Case ID: nc_185/html/0343-01.html
Source: Caselaw Access Project
Author: {"author": "Claeic, C. J. Walicee, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

W. P. McRAE v. L. G. FOX et al.
    (Filed 25 April, 1923.)
    1. Evidence — Defense—Nonsuit—Burden of Proof.
    Where the plaintiff moves for judgment as of nonsuit upon the defendant’s evidence tending to show that by mutual mistake he had not endorsed the note sued on “without recourse,” the burden of this issue is on the defendant, and the evidence should be taken in the light most favorable to him; and the motion will be denied if so construed, there is sufficient evidence to sustain his defense.
    2. Correction of Instruments — Negotiable Instruments — Endorsements— Mutual Mistake.
    In an action by the holder of a note against an endorser it may be shown by the defendant that the plaintiff had acquired the note upon the distinct agreement that it was to be without recourse on him. and by the mistake of the parties it had been endorsed by him otherwise.
    3. Same — Instructions—Sufficiency of Proof — Equity.
    Where the endorser on a negotiable note defends an action thereon by the holder, on the ground that the latter was to accept the note “without recourse,” and by mutual mistake he had otherwise endorsed it by writing his name on the back thereof, and the character of his evidence is fully sufficient to sustain his defense, a charge of the court is not error to the plaintiff’s prejudice, that the burden is on the defendant to show his defense by “clear and convincing proof,” when taken with the other relevant portions of the charge, construed as a whole, his language necessarily implied, and the jury must have so understood, that it required proof that was “cogent” or “strong,” etc.
    Adams, J., did not sit.
    Appeal by plaintiff from Long, J., November Term, 1922, of RICHMOND.
    On 12 April, 1920, Gf. W. Lee and wife executed and delivered to Paul R. Yountz two notes aggregating $3,000, and to secure iiayment thereof executed a deed of trust on certain lands in Richmond County. Yountz thereafter endorsed the bonds over to T. T. Cole and Cole endorsed the same “without recourse” to the defendant, L. Gf. Fox. In the summer of 1920 negotiations were had between the plaintiff McRae and the defendant Fox which resulted in the sale by McRae to Fox of a house upon a lot in Rockingham, in payment for which Fox endorsed and assigned to the plaintiff, McRae, said bonds.
    Default having been made in the payment of said bonds, McRae instituted suit against Lee and wife to recover judgment against him as maker thereof and to foreclose the deed of trust to secure the same, and Fox was made a party defendant to enforce his personal liability as endorser. There is no defense by Lee and wife but Fox answered alleging that under the agreement between the parties McRae was to accept an endorsement of said bonds without recourse on defendant, Fox, and that the words “without recourse on me” were omitted when Fox endorsed the same, by mutual mistake between the parties.
    The issue of mutual mistake was the only controversy between the parties and the only issue submitted to the jury. Verdict in favor of defendant; judgment and plaintiff appealed.
    
      J. G. Sedb&rry, McIntyre, Lawrence & Proctor for plaintiff.
    
    
      W. Steele Lowdermillc, Bynum & Henry for defendants.
    
   Claeic, C. J.

The following issue was submitted to the jury: “Did the defendant, L. Gf. Fox, endorse the bonds declared on, leaving out the words 'without recourse to me’ by mutual mistake between himself and the plaintiff, W. P. McRae, as alleged in his answer?”; to which the jury responded “Yes.” Tbe appeal presents two questions for our consideration. Tbe plaintiff assigned as error tbat tbe court overruled tbe motion to nonsuit. Tbe evidence must be taken on sucb motion in tbe light most favorable to the defendant upon whom rested tbe burden -of proving this issue.

Tbe defendant, Fox, testified that after be became the bolder of tbe bonds, the plaintiff began negotiations with him for a certain bouse in tbe town of Rockingham for which McRae asked $2,500; tbat after some conversation about tbe matter, Fox testified tbat be told tbe.plain-tiff, McRae, tbat be bad $3,000 in bonds tbat bad been transferred to him by T. T. Cole and which were secured by mortgage against G. W. Fee on 140 acres of land near Rockingham; tbat be did not know anything about tbe land or its value but tbat be would give McRae the bonds for tbe bouse; tbat McRae insisted tbat Fox buy tbe bouse and give him bis note which Fox did not agree to but that be would give tbe $3,000 in bonds; tbat McRae then suggested tbat Fox endorse them, to which Fox testified tbat be replied tbat if be did this be would be just as liable as if be bad given McRae bis individual note. Fox testified further tbat McRae then asked to take tbe bonds to tbe bank so tbat be might inquire about tbe value of tbe land secured thereby and later brought the bonds back to Fox and told him that be would take them on tbe trade for tbe bouse; tbat Fox bad told him tbat be would not endorse tbe notes but tbat be would trade with him if be would take tbe bonds and relieve him of any further liability thereon, to which Fox said be replied tbat McRae said “all right.” He said he got tbe bonds out and looked at them and tbe endorsement thereon was “Pay to L. G. Fox without recourse to me. (Signed) T. T. Cole”; and thereupon be signed bis name thinking tbat tbe bonds under tbe agreement between him and McRae was tbat be was assigning them without recourse and be wrote on them simply “Pay to W. P. McRae” and signed his name.

He further testified tbat when McRae brought tbe bonds back after be bad shown them to the bank, as above stated, he kept them for two or three weeks when McRae having moved tbe bouse over upon Fox’s lot, which was a part of ¿heir agreement, be signed bis name on tbe back of tbe bonds and sent them to McRae; tbat McRae asked $2,500 for tbe bouse and tbe agreement was tbat he was to take tbe $3,000 notes without endorsement by Fox for tbe bouse.

Tbe plaintiff, W. P. McRae, testified there was nothing said about tbe notes being endorsed without recourse. There was full testimony by both parties and tbe jury found the issue in favor of Fox.

We cannot sustain tbe contention of the plaintiff tbat tbe motion for nonsuit should have been granted. There was very full evidence on botb sides; tbe issue was squarely raised and tbe jury found in favor of tbe defendant.

Tbe plaintiff further contends tbat tbe court did not charge tbat tbe burden was on tbe defendant to prove tbe mutual mistake by evidence tbat was “clear, strong and convincing.” Tbe court charged tbe jury three times upon this proposition. He said tbat “as tbe plaintiff alleges, tbe burden is upon Eox to prove it (the mutual mistake) and show by evidence tbat shall produce satisfaction to tbe mind upon all tbe evidence tbat there was a mutual mistake between Eox and McRae.” Again tbe court charged tbe jury: “Has be satisfied you on tbat so tbat you can say and are satisfied tbat it was a mistake at tbe time — a mutual mistake between him and McRae; tbat is what be alleges now, and if be has satisfied you of it as tbe face of tbe paper has not those words (without recourse) and be has alleged there was mistake, I stated to you tbat tbe burden was upon him to satisfy you tbat there was a mistake and tbe kind of mistake be alleges there was.”

And again tbe court charged tbe jury: “Has be satisfied you by tbe evidence, clear and convincing, tbat those words should have been there ? If tbe defendant has so satisfied you and this in tbe manner which I have explained to you, your answer to tbe issue should be ‘Yesd If be has failed to so satisfy you, your answer to this issue should be No.’ ”

It is true tbat the usual phrase is “clear, strong and convincing” but these exact words are not absolutely indispensable. They are not “sacramental words,” S. v. Arnold, 107 N. C., 862, but it is sufficient if the expression used conveyed to the minds of the jury the same meaning. the use of the words here “clear and convincing” together with the twice repeated expression tbat unless the jury was so satisfied “in the manner in which be bad explained to the jury,” tbat is by “clear and convincing” evidence tbat they should answer the issue “No,” was sufficient.

In Mendenhall v. Davis, 72 N. C., 150, it was held tbat parol evidence was admissible to show tbat an endorsement in blank was made with tbe understanding tbat it was to pass tbe title and without any assumption of liability. In Comrs. v. Wasson, 82 N. C., 308, it was held tbat an endorsement could be construed as simply passing tbe title. Tbe plaintiffs contention, however, does not seem to controvert tbat proposition but rests upon tbe ground tbat tbe charge “Has be satisfied you by tbe evidence, clear and convincing” was not sufficient, but was defective because of tbe omission of tbe further word “strong” or “cogent.”

In S. v. Arnold, 107 N. C., 862, in discussing tbe words for which no synonyms can be substituted in indictments, it was held tbat while “feloniously,” “with malice aforethought,” and “murder” are essential to tbe validity of tbe indictments requiring them, tbat there were no other “sacramental words,” tbat is, words which admitted of no substitute and especially that “wilfully and unlawfully” could' be expressed by other words conveying the same idea.

The entire controversy depended solely upon the question whether the words “without recourse” were omitted by mutual mistake. On this there was a direct conflict of evidence and when the jury were told to find the issue in the negative unless they were satisfied by clear and convincing proof, they must have understood this required proof that was strong and cogent. While it is best always to follow the customary expressions and terms, if for no other reason because it will avoid such debates as this and will prevent experiments in language — whether in civil or criminal cases — we do not see that the expression “clear and convincing proof” which would satisfy the jury, wras not sufficient to convey to their minds the same idea that would have been conveyed if the additional word “strong” or “cogent” had been used.

It is more probable that the testimony of defendant that the plaintiff asked $2,500 for the house (and the plaintiff admitted it was $2,750) was clear and convincing to the jury that $3,000 in bonds, with the interest thereon, was agreed upon because not endorsed.

We have held frequently and consistently that the charge of the court should be construed in its entirety and not by any detached portions.

Taking the evidence of the defendant, Fox, and that of the plaintiff, together with the charge of the court, we think that the controverted point together with the necessary intensity of proof required, must have been fully understood by the jury and that they found the issue intelligently and understandingly and we cannot on appeal disturb the verdict merely because the word “strong” (or “cogent”) was not added to the phrase that the proof must be “clear and convincing.”

No error.

Adams, J., did not sit.

Walicee, J.,

dissented upon the ground: 1. That there is no evidence of a mutual mistake, or any mistake, as understood in the law, by L. G. Fox, and certainly none by W. P. McRae, and therefore there was no mutual mistake, and the court should have granted the motion to nonsuit.

L. G. Fox signed the very endorsement he intended to sign, and did so not mistakenly, in the sense of a mistake in fact, but because he thought that, as T. T. Cole had the words “without recourse” in his endorsement, it would import the same words into his own endorsement. But in this he was mistaken, not in fact, but only in law, and that will not do; because, for one good reason, W. P. McRae did not participate even in that mistake. What L. Gr. Fox needed was a lawyer, when he would have had better advice than his own. Whoever has himself for his lawyer, is apt to have an unwise man for his client, is the old, old adage.

2. The charge of the court, based upon the defective evidence, was also erroneous, and necessarily so.

3. It is well settled that there must be a mutual mistake of the parties or the mistake of one induced by the fraud, surprise, etc., of the .other, which is not alleged here. White v. R. R., 110 N. C., 456; Day v. Day, 84 N. C., 408; Jones v. Warren, 134 N. C., 390; McMinn v. Patton, 92 N. C., 371, 374; Wilson v. Land Co., 77 N. C., 445; Britton v. Ins. Co., 165 N. C., 149, and more recently, Ray v. Patterson, 170 N. C., 226; Newton v. Clark, 174 N. C., 393. Where mistake alone is relied on, it must be both alleged and shown that it was a mutual one, and that the matter asked now to be supplied, or inserted, was omitted by reason of a mutual mistake. Ray v. Patterson, supra; Newton v. Clark, supra.