Case ID: wis_116/html/0647-01.html
Source: Caselaw Access Project
Author: {"author": "WiNsnow, J.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Prentiss, Appellant, vs. Strand and others, Respondents.
    
      February 3
    
    February 24, 1903.
    
    
      Bills and notes: Bona fide purchasers: Fraud: Evidence: Practice: Negligence.
    
    1. Where plaintiff’s assignor purchased a negotiable promissory note in good faith, and for value, before maturity, plaintiff is entitled to the rights of a bona fide purchaser for value before maturity, although he may have had notice of defects.
    2. The owner of a stallion proposing to sell him for $2,000 to a contemplated corporation, procured signatures to contracts binding the signers to take stock in the corporation, and, on organization, to give three notes for the purchase price. After all such agreements had been carried out it was discovered that the signers had signed another note for the full amount, printed on the same paper as the contracts. This note had been assigned to V., a bona fide purchaser for value, and by V. assigned to plaintiff for value, both transactions having taken place before maturity. Held, that evidence that the signers of the note on which action was brought had paid the other notes was admissible as part of the same negotiation, and as showing extinguishment of their liability arising therefrom.
    S. Where the answer to a question is objected to, but no motion is made to strike it out as nonresponsive to the question, it is not error to allow the answer to stand..
    4. In an action against several signers of a promissory note alleged to have been procured to be signed- by fraud, there was' testimony tending to show that the note in question had been torn from a hook- which purported to contain a contract to take stock in a corporation organized to purchase a horse, that the book was so bound that the part containing the note was invisible, and that the description of the book as given by all the signers was substantially identical. Held, that it was not error for the court, in framing questions for, a special verdict, to assume that the note was in the same condition when all the defendants signed it.
    5. In such case, evidence of a witness that he signed a note, contained in the same book, about the same time, and that the entire note was visible, corroborated to some extent by plaintiff’s attorneys, is held to be insufficient to overcome a verdict that the signers were not guilty of negligence in not more closely examining the paper, and discovering that they were signing a note.
    Appeal from a judgment of the circuit court for Trem-pealeau county: James O’Neill, Judge.
    
      Affirmed.
    
    This is an action upon a promissory note purporting to be signed by twenty-three persons, in the following terms:
    “Arcadia, Wis., April 2, 1S92.
    “Eor value received, we, or either of us, promise to pay to Byron S. Eryer, or order, two thousand dollars, as follows: $600.00 April 1st, 1893, $700.00 April 1st, 1894, $700.00 April 1st, 1895, with interest at the rate of eight per cent, per annum; interest payable annually; interest, if not paid when due, to be added to the principal, and bear interest at the same rate.”
    The plaintiff claimed to be a tona fide purchaser of this note before maturity. All of the alleged signers of the note were made defendants in the action, but two of them were not found, and were never served upon; hence there were twenty-one real defendants. Of these, two, Knut L. Strand and Vrol Swenson, answered, denying the genuineness of their signatures to the instrument. The remaining nineteen defendants answered separately, each denying that he ever signed the alleged note, and further alleged that, if his apparent signature thereto be not a forgery, then that such signature was obtained by a fraudulent substitution of one paper for another by Eryer, or by some other fraudulent device, by means of which he signed what seemed and what was represented to be a contract for the purchase of a stallion, when in fact the writing contained a note. The action was tried before a jury. On the part of the plaintiff the note in ■question was offered and received in evidence. It was indorsed in blank by Byron S. Eryer. One Valerius testified that he purchased it in good faith from Eryer August 12, 1892, and sold it to the plaintiff February 1, 1894. The plaintiff testified that he purchased the same from Valerius in good faith, and for value, February 1, 1894. The plaintiff also offered in evidence the testimony of experts tending to show the genuineness of the signatures of the various defendants. The note was partly printed and partly written, and occupied a few lines in small print at the top of the paper; the paper itself being oblong in shape, about seven inches long and four inches wide, with a line of perforations at the top, where it appeared to have been severed from something else. It apparently had been a leaf of a book arranged to open at the end, the printed part constituting about one-third of the space at the top, and the other two-thirds of the page being arranged with lines for signatures in double columns, there being twenty-four places for signatures, and all but one of the spaces being filled with the alleged signatures of the defendants. At the close of the plaintiff’s evidence the action was dismissed as to the defendants Vrol Swenson and J. O. Nilsestuen, whose signatures were each evidenced by a mark, because there was no proof that either of them authorized his mark to be made. The action was also dismissed as to the defendant X. L. Strand, because it appeared that his name was signed by his son, and there was no proof of his son’s authority. All of the remaining eighteen defendants testified as witnesses on their own behalf. They are and were farmers living in the vicinity of Arcadia, and all are foreigners; a number not being able to read English. All of them, finally conceded tbe genuineness of tbeir signatures, except Lena Christenson, wbo absolutely denied signing. Tbeir testimony substantially agreed as to tbe general nature of tbe circumstances under wbicb tbeir signatures were obtained. Tbeir testimony tended to show that in March, 1892, Byron S. Eryer, accompanied by one Bilben, a Norwegian interpreter, came to Arcadia with a stallion, wbicb be proposed to sell for $2,000 to a company of farmers, bis plan being to form a company, wbo should take twenty’shares of $100 each. To accomplish this purpose, Eryer and Bilben -went around tbe country, and called on tbe defendants individually, to get them to subscribe to shares in tbe proposed company; and then in each case, when consent was finally obtained, a book was produced by Eryer, wbicb corresponded in size with tbe paper on wbicb tbe note in suit appears, wbicb book was represented by Eryer as containing a contract by wbicb tbe signers agreed to form a company for tbe purchase of tbe horse and to give notes for $2,000 after tbe company was formed. Those of the defendants wbo could read testified to having read tbe supposed contract, wbicb was described as commencing at tbe top of tbe page and reading down continuously, tbe last four or five lines being upon tbe lower page; and said lines being that part of tbe note beginning “two thousand dollars, as follows.” Most of tbe defendants testified that no such words as tbe first part of tbe note, to wit: “Arcadia, Wis., April 2, 1892. Eor value received, we, or either of us, promise to pay Byron S. Eryer, or order,” were visible. Several of tbe defendants, wbo examined tbe book most closely, testified that tbe binding was very stiff, and was an inch or more inwidtb, so that it could not be opened clear back. Nearly or quite all of tbe defendants wbo did not examine tbe book so closely testified in general terms that tbe book bad tbe condition and appearance testified to by tbe witnesses wbo described it particularly. Tbe defendants wbo could not read stated that Eryer or Bilben pretended to read it to them, and induced tbem to believe by such-reading that it was simply a contract to'form a company to .buy the horse, and to take shares in such company, and give-notes for the horse when the company was formed, and, in-all but one or two instances, that.no one was present or within reach at the time who could read the English language. All of the defendants unite in declaring that the understanding was that, after the shares were subscribed, a-meeting of the subscribers was to be held to close the business, and give the notes; and it appears that this meeting was in fact held April 2, 1892, and three notes in the usual form of promissory notes, one for $600 and two for $700 each, were then given, signed by the .defendants; all of which have-been paid in full. Neither Eryer nor Bilben was called as a witness, so that the defendants’ statements as to the transactions with Eryer stand without any direct contradiction. Upon rebuttal, however, one Pelowski testified to signing a note about the same time, contained in the same book, and his testimony tends to show that when he signed the entird note-was visible. This testimony is also corroborated in some degree by the testimony of one of the plaintiff’s attorneys, who-claims to have seen the book at several times while Eryer was-obtaining signatures to the note.
    The following special verdict was rendered by the jury:
    “1. Is the signature of Lena Christianson on Exhibit A the genuine signature of such defendant? Answer. No. 2. Did the plaintiif purchase the note Eebruary 7, 1894, for value, and in good faith? A. No. 3. Did Valerius purchase the note for value, before maturity, and in good faith ?' Not answered. 4. Were the first three lines of the paper Exhibit A concealed by the binding in the book when it was-subscribed by defendants, so that a person reading the upper and lower pages of said book, and using ordinary care, would read the same as a continuous writing and contract, and without observing said first three lines of said Exhibit A? A. Yes. 5. Were the signatures to the note Exhibit A of such •of tbe. defendants as could not read tbe English language obtained by tbe fraudulent representation that tbe paper tbey were signing was a contract for tbe purchase of a stallion, with provisions as to forming a company, price, pedigree, number and price of shares, notes to be given, date of payments, and rate of interest, and by fraudulently omitting to read or inform tbe defendants of the first three lines of said Exhibit A? A. Yes. 6. Were tbe defendants induced by fraudulent representations, trick, or artifice to execute tbe paper Exhibit A, 'and under such circumstances that tbey were fraudulently led to believe that tbey were signing only .a contract for tbe purchase of a horse, without any promissory note therein? A. Yes. 7. Did tbe defendants, when tbey executed Exhibit A, believe that it was a contract for tbe purchase of a stallion and tbe forming of a company therefor, and not a promissory note ? A. Yes. Were tbe defendants in tbe exercise of ordinary care in affixing their signatures to tbe paper Exhibit A without discovering that it was in form a promissory note ? A. Yes.”
    Upon this verdict judgment was rendered for tbe defendants, and tbe plaintiff appeals.
    For tbe appellant there was a brief by Richmond & Richmond and Higbee & Bunge, and oral argument by JE. G. Hig-bee.
    
    For tbe respondents there was a brief by Gaveney & Gom-stoclc and S. G. Gilman, and oral argument by J. 0. Gaveney.
    
   WiNsnow, J.

Tbe evidence leaves no doubt of tbe grossly fraudulent character of tbe operations of Fryer. By means thereof be succeeded in obtaining from tbe defendants apparent obligations aggregating $4,000 for tbe purchase of property not exceeding $2,000 in value. Indeed, tbe fraud is not controverted in this case, and tbe only questions really in •dispute were whether tbe plaintiff was entitled to protection as a bona fide bolder of commercial paper, and, if so, whether tbe defendants were guilty of negligence in signing that which was in reality a negotiable note, but which tbey supposed to be simply a contract to purchase a horse, and give their notes therefor. The first question suggested really drops out of the case upon this appeal for two reasons: (1) Recause the bona fides of both Valerius and the plaintiff in purchasing the note in suit was thoroughly proven without substantial contradiction, and (2) because the jury failed to negative the good faith of Valerius in his purchase. If Valerius purchased in good faith, and for value, before maturity, then the plaintiff, who purchased from him, is equally protected even though he may have had notice himself of defects. Montpelier S. B. & T. Co. v. School District, 115 Wis: 622, 92 N. W. 439. We proceed, therefore, 'to consider whether the verdict of the jury to the effect that the defendants exercised ordinary care in affixing their signatures to the paper was arrived at without prejudicial error. The first and most important contention made by the appellant is that there was error in the admission of evidence. This claim is based upon the admissions of the testimony of the defendants to the effect that they had subsequently paid the three notes which they admittedly signed for the purchase of the horse. This is said to be proof of another transaction, having no legal bearing upon the controversy, and naturally exceedingly prejudicial to the plaintiff. With this claim we cannot agree. The defense of the defendants was that the various transactions by which they were induced to sign the various papers were all integral parts of the same negotiation; that in the course of this one negotiation they agreed to form a company to buy the horse for $2,000, and to give their notes for the price; and that the various papers which they signed were intended to accomplish these agreements, and nothing more. Clearly, it was necessary for them to show all that was done at the time, and we can see no valid reason why it was not competent for them to show payment of the notes. This was, in effect, simply showing that they had fully performed and! discharged the agreement in fact made. Had they not shown •'that tbey gave and fully paid tbe note, tbe case would have stood simply upon tbe admitted fact that tbey bought tbe horse, agreed to pay $2,000 therefor, that tbey bad not paid it, and that tbe plaintiff was tbe owner of their agreement to pay in notes, with all tbe rights at least of an assignee of tbe contract. Tbe payment and discharge of tbe notes, thus extinguishing all liability to any one resulting from tbe transaction (provided tbey showed themselves free from negli/gence), was manifestly proper, if not necessary, to make their defense complete. Tbe facts were fully pleaded, and seem to ns to be entirely relevant and proper to complete tbe history of tbe transaction, upon a distorted part of which plaintiff founds bis right.

Tbe appellant also claims error in tbe admission of evi- ■ dence of tbe defendants to tbe effect that tbey laid tbe matter before tbe district attorney of tbe county, and that Eryer •finally admitted tbe fraud, and sent a man to settle with tbe defendants. Tbe supposed erroneous evidence came into tbe .case in tbe following manner: Upon cross-examination of L. K. Strand, tbe plaintiff proved by him that be signed a receipt acknowledging payment to him by Fryer July 6, 1892, ■of $102.50, with tbe statement that it was for services in assisting in tbe sale of tbe borse. This receipt was then put in evidence by tbe plaintiff. Upon re-examination tbe defendant’s counsel asked Mr. Strand to state tbe circumstances under which be signed tbe receipt, and be answered, against ■ objection for incompetency, that “it was an indorsement that this man [Fryer] bad beat us out of. I think it was a little •over $1,000. We were down to Galesville to tbe district at■torney, and bad him attend to it, and be wrote to him if be would not come back and pay that money.” This answer was ■objected to, and tbe court said that it was not an answer to the question, but no motion was made to strike it out. It is always competent to explain a mere receipt for money, so -■that there appears to be no serious ground of objection to tbe question asked. If the answer was not responsive, the plaintiff should have moved to strike it out. Probably the court would have done so had the motion been made. In the absence of such a motion, no error appears.

It is claimed that there was error resulting from the fact that question 4 and the following questions of the special verdict to the jury assume that the supposed note was in the same condition when all the defendants signed it, whereas in fact they all signed at different times and places, and they do not all testify that part of it was concealed in the binding of the book. In this connection it is said that the defendant Martin Walder a, who could not read, did not have the contract read to him by Eryer, nor even ask that it he read. The objection does not seem substantial. All of the defendants who can read English testify, in substance, that they took the book, and read the supposed contract, or looked over while Eryer was reading it; and they all testify to the condition of the book — as to the stiffness of the binding, and the fact that an inch of the leaf was thereby concealed, and that no perforation was visible. Some of them testify to this particularly, and some generally, by stating that its condition and appearance was identical with the description given by the defendant Moen, who testified positively and clearly to the fact. Most of the witnesses who could not read testify also to the appearance of the book being the same as described by Moen, and they all testify (including Waldera) in one form or another to the effect that there was no one present or accessible who could read English, and that Eryer read or explained its contents to them either upon request or without request, and that his explanation and reading was that it was a contract to form a company and purchase the horse, and that they believed him. As matter of fact, the form of the questions does not prevent the jury from excepting from an affirmative answer the three defendants whom appellant claims might have been found careless in signing. But, even if tbe fact were otherwise, careful reading of tbe testimony convinces us that tbe proof was simply overwhelming that, tbe book was in tbe same condition when all of tbe defendants signed, and that tbe attempted evidence in rebuttal is insufficient to shake this conclusion in tbe least, or authorize tbe jury to find any verdict to tbe contrary.

These considerations also dispose of tbe claim that tbe verdict is contrary to tbe evidence. On tbe whole ease we are satisfied that justice has been done without material error.

By the Court. — Judgment affirmed.