Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1913-02-02
Supreme Court

SohSsu HhFAH VII ie's' ".... .-
John McCarty. Plaintiff and Respond
ent, vs. John Kepreta, Defendant n
Appellant.
This action for r~eplevin Is brought by
plaintiff as indorsee Of a note secured by
chattel mortgage on the replevled prop
erty, by which action plaintiff seeks TO
recover the mortgaged property for iore-
closure purposes. The note and mortgage
were executed by defendant to Il state
bank at Knox, and by it were assigned
by its cashier for value to its president
this plaintiff. Plaintiff testifes he had
nc actual knowledge of any intirmity IN
the note or Of any defense to its pay
ment; and that he, though president n
q director Of the bank, was a non'resi-
dent and not active In its management
and had no personal knowledge concern
ing the transaction under which the
note n mortgage We're taken to the
bank by the cashier as it's managing Of
ficer. Plaintiff purchased the note OF
the bank before maturity, paying there
for full face value. Defendant defends
OF the ground that he received no con-
sideration whatever for the note from
the payee or any other person. From
the trial courts rulings. that such de-
Tense is not available until actual knowl-
edge OF such want Of consideration for
the note shall have been established as
known to this plaintiff, or until such
facts were established as would consti-
tute bad faith in the purchase of the in
strument by plaintiff. and that proof that
| plaintiff was at all times in question. the
president and necessarily a director Of
the bank, was insufficient as a founda.
| ton to admit proof Of the want OF con-
| sideration for the note in this action; IT
| Is HELD:
"a The negotiable instruments act
does not operate to- constitute plaintiff
! Il holder in due course of such negotiable
note where from his relationship to the
| payee, the bank, under the banking laws
| plaintiff is presumed in law, from such
| relationship, to have had actual knowf-
edge of the facts under which the note
| was executed by defendant and obtained
| by the bank.
(2) In determining whether plaintiff
is a holder in due course Of such negoti-
able instrument. as q holder in due
| course is defined under the negotiable
linstru,nents act, Sec. 1854, Il. c. 1905, the
,o,ot;,n,h, ~ ,,,o ;rdo,sae to tho nav
ee and the law thereto applying must
! be considered with and as supplementing
| the negotiable Instruments act; and Secs.
1854, 6357 and 6$58, defining a holder in
| due course, defective title to the IL
strument and notice Of intirmity in the
-. t.,,, -, r,.io, ar 1ofoct of ,;t,e
.noro.n .a,n.t ho nn,..u,o1 ~. excl,d-
49,. az acnn;., /, ", on,,orn,n, fbe re,n.
t,on.h;n - A. L,nn ana =. n,osident
=, .s u my IT, ,bo ,n.esidont of n
to- ,an,. @.na rano.,, vii, Nv ,ow .
d,rector ,,,ereof q, holder IN due course
~ : naont;ahIo met r;mont 10, fnst Tho
m vmont ~ which the ma lcr in \ suit
r.. 49,. ,,n,. ,,,n,,,1 Y, , 1oren.a
n, a defa,sa nf wan+ If cons;de,ation
:, ,, ~, ~, !; ,r.. =. oy,inct ;, st,tc
,,.rn ,s r,,sa nf +, n,,Gtiah,c ;nstru.
$500 49, ~ ...o,,od nc :, aofon.o IN
an ,cti,n. h,,,pa,sshv rho han,,e president
inst Vi h e M iI,Sut IA r33onT Of ac-
ma, not;cc ~ Ms sa,,cch, president of the
faot ,h,t mo not. was p;ven withont
oon.,1or, ION. Snd ,h;s without regard
- ~. ,,ood fo;ih cf rho hang nresident
~ h,s r,,rch6so ~ tho nepot,a h,e instrn.
mon+ .uod mon e.
.uI rho cash,e,,s actna1 knowledge Of
tho ;nti,,n;tv in tho instrument Of it
beinp @y,t,,out nsideration the law
ooncl,,x,ve,v nras,,mes ia hav, heen COM
~ nnic. +ad IN J,a course to and 70 have
heen had nv tho hoa,d of directors mn
ier tho c,rcn INST . noes Of this case where
IN No ;nterost hostile to +he hank mr. IN
f,o I'D NJ &c stoc1,ho,ders or denositors is
assartad. and snch presumed actual
lpou,,oaoo IN ;ts directors is nresrroed
n. have haen had nv nlaintiff as presi-
dent If tho hank ut the time he purchas-
Cd tha nepotiahle instrument OF the banl,
acting nv its cashier.
* Whatever know,edee n,ainttfr as a
director and officer of the bank at such
fine had or ought ID have nossessed as
an official no vii, he conc,usiyelv pre-
suncd in law to have had as a privatt
individual.
f6, Such n~resnmption renders impos-
sihle nlaintirf.s recovery as n holder in
due course Of the nepotiab}e instrument
IN sn;+ 70 tho defense offered is estab-
lisbod
~, Proof Of nc plect, Of dutv owing by
the president Of the bank. it's stockhold-
ers and denositors and persons dealing
Herewith. nv nroof az, failure of the pres
ident and diractor to nart;cinate in the
active mana pe,nent n tho hank and the
consequent Ignorance Of the facts of the
transaction IN nnestion. does not relieve
s,cb of6cio, from tho knowledue IRE.