — In an action on a note procured by fraud from the defendant, where the evidence showed that plaintiff purchased it (a $1,000 note) for $750, that the maker lived in a suburb of the city in which plaintiff was located and could have been easily reached by telephone, that the plaintiff had changed his reply in which he asserted his good faith, that he failed to call as a witness the party who sold him the note, though available, a verdict for the defendant was not unsupported by the evidence nor contrary to law, the plaintiff having the burden of proving his good faith in purchasing the note. p. 71.
7. BILLS AND NOTES — Presumption of Delivery. — The conclusive presumption of delivery of a negotiable instrument which is required by the Negotiable Instruments Law (§ 11375 Burns 1926) applies only to a holder in good faith, and not to a case where such holding is controverted. p. 73.
8. APPEAL — Review — Error in Refusing Instruction. — There is no error in refusing to give an instruction which was not a correct statement of the law. p. 73.
9. APPEAL — Review — Error in Refusing Instruction. — There is no error in refusing to give an instruction which is covered by instructions given. p. 73.
From Johnson Circuit Court; Fremont Miller, Judge.
Action by Hubert H. Woodsmall against Geneva Bates Myers. From a judgment for defendant, the plaintiff appeals. Affirmed. By the court in banc.
Henderson Henderson and White Owens, for appellant.
William Bosson and William E. Deupree, for appellee.
Action by appellant on a $1,000 note which he claims that he holds in due course and as a good faith purchaser before maturity, for value, against appellee.
To the complaint in one paragraph declaring upon the note, there were three paragraphs of answer; general denial, fraud in the execution of the note, and no consideration. Appellee replied in two paragraphs; general denial, and that appellant purchased the note before maturity, in due course of business, for value, without notice of any infirmities in the instrument. Appellee also filed a fourth paragraph of answer, the same in legal effect as the second, but more fully setting up the alleged fraud in the execution of the note, to which appellant replied by general denial, and that prior to the maturity of the note, his sister, a Miss Woodsmall, and his wife, purchased the note in due course of business, without notice or knowledge of any infirmity therein, for value, and that appellant, prior to the suit, purchased the note of them in due course, in good faith, without notice or knowledge of any infirmity in the note and before its maturity.
There was a trial by jury which resulted in a verdict for appellee, on which, after appellant's motion for a new trial was overruled, judgment was rendered, from which this appeal is taken. Appellant assigns as error the court's ruling on the motion for a new trial, the reasons for which being the insufficiency of the evidence, that the verdict is contrary to law, and error in instructing the jury.
It is undisputed that appellee was the victim of a fraud perpetrated on her by one Griffin, with whom it appears that others were in conspiracy, and that the note in suit was obtained from her as a result of the fraud, and that she received no consideration whatever for it. But it is appellant's contention that he was a holder in due course in that he took the note, first for his wife and sister, and then, in turn, for himself, that it was complete and regular on its face, and that he took it before it was due as and for an investment, for value, and without notice of any infirmity in it or defect in the title of the person negotiating it.
If appellant was a purchaser in good faith before maturity, it is unquestioned that he should recover of appellee notwithstanding the fact that she was defrauded by being 1-6. induced to execute the note without receiving any consideration therefor. But this was a question of fact submitted to the jury, and the jury has found against appellant's contention. It is the law that a purchaser in good faith of a negotiable instrument, complete and regular on its face, before it is due, is not required to make any inquiry of the transaction out of which the note grew. But going to the question of his good faith, the jury has a right to consider, along with other circumstances, the fact that such inquiry, with reasonable opportunity, was not made. As was said in State Bank, etc., v. Lawrence (1912), 177 Ind. 515, 96 N.E. 947, where the circumstances show that the purchaser refrained from making inquiry lest he should thereby become acquainted with the transaction out of which the note originated, he cannot occupy the position of a holder in good faith without notice. That case quotes from State Nat. Bank v. Bennett (1893), 8 Ind. App. 679, 36 N.E. 551, as follows: "The rule thus laid down, we regard as an extremely equitable and salutary one. No man should be permitted to willfully close his eyes and then excuse himself upon the ground that he did not see." When fraud in procuring the execution of the note was shown, it then devolved upon appellant to show that he was a good faith purchaser. This, the jury by its general verdict, says that he did not do. Appellant says that the undisputed evidence shows that he was a good faith purchaser. But this evidence, though undisputed by any other witness was by appellant alone. We cannot say that the evidence was insufficient to sustain the verdict because of appellant's affirmative oral testimony of facts pleaded by way of reply of which appellant had the burden of proof. The jury may have found that the reply was not established because it did not believe appellant's testimony. This it had a right to do. Talge Mahogany Co. v. Burrows (1921), 191 Ind. 167, 130 N.E. 865; Kelly v. Jones (1919), 290 Ill. 375, 125 N.E. 334; Cohen v. Longarini (1910), 207 Mass. 556, 93 N.E. 702; Henderson v. Wertheimer (1919), 12 Ohio App. 249; Jefferson v. Cox (1923), 246 Mass. 495, 141 N.E. 493. Along with appellant's demeanor on the witness stand, which we did not see, the jury may have taken into consideration that the $1,000 note was purchased by appellant for $750; that appellee lived in Broad Ripple, a suburb of Indianapolis, and could have been easily reached by telephone from appellant's office; that by his reply of February 24, 1924, he alleged that he purchased the note for himself, and then by his reply of June 5, 1925, he alleged that his wife and his sister, who was in Constantinople, purchased the note, and that he bought it from them; that he did not call as a witness the party who sold the note to him, though he talked with him on the morning of the trial; and that he was wholly unacquainted with Griffin, who was engaged in the transaction out of which the note grew. The jury weighed all of these matters along with any other circumstances before it surrounding the deal, and determined therefrom that it would not believe appellant's evidence, and that he was not a purchaser in good faith. We will not disturb the verdict.
Instruction No. 17 1/2 given by the court at the request of appellee was on the theory that there was an answer of non est factum, and it has been discussed by both appellant and 7. appellee on the theory that there was such an answer; but we do not find such an answer in appellant's statement of the record, nor has appellee set it out. However, we may say that the conclusive presumption of delivery, which appellant asserts prevails under the statute, applies only to notes held in due course, and, in this case, such a holding is controverted. We find no reversible error in the instruction.
There was no error in refusing to give appellant's instruction No. 2. Without the element of a good faith purchaser in due course therein, the instruction was not a correct 8, 9. statement of the law. The law which appellant undertook to state in this instruction and in instruction No. 5 tendered by appellant, was correctly stated in other instructions given by the court on its own motion.
We find no reversible error.
Affirmed.