Case ID: foster_2/html/0385-01.html
Source: Caselaw Access Project
Author: {"author": "Sharswood, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Supreme Court of Pennsylvania.
    LOSEE v. BISSELL.
    An irregular endorsement of a note should put a purchaser on inquiry, and affects him with notice of the equities of the parties.
    Error to Common Pleas of Crawford county.
   Opinion delivered January 4, 1875, by

Sharswood, J.

It appears by the evidence that the defendant below had indorsed his name on the back of a note drawn to the order of McFarland, at. his, McFarland’s, request, and upon the assurance that it was a mere matter of form, and he would not negotiate it. The defendant’s indorsement was in law upon the condition that McFarland should assume the position of first indorser; Shafer v. Farmers’ and Mechanics’ Bank, 9 P. F. S. 144. At the time it was first presented to the plaintiffs for discount it may have been in that position, and if it was, it bore on its face distinct, unequivocal 'evidence, that it had not been negotiated in the ordinary course of business. To .make such negotiation it should have appeared that McFarland -had endorsed to Losee, and Losee back again to McFarland, in whose hands the note was when it was offered for discount. But the most important link in the chain was wanting' — the first indorsement by McFarland. For him to negotiate the note without such indorsement was to attempt a fraud on Losee, and was of itself sufficient to put the plaintiff upon inquiry. Such inquiry would have developed the fact that there was no consideration as between McFarland and Losee; and that McFarland was negotiating the note contrary to his express agreement. The learned judge below thought that if the indorsement by McFarland was made after discount and before maturity, it established the bona fides of the indorser ; but not after maturity. Why not? Bissell & Co. had notice of the 'irregular character of the paper when they took it, and if that can be helped by putting it afterwards into regular shape, it might be done as well after maturity as before. Indorsements may be filled up in full or stricken out on the trial so as to conform to the declaration. If there had been no defence as between-McFarland and Losee the indorsement in question might have been made on the trial. But to determine the character of the .in-dorser as. a bona fide holder for value without notice, the point of time at which he parts with his money is the important fact. If the paper was then on its face irregular — out of the usual course of business — the effect of that knowledge on the indorser could not be prevented by subsequently putting it in a regular shape. We think, therefore, that the second assignment of error must be sustained.

Judgment-reversed and a venire facias de novo awarded.