Case ID: ohio-cc-ns_6/html/0225-01.html
Source: Caselaw Access Project
Author: {"author": "", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

ACTIONS ON PROMISSORY NOTES.
    [Circuit Court of Cuyahoga County.]
    The Independent Coal Company v. The First National Bank.
    Decided, February 21, 1905.
    
      Promissory note — Suit, Upon — Defense Against — Blanlc Endorsement of — Rule in Ohio as to Party in Interest — Pleading—Evidence— Sections 5086 and 4993.
    1. There is no warrant in the language of the Supreme Court in Brown v. Ginn for believing there has been a modification of the previous interpretation of the code, making it necessary that a suit on a promissory note be brought by the real party in interest.
    2. One who is not the owner is not the real party in interest, and the presumption of ownership arising from possession of the note ■endorsed in blank may be rebutted.
    3. No prejudice arises from the improper exclusion of evidence, where the fact which it was sought to prove was one which it was not necessary to prove.
    Marvin, J.; Winch, J., and Henry, ,T., concur.
    Error to tbe court of common pleas.
   Suit was brought by the First National Bank against the Independent Coal Company upon a promissory note. The petition is in the short form authorized by Section 5086, Revised Statutes.

The note sued upon was in these words:

“$491.81. Cleveland, 0., Sept. 24, 1902.

“One month after date we promise to pay to the order of Northern Ohio Coal & Coke Supply Co. four hundred and ninety-one and 81-100 dollars at the Woodland Avenue Savings & Loan Co.

“Value received.

(Signed) “The Independent Coal Co.,

“M. Schuerer, Secy, and Treas.”

(Endorsed): “Northern Ohio Coal & Coke Supply Co.,

“By H. J. Thrasher, Secy.

“F. P. Walthour, Mgr.

“H. J. Thrasher, “C, N. Quirk, Pres.

“F. P. Walthour,

“C. N. Quirk,”

To the petition the defendant filed an answer, in whjch no denial is made of the giving of the note nor of the endorsements made thereon, but avers that snch note “was transferred by the payee thereof, the said Northern Ohio Coal & Coke Supply Company, to said plaintiff by mere delivery, and for the mere purpose of collection, and with the design and for the purpose of accommodating said payee in attempting to avoid and evade the defendant’s set-off and counter-claim against it in the hands of said payee; and the defendant says further by way of answer that said plaintiff’s action is not prosecuted in the name of the real party in interest.”

With the pleadings in this situation the parties went to trial. The plaintiff .introduced the note and rested. Thereupon the defendant moved the court to direct a verdict for it, which motion -was overruled, and error is claimed for this action of the court. There was no error in overruling this motion. Whether it was necessary for the plaintiff to introduce the note at all need not here be determined, but surely the note with the blank endorsement of payee made a prima facie case for the plaintiff. See Osborn v. McClelland, 43 O. S., 284. The fifth clause of the syllabus of this ease reads:

“In case of the blank endorsement of negotiable paper, the endorsee, who is in possession thereof, is prima facie the owner, and entitled' to sue thereon, but this presumption may be rebutted and the rights of the real owner established.”

Later on in the trial the defendant amended its answer, at the suggestion of the court, and interlined the following words: “Defendant denies any liability on said note, and denies the plaintiff is or ever was the owner of it.” Whether this amendment was material or not, it in no wise prejudiced the defendant that the court required such amendment to be made, for it added nothing to what the defendant clearly meant to make as a defense in his answer as originally filed. Unless the answer as originally filed was in effect a denial of the ownership of the note by the plaintiff — about which we express no opinion — it was not a good answer.

This amendment having been made, the plaintiff replied, denying all the allegations of the answer except such as are admissions of the allegations of the petition. This amendment to the answer and filing of the reply took place during the trial. •The parties then proceeded with the trial, and the defendant introduced as a witness one P. B. Quayle, who stated that he was the manager of the Independent Coal Company, the maker of the note. He was inquired of as to whether he had dealings with the payee of the note, which was shown to be a partnership, and then this question was asked him: “You may state whether at the time you had a contract with this Northern Ohio Coal Company represented by these men?” To this question the plaintiff objected, and counsel for the defendant stated that he expected and offered to show that the witness did have a contract; that by virtue of that contract the payee of this note represented by these men are legally indebted to the Independent Coal Company for not having furnished such company coal as they had agreed, by reason of which the coal company had suffered damage. The court sustained the objection, and it is urged that the ruling was erroneous. The question was asked under a misapprehension on the part of counsel for the defendant as to what it was incumbent upon him to show as a defense to the claim made by the plaintiff. It was not necessary that, the defendant should show that if suit had been brought by the payee it would have had a defense. It was sufficient that the defendant show that the plaintiff ivas not the owner of the note. If he succeeded in showing this, he made a complete defense to the action, for if the plaintiff was not the owner of the note, then it was not the real party in interest as required by Section 4993, Revised Statutes. Under this section the -real party in interest who brings suit upon a promissory note must be the owner of that note. Such suit can not be maintained by one to whom the note has been transferred 'whether by endorsement or by mere delivery for the purpose of collection only. Nichols v. Gross, 26 O. S., 425; Osborn v. McClelland, 43 O. S., 284.

In the latter case, this language is used in the opinion:

“Let it be assumed that this note was negotiable after due, so as to confer upon the indorsee the legal title, and that prima facie he is entitled to recover.

“At common law this authorized the indorsee to sue in his own name, and it was no defense to show that he was not the owner.

“By the code the action must be brought in the'name of the real party in interest, except in oases of express trust, etc. If, therefore, the indorsee is not the real party in interest, nor the trustee of the real owner of a negotiable note, his action may be defeated by showing that some other person is the owner.”

Numerous authorities are cited in the opinion, and no modification of the rule there laid down has been announced by our Supreme Court since.

A question akin to this was raised in the ease of Brown v. Ginn, Trustee, 66 O. S., 316. In this case the suit was brought by the assignee of several claimants against one Brown of their several choses in action. The assignee, Ginn, was to receive as compensation for collecting these claims a certain per cent, of the amount collected, and' it was held in that ease that, though the plaintiff had an interest in these claims, he was not the real party in interest. In the opinion, Judge Spear uses this language:

“We are aware that the tendency of some courts has been to uphold actions brought upon negotiable instruments, transferred for collection only, on the ground that the plaintiff is the real party in interest, and that there are some authorities that point to that conclusion. Indeed, it may be admitted that the trend in some of the code states is in that direction. ’ ’

Surely there is no intimation in this language that Ohio has modified the rule laid down in Osborn v. McClelland, supra, and Nichols v. Gross, supra. It follows, then, as already said, that the defendant was in no wise prejudiced by the ruling of the court excluding the evidence, because the fact sought to be proved was one which the defendant did not need to prove to defeat the action.

Later on, the same witness was asked as to a conversation had between himself and certain representatives of the payee at a time when the cashier of the plaintiff was present, subsequent to the transfer of the note by the payee to the plaintiff. Objection was made to the evidence, and though we are not prepared to say that the reason given for the objection or the reason assigned by the court for excluding the evidence was good, we find no error in the ruling of the court excluding the evidence.

What was sought to be shown by this evidence, as stated by counsel for the defendant, was that “after this note fell due the payee, in company with the cashier of the plaintiff, appeared at the office of this defendant, and together they were anxious to have this matter settled up, and that thereupon and after a long consultation the payee, to-wit, Mr. Walthour and Mr. Thrasher, the principal persons in the payee, thereupon said to the manager of the defendant that they then were going to sue that note, the bank were going to sue on this note, and that thereupon the cashier of the bank made no objection nor made no claim to be the owner of the note.” If the witness had testified to exactly what counsel for the defendant stated he expected him to testify to, it would have had no tendency to show that the plaintiff was not the real owner of the note. It was not sought to show that the cashier representing the plaintiff said anything as to the ownership. Counsel for the plaintiff below and the court, from what appears in the bill, seemed to think that if the cashier of the bank had made a statement to the effect that .the bank was not the owner of the note, such statement being made after the note was transferred to the bank, it would not be admissible to prove that the cashier had so stated. But whatever ruling should have been'made, if it had been sought to show some statement of the cashier, no ruling was made on that question because it was not sought to show that the cashier said anything about it, but only that parties representing the payee said in the presence of the cashier that they proposed to sue the note. Did this call on the cashier to say anything? We think not. The circumstances were not such as that the cashier or any one claiming to own the note would be likely to interfere upon the statement being made by the payee, or those representing the payee that they were about to sue the note, to interfere and deny that they had any right to bring the suit. The natural thing was for the cashier under the circumstances to have said nothing; hence the evidence, if admitted, would have availed the defendant nothing. There was therefore no error in sustaining the objection to this evidence.

Kerruish, Chapman & Kerruish, for plaintiff in error.

Hamilton, Hamilton & Smith, for defendant in error.

This disposes of the complaints made, and. as we find no error to the prejudice of the plaintiff in error, the judgment of the court below is affirmed.