Case ID: tenn_20/html/0468-01.html
Source: Caselaw Access Project
Author: {"author": "Green, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Wormley vs. Lowry and Rushing.
    A bill single assigned before due for a pre-existing debt is not an assignment within the meaning of the words “due course of trade,” and therefore subject to be defeated in the hands of the assignee, upon proof of failure of consideration.
    Robert Lowry and Calvin Rushing warranted John S. Wormley on a bill single, executed by him to B. B. Everett, for the sum of thirty-six dollars, and assigned by Everett to them in the following words, to wit: “Pay the within to Low-ry and Rushing, B. B. Everett.” This assignment was without date. Judgment was rendered for the plaintiffs by a justice of the peace of Henderson county for the amount of the bill single. The defendant appealed to the circuit court, where, upon the trial before Read, judge, it was proved that fifteen dollars of the amount embraced in the instrument were agreed to be paid for hogs sold to the defendant, which Everett alleged he had in the woods, and that Everett in fact had no such hogs in the* woods; that the statements upon which the promise of that amount of the money was obtained were false; that the ■ bill single was assigned to the plaintiffs before it was due in discharge of a pre-existing debt due from Everett to plaintiffs.
    Upon this proof the counsel of the defendant requested the court to charge the jury that if they were satisfied that, fraud existed in obtaining the original note to the amount of fifteen dollars, that the plaintiffs, in order to protect themselves as endorsees, must show that a consideration passed from them to said Everett in the usual course of trade. The court refused so to charge the jury, but charged that the written endorsement on the bill single was prima facie evidence of consideration, and that the onus of proof lay on the defendant to show that no consideration did pass before he could enquire into the fraud in obtaining the note. The court further charged the jury that the receiving the note by the plaintiffs for and in discharge of a pre-existing debt due from Everett was a good consideration, and that the assignment of the note was in the due course of trade.
    The jury found a verdict in favor of the plaintiffs for the full amount of the note and interest. A motion was made for a new trial, which being overruled by his honor judge Read, the presiding judge, and judgment being rendered in conformity with the verdict, the defendant appealed in error.
    
      M- Brown, for plaintiffs in error.
    1. In this case nothing passed from the endorsees to the endorser. The case of Nich-ol and Hill vs. Bates was where the endorsement of a third person was given up. In this case nothing was given up, nothing passed; it falls strictly within the New York cases and the cases in this State also. The case should therefore be reversed.
    2. The court below also erred in refusing to charge that the proof of consideration lay on the endorsees.
    
      Bullock, for defendant in error.
    Where a bill or note is transferred before it is due the assignee receives it on its own intrinsic credit; nor is he bound to enquire into any circumstances existing between the assignor and any of the previous parties to the instrument, as he will not be affected by them. Chitty on Bills, 141.
    
      No equities existing between the original parties to a note be set up against a bona fide holder unless taken and received by him in due course of trade. 10 Yer. 429.
    
      ^ note ^a]cerL jn ¿ue course 0f trade is where the holder has given for the note his money, goods or credit at the time of receiving it, or sustained loss or incurred some liability. I 0 Yer. 429.
    Where a note is taken in payment of a debt due and secured by the endorsement of a third person, which last note is given up and discharged: Held, that the note is taken in a due course of trade. 10 Yer. 429.
   Green, J.

delivered the opinion of the court.

This action is brought by the endorsees against the maker of a bill single for thirty-six dollars. The defendant proved that the note was given in part for hogs which the payee fraudulently represented he owned. He proved that it was assigned by the payee to the plaintiffs in payment of a preexisting debt due them by Everett, the payee.

The court charged the jury that the “receiving the note by the plaintiffs for a pre-existing debt due from Everett, the original payee, was a good consideration, and in the usual course of trade.” In this charge there is error. In Kimbro vs. Lytle, 10 Yer. 417, and Nichol and Hill vs. Bates, 10 Yer. 429, it is settled that “due course of trade is where the holder has given for the note his money, goods or credit at the time of receiving it, or has on account of it sustained some loss or incurred some liability.”

Where a party receives a note for a pre-existing debt due from the person only who assigns the note he parts with nothing; he is in the same situation after a successful de-fence by the maker that he was before he took the note. It is not like the case where a note in bank is taken to renew one already existing. In that case the bank gives up the endorser on the old note, and thereby parts with the security; but here the plaintiffs parted with nothing. The note was not taken therefore in due course of trade. Bay vs. Coddington, 20 John. Rep. 637.

Reverse the judgment and remand the cause.