Case ID: ga_48/html/0119-01.html
Source: Caselaw Access Project
Author: {"author": "TrippE, Judge.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Jefferson Hogan, plaintiff in error, vs. David H. Moore et al., defendants in error.
    (Atlanta,
    January Term, 1873.)
    Promissory Note — Duress—Innocent Holder — A promissory note
    
      was given, payable at twelve months. The note was transferred by the payee, and a few days after its maturity the transferree or bearer indorsed the note to plaintiff. It does not distinctly appear from the evidence whether the first transfer was made before or after the maturity of the note. The defense against the note was that the payee procured it by duress or threats amounting to fraud. *The Court charged the jury, that if the note was procured by duress — stating what constitutes duress — and the plaintiff came into possession of. the note after it fell due, they would find for the defendant:
    Held, That this charge of the Court was error, inasmuch as it assumes that the first transfer of the note was not made until after its maturity. If the first transferee came into the possession of the note before it was. due, and the law presumes he did unless the contrary was proven, then under the decision in Robinson v. Yason et al., 37 Georgia, 66, the defenses could not be set up against him, and his indorsee holds the note free from all the equities against which it was protected in his hands.
    Promissory notes. Duress. Before Judge Green. Pike Superior Court. October Term, 1871.
    Jefferson Hogan brought complaint against David H. Moore, principal, and John A. Jackson and Thompson Graham, securities, on a note made by said defendants on September 22d, 1865, payable twelve months after the date thereof to J. B. Stafford, or bearer, for $604 55. On the note were the following entries: “.For value received, I indorse the within note, not liable in the first instance. October 3d, 1866.
    (Signed) . “J. F. Hanson."
    “Received on the within note $200 00 from J. A. Jackson, per E. M. Amos. This 23d February, 1867.”
    The defendants pleaded the general issue, and that the note was procured by fraud and duress.
    The plaintiff introduced the note sued on, and closed. ¡ '■ The defendants introduced the following testimony:
    D. H. Moore, sworn, says: In 1859 he purchased about one hundred and seventy-five acres of land of H. W. Flail, for about the sum of $1,750 00, and gave J. S. Head as security. The note was made payable to H. W. Hall. Subsequently James B. Stafford came into possession of the note. In 1863, between the 1st and 10th days of August, J. E. Head died. Subsequent to that date witness renewed the note, made it payable to J. B. Stafford for about $2,000 00, and gave John A. Jackson and Thompson Graham as his securities; the note was *dated about the latter part of August, or some time in September, 1863. Subsequent to its maturity, witness paid $500 00 which was accepted as a credit on the note. After the surrender in 1865, in the month of August or September, Stafford approached witness and demanded a settlement; witness replied that he had no money. Stafford told witness that he had made arrangements with a friend in Kentucky who would take the note for goods, sue in Federal Courts, and use the Federal soldiers, and dispossess witness and his securities at once, and hold their lands until the debt was paid. Witness was greatly alarmed because of the threats, as the country was full of Federal soldiers at the time, and as he believed they would interfere and dispossess him and his securities, and under this belief and because of the threats aforesaid, witness was induced to make the settlement proposed by Mr. Stafford. At this time he turned over to Stafford the original quantity of land purchased from Hall, save ten acres and forty additional acres, which was valued at the time at about $1,200 00, probably $1,150 00. He turned over to him twelve hundred pounds of lint cotton, at twenty-seven cents per pound, which amounted to $324 00 or $325 00, and gave the note now sued on for $604 00. Witness says the lands turned over to Stafford were worth $1,500 00 at the time they were turned over. There was no money in the country at the time; probably the land would not have brought more than $4 00 per acre in the market, because there was no money in the country; he would not have taken less than $1,500 00 in currency for the land, but for the threats of Stafford, as he would not have parted with the same. He would not have sold the cotton at the price, or renewed the note, but for the threats of the interference on the part of the Federal soldiers, made by Stafford. It was not the threat of suit in the Federal Court that aroused the fears of witness, but the threat of the interference of the military. In 1866, after the maturity of the note, and after the same had gone into possession of Hogan, the plaintiff, suit was threatened in the Federal Court. Witness consulted . Colonel *Whittle, of Macon, with the view of making his defense; the same defense is now making. Whittle advised him. that his defense could be better made in the State, than Federal Courts, and advised witness to make a payment so as to reduce it below the Federal Court jurisdiction, and when sued in the State Courts, then to make his defense. With this view the payment was made, and not with a view to ratify the contract. Witness offered to pay the note dated in 1863, in Confederate money which Stafford refused. Witness put about $400 00 worth of improvements on the land. It was only the threat of military interference, and from fear that the military would interfere that induced witness to part with his property and renew the note.
    Thompson Graham, sworn, says: In 1865, about the time the note sued on was made, Stafford threatened to invoke the interference of the military, and dispossess Moore, Jackson and witness, unless the note of 1863 was paid. Under these threats, Moore turned over his land, some cotton and gave the note now sued on; Stafford put his own price on the land and cotton and would settle no other way; the land was worth $1,500 00. There was no land on the market at that time, as there was no money in the country, and witness cannot tell what was the market value, but it lay on the railroad, was well improved and worth at least $1,500 00. Witness did not induce Moore to give up his land; wdtness held a mortgage on the land to save him harmless, as security, and gave it up and let the land be transferred, because he thought the Federal soldiers would dispossess him of his property by force; but for the threats of Stafford he never would have consented, to tiie settlement and the making of the new note; witness offered at one time to pay Stafford, with Confederate money, a note Stafford held against him, and he refused to take it.
    John A. Jackson, sworn, says: In 1865, about the time the note now sued on was renewed, Stafford threatened to invoke the interference of the military, and induced Moore to give up his property and to give a new note; witness would never have signed the note but for the threats of Stafford; he was *afraid of interference; Stafford applied for payment; the note was not paid; after Hogan became in possession of the note he threatened suit in the Federal Court; witness, in company with Moore, went to see Whittle for the purpose of making this defense; Whittle advised them to make a payment, reduce the note below the Federal jurisdiction, and when sued in the State Court make this defense. With this view the payment was made, not with a view of ratifying the contract.
    The plaintiff in rebuttal introduced the following testimony: Jefferson Flogan (the plaintiff) testified that he had owned the note sued on since October, 1866.
    •J. B. Stafford testified as follows: In the fall of 1865, I took a note from D. H. Moore, with John A. Jackson and Thompson Graham, securities, for a fraction over $600 00, the precise sum I do not remember; I sold the note to J. F. Hanson; the consideration was the balance then due me on another note I held on the same parties for about $2,100 00, made I think in 1863, but made in lieu of a note formerly held by me on J. L. Head and D. H. Moore, which last named note was made in 1859, I think, and was given for land bought by Head and Moore from H. W. Hall; I do not remember the precise date or amount of the note given by defendants to me, but it was in the fall of 1865, and for a few dollars over $600 00, and was given for a balance due me on settlement of another note made by the same parties; the date of the note for which the one sued on was given was sometime I think in 1863, and that note given in 1863 (as I think) was given for two notes made by J. L. Head and D. H. Moore, and payable to FI. W. Hall and given for land, in 1859, and purchased by me from Hall; I bought the note from Hall in 1859, I think at ten per cent, discount; defendant, Moore, subsequently paid me $500 00 in Confederate money, but whether on the notes bought from Hall or on the note given me m lieu of the Hall notes, I do not now remember; after I purchased from Hall the notes made by defendants, Moore and J. L. Head, defendant, Moore, gave mefin *lieu of these notes his note, with Jackson and Graham, securities, and on the last named note he paid me, in addition to the $500 00 mentioned above, a tract of land at about $1,150, and about $325 00 in cotton or the proceeds of cotton sold me and gave me for the balance due the note now sued on, on which last note nothing was ever paid to me; defendant sold me about one hundred and seventy-five acres of land; I do not know what the land was worth; I sold it in 1866 and 1867 for about $600 00; I did not threaten to sue defendant, Moore, in any Court if he did not give up the land and cotton to me and renew the note; Moore himself proposed to sell me the land and urged me to take it on the note which amounted at that timé, principal and interest, something over $2,000 00; I took the land to oblige him, at his earnest request and to relieve his securities as far as it went; the defendant did not offer to pay me the note in Confederate money; I never refused to take from him, or any one else, Confederate money when it was offered me in payment of debts.
    The Court charged the jury as follows:
    “Gentlemen oe the Jury: — The Court charges you that the plaintiff is entitled to recover of these defendants the amount due upon the note sued upon, principal, interest and costs, unless the defendants have shown by evidence some good and sufficient legal reason why he should not. The Court further charges you that these defendants cannot set up any defense against the recovery of the plaintiff upon the note sued upon, unless you believe from the evidence that it was transferred to the plaintiff after due. If then, you come to the conclusion that it was transferred after due, you may inquire into the alleged settlement with Stafford (the original payee of said note), and if, upon inquiry, you find that there is a mistake in said alleged settlement,'you may correct it and allow it in your verdict.” (The Court then carefully read twice to the jury section 2710, of Irwin’s Code, and proceeded as follows:) y.
    “If you believe from the evidence that the defendant Moore disposed of his land and cotton to Stafford, and executed the *note sued upon freely and voluntarily, you should find for the plaintiff the amount due upon said note according to the proof submitted; but if you should believe from the evidence, that Stafford induced and forced the said defendant to give up his said land and cotton, and to execute the note sued upon from fear and alarm induced through threats of Federal bayonets, and that the act was not freely and voluntarily done by the defendants, but was brought about, induced and forced through the threats of Stafford to procure the use of Federal bayonets, or the interference of the military, the contract is fraudulent and void. But you should be satisfied from the evidence, that the contract was made and entered into solely under the fear and apprehension that Stafford would dispossess them of their lands by aid of the military or Federal interference, and if so, you should find for the defendants.”
    The jury returned a verdict for the defendants. Whereupon the plaintiff moved for a new trial because the verdict was contrary to the law and the evidence, and because said charge was error. The motion was overruled and plaintiff excepted.
    T. B. Cabaniss; A. D. Hammond; Peeples & Howell, for plaintiff in error.
    John I. Hall, by Jackson & Clarke, for defendants.
    
      
      Promissory Note — Fraud—Duress—Innocent Holder. — To the holding that, “fraud in the procurement of a note, as specified in the Revised Code, sec. 3694, means fraud in the procurement by the holder thereof. An innocent holder of a note for value before due will be protected, although the note may have been fraudulently procured by the payee from the maker, of which the holder had no notice,” the principal case is cited in Pate v. Allison, 114 Ga. 653, 40 S. E. Rep. 715; Merritt v. Bagwell, 70 Ga. 583; Bealle v. Southern Bank, 57 Ga. 275; note to Robenson v. Vason, 37 Ga. 67; Ency, Dig. Ga. Rep., vol. 2, p. 413.
    
   TrippE, Judge.

It was held by this Court in Robinson vs. Vason et al., 37 Georgia, 66, that “Fraud in the procurement of a note, as specified in the Revised Code, means fraud in the procurement by the holder thereof.” There may be an innocent holder of a note which was procured by the payee from the maker by fraud, as well as in other cases. Such a holder may transfer the note after dishonor, and his transferree’s title will be as good as his own. In this ease the note was transferred twice, first to Hanson and afterwards by Hanson to Hogan, the plaintiff. If Hanson obtained the note before maturity for a valuable ^consideration, and without notice of any equity against it, his title was good, and so was the party to whom he assigned, no matter when that transfer was made. The Court in the charge told the jury, that if the plaintiff came in possession of the note after maturity, and it was obtained from the maker by duress, they should find for the defendant. This charge ignored the fact that the note had been in the hands of another holder than the payee before the plaintiff traded for it, and thus excluded him from any benefit he might derive as'the holder under Hanson. From the record it appears that the plaintiff did obtain the note after it was due. It does not appear when Hanson became the owner of it. That was a material fact, and unless the contrary appears, Hanson will be presumed to have had it before maturity, thus protecting Hogan.

Judgment reversed.