Case Name: BEHRENS v. APESSOS
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1972-03-24
Citations: 39 Mich. App. 426
Docket Number: Docket No. 11833
Parties: BEHRENS v APESSOS
Judges: Before: Levin, P. J., and Holbbook and Bbonson, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 39
Pages: 426–432

Head Matter:
BEHRENS v APESSOS
Opinion of the Court
1. Bills and Notes — Negotiable Notes — Recovery on Note.
The holder of a negotiable note on which the signatures are not in dispute is entitled to recover by merely producing the note, unless the defendant establishes a defense (MOLA 440-.3307[2]).
References for Points in Headnotes
11 Am Jur 2d, Bills and Notes §§ 991-1018.
11 Am Jur 2d, Bills and Notes §§ 215-268,
2. Bills and Notes — Negotiable Notes — Lack op Consideration.
Lack of consideration is not proven as a defense by the maker of a negotiable note against a holder where the maker received no consideration from the holder but it is not proven that the maker received no consideration from a third party.
3. Bills and Notes — Negotiable Notes — Lack op Consideration.
Consideration existed to support a negotiable note where the purchasers of a house had given the note to the plaintiff-owner of 95% of a construction company in part payment for a home built by the plaintiff’s company, because the consideration consisted of the building of the house by the company; whether the consideration moved from or to a third party is immaterial.
Dissent by Holbrook, J.
4.Bills and Notes — Negotiable Notes — Lack op Consideration.
A negotiable note executed by defendants, purchasers of a home, to plaintiffs, the majority owner of a construction company and his wife, in part payment for the construction of a house by the plaintiff-husband’s company was invalid for lack of consideration where the note was between the plaintiffs, as individuals, and the defendants, the construction company was not a party to the note, the plaintiff husband was not the sole stockholder of the company, the plaintiff wife was not a stockholder, there was no evidence that the plaintiffs were acting as the company’s agents, ■there was no showing of any consideration based upon a business relationship between the defendants and the individual plaintiffs, and there were no allegations that the plaintiffs agreed to pay any of the money received on the note to the company or that they would have done so.
Appeal from Kalamazoo, Donald T. Anderson, J.
Submitted Division 3 January 4, 1972, at Detroit.
(Docket No. 11833.)
Decided March 24, 1972.
Complaint by Jack and Susan GL Behrens against Peter and Donna L. Apessos for nonpayment of a negotiable note and to foreclose a mortgage on real property. Summary judgment for defendants. Plaintiffs appeal.
Reversed and remanded.
Troff, Lilly, Piatt, File & Doyle (by Richard G. Schreur), for plaintiff.
Vlachos $ Carey (by Sidney D. Durham), for defendants.
Before: Levin, P. J., and Holbbook and Bbonson, JJ.

Opinion:
Bbonson, J.
Plaintiffs commenced this action for nonpayment of a $5,000 negotiable note and to foreclose a mortgage on real property. Tbe note and mortgage were executed by tbe defendants to plaintiffs in partial payment for a home built by Behrens Construction Company. Plaintiff Jack Behrens owns 95% of said company. The house was built on a cost-plus contract. The note and mortgage were executed when plaintiffs claimed that the house cost more to construct than had been estimated originally. It appears that financing for this additional cost was unavailable through a lending institution. In their answer, defendants pled failure of consideration. At trial, Jack Behrens was the only witness. At the close of his testimony, defendants moved for a directed verdict. As the case was tried without a jury, the trial judge granted a judgment on the evidence based on a failure of consideration. He also denied plaintiffs' motion to reopen their proofs. Plaintiffs appeal of right.
The parties agree that the note is a negotiable instrument, MCLA 440.3104(1); MSA 19.3104(1), and that plaintiffs are holders, MCLA 440.1201(20); MSA 19.1201(20), with a right to enforce the note in their own names, MCLA 440.3301; MSA 19.3301. As the signatures on the note are not in dispute, plaintiffs are entitled to recover by merely producing the note. MCLA 440.3307(2); MSA 19.3307(2). This plaintiffs did during the direct examination of Jack Behrens. This is all plaintiffs were required to do.
On cross-examination, defendants went beyond the note's authenticity and introduced evidence concerning their defense of lack of consideration. This is an affirmative defense available, to the defendants on which they had the burden. MCLA 440.3306(c); MSA 19.3306(e) and MCLA 440.3408; MSA 19.3408. Following their cross-examination of plaintiff Jack Behrens, defendants moved for a directed verdict. The basis of their motion was that since Behrens Construction Company had built the house, plaintiffs themselves had given no consideration. The trial judge agreed.
On appeal, we affirm a judgment on the evidence if the trial judge's findings of fact p,re not clearly erroneous. Miller v Department of State Highways, 30 Mich App 64 (1971). Defendants contend there is sufficient evidence to support the trial judge's finding. They base their argument on the fact that no consideration moved between plaintiffs and defendants. This contention has no merit. That consideration moves from or to a third party is immaterial. Levitz v Capitol Savings & Loan Co, 267 Mich 92 (1934); Fisher v Lehrer, 149 Conn 106; 175 A2d 707 (1961); 1 Restatement, Contracts, §75, p 82; 1 Williston, Contracts (3d ed), § 114, p 452. The consideration for defendants' promise to pay was the building of a house by Behrens Construction Company. By contract defendants had agreed to pay the company's costs in building this house. The fact that defendants paid someone other than the company for the house does not mean there was no consideration for their promise.
To prove failure of consideration defendants must show the obligation cannot he enforced against them. MCLA 440.3408, Comment 1; MSA 19.3408, Com ment 1. Defendants contend they have paid more for the house than they had agreed to pay. The only part of Jack Behrens' testimony which supports this is his admission that possibly defendants had reached such an agreement with his father, but he was unaware of it. To say that such an agreement was reached is speculation as defendants presented no positive evidence to that effect. It is true that plaintiffs introduced no evidence to substantiate their allegation that the house cost more than originally estimated. It was not their burden to do so until defendants established a defense.
We think it was error to grant defendants' motion and grant a judgment on the evidence. Reversed and remanded for a new trial.
Levin, P. J., concurred.