Title: Ricks v. Bank of Dixie

State: mississippi

Issuer: Mississippi Supreme Court

Document:

352 So. 2d 798 (1977) J.V. RICKS, Jr., John P. Ricks and Mrs. J.V. Ricks, d/b/a Ricks' Motor Service Company v. BANK OF DIXIE. No. 49689. Supreme Court of Mississippi. November 23, 1977. *799 Brewer, Deaton & Evans, Norman C. Brewer, Jr., Gray Evans, Greenwood, for appellants. Odom, Odom & McCain, Talbot O. McCain, Greenwood, for appellee. Before PATTERSON, ROBERTSON and SUGG, JJ. SUGG, Justice, for the Court: The Bank of Dixie, a Louisiana Corporation, as plaintiff, sued J.V. Ricks and others for collection of a promissory note in the Circuit Court of Leflore County. The court granted a peremptory instruction for plaintiff and the only issue argued on appeal is that the trial judge erred by granting a peremptory instruction for plaintiff. A decision of the issue requires determination of this threshold question, did J.V. Ricks, Jr. sign the note on behalf of the defendants because of misrepresentation which induced him to sign the note with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms? Plaintiff filed suit for recovery on a promissory note payable to the order of Dixie Machine Works and plaintiff which was endorsed to plaintiff by Dixie Machine Works. Defendants asserted as affirmative defenses the following: Plaintiff filed an answer specifically denying every allegation of the defendants in their affirmative defenses. Defendants' first affirmative defense would relieve them from liability on the note, if supported by a preponderance of the evidence, under section 75-3-305 Mississippi Code Annotated (1972) which follows: The first affirmative defense was based on subsection (2) part (c) which permits defenses to be asserted against a holder in due course which were not available under the Uniform Negotiable Instruments Act.[1] It allows the maker of an instrument to assert as a defense, "[S]uch misrepresentation as has induced the party to sign the instrument with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms." The defense authorized by section 75-3-305(2)(c) is a limited defense and may be asserted against a holder in due course only if a party was induced to sign an instrument because of misrepresentation coupled with the fact that the party signing the instrument had neither, (1) knowledge of its character or its essential terms, nor (2) reasonable opportunity to obtain knowledge of its character or essential terms. The comment pertaining to this defense found in Anderson's Uniform Commercial Code, section 3-305:(1) p. 598 (1961) states: In our opinion the above comment correctly states the factors to be considered by a trial court when it is called on to determine if a defendant is to be released from liability for signing an instrument. In order to determine if the defense in this case meets the above test, we must consider the evidence which was before the trial court. The evidence shows without conflict that J.V. Ricks, Jr. signed a promissory note on October 7, 1974 payable to the order of Dixie Machine Works and plaintiff on behalf of all the defendants. The original note was introduced in evidence and is a *801 negotiable instrument under the requirements of section 75-3-104 Mississippi Code Annotated (1972). Plaintiff purchased the note from Dixie Machine Works for a valuable consideration on October 21, 1974 and the note was negotiated on that date in accord with section 75-3-202 Mississippi Code Annotated (1972). Plaintiff met the requirements of section 75-3-202 and became a holder in due course. The only witness offered by defendants was J.V. Ricks, Jr., who testified that, on the date the note was executed, he signed numerous purchase orders and he thought the note was a verification of terms. He signed all documents presented to him on that day without reading any of them. The witness has a college education and is a businessman with many years of experience. J.V. Ricks, Jr. did not use ordinary care when he signed the note without reading it and putting it into circulation; he was not prevented from reading the note; therefore, defendants' claim of misrepresentation has no legal substance. His testimony fails to establish that he was induced to sign the note, "[W]ith neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms." Defendants did not offer any evidence in support of their second affirmative defense that the signature of J.V. Ricks, Jr. on the note was obtained as a result of a conspiracy between Dixie Machine Works and plaintiff. Neither did the defendants offer any evidence in support of their third affirmative defense that the plaintiff did not purchase the note for value in good faith without any notice of any infirmity of the instrument. The fact that plaintiff was named as original payee along with Dixie Machine Works in the note does not destroy its status as a holder in due course. Section 75-3-302(2) Mississippi Code Annotated (1972). Defendants argue that the case should have been submitted to a jury and that the trial court erred when it granted a peremptory instruction for the plaintiff. They rely on a line of Mississippi cases which indicate that the trial court, when determining whether a peremptory instruction should be granted, should look solely to the evidence on behalf of the party against whom the directed verdict is requested. The correct rule for governing the granting or refusal of a peremptory instruction is stated in Paymaster Oil Mill Co. v. Mitchell, 319 So. 2d 652 (Miss. 1975). Paymaster clears up some of the confusion which has apparently existed with reference to the evidence a trial court may consider when a peremptory instruction is requested, collates the holdings of earlier cases, and states a definite and clear rule. When a peremptory instruction is requested, the evidence of both parties, which is not in conflict, may be considered to determine whether a peremptory instruction should be granted. In Paymaster we stated: In this case the trial court had before it testimony which was not in conflict on the issues to be resolved. It properly considered the evidence, not in conflict, of both plaintiff and defendants in arriving at its decision to grant the peremptory instruction, and correctly decided the issues of law from nonconflicting facts. In sum, the defendants executed a promissory note through their partner, the partner was an educated businessman who signed the note without reading it, the note was negotiated to plaintiff for a valuable consideration, plaintiff became a holder in due course, and defendants did not establish their affirmative defenses. The trial court correctly granted the peremptory instruction for the plaintiff. AFFIRMED. PATTERSON, C.J., INZER and SMITH, P. JJ., and ROBERTSON, WALKER, BROOM, LEE and BOWLING, JJ., concur. [1] The Uniform Negotiable Instruments Act, being sections 42 to 237, inclusive, Mississippi Code Annotated (1942), recompiled, as amended, was repealed by Chapter 316 § 10-102, Mississippi General Laws of 1966 [now section 75-10-102 Mississippi Code Annotated (1972)]. The repeal was effective March 31, 1968, the same day the Uniform Commercial Code took effect.