Case Name: EVERDING & FARRELL v. TOFT
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1915-07-27
Citations: 82 Or. 1
Docket Number: 
Parties: EVERDING & FARRELL v. TOFT
Judges: Me. Chief Justice Moore, Mr. Justice Bean and Mr. Justice Burnett concur.
Reporter: Oregon Reports
Volume: 82
Pages: 1–22

Head Matter:
Motion to dismiss appeal denied July 27, 1915.
[Argued on the merits September 26,
reversed November 21, 1916.
EVERDING & FARRELL v. TOFT
(150 Pac. 757; 160 Pac. 1160.)
Appeal and Error — Decisions Reviewable — Part of Judgment.
1. Sections 549, 550, L. O. L., declare that any party to a judgment or decree, not rendered by confession or for want of an answer, may ■appeal therefrom, or from some specified part. In an action on a note brought against several, the answers of the several defendants raised different issues. There was judgment in favor of one of the defendants •and against the others. Held that, while the statute does not authorize a party to maintain separate appeals from different parts of a judgment, yet in such case plaintiff might appeal from that part of the judgment in favor of one of the defendants.
Bills and Notes — Indorsement—Rights of Holders.
2. The perpetration of fraud will not alone defeat the holder of a negotiable instrument, but it must be supplemented by a notice to the holder.
Bills and Notes — Indorsement—“Holder in Due Course.”
3. Under Section 5885, L. O. L., defining a holder in due course, a person is not a holder in due course if he does not take the note in good faith without notice of any infirmity in the instrument or affecting the title of the person negotiating it.
Bills and Notes — Indorsement—Notice of Defects.
4. A person who takes a note has notice of an infirmity in the instrument or defect in the title if he had actual knowledge of the infirmity or defect, or knowledge of sueh faets that his action in taking the instrument amounted to bad faith.
Bills and Notes — Indorsement—Bad Faith of Indorsee — “Negligence” —“Bad Faith.”
5. While negligence is not synonymous with bad faith, yet where a person takes a note under suspicious circumstances and, having means of knowledge, willfully abstains from making inquiries, his intentional ignorance may result in bad faith.
[As to parol evidence to vary effect of indorsement, see note in 7 Am. St. Rep. 366.]
Bills and Notes — Actions—Questions for Jury.
6. The question of good or bad faith of the holder of a note is peculiarly for the jury and not for the eourt, especially when the-burden rests on the holder to show that he beeame the holder in due. course.
Bills and Notes' — Actions—Burden of Proof.
7. Under Section 5892, L. O. L., providing that when it is shown that the title of any person who has negotiated an instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired title as a holder in due course; when a note had its origin in fraud, the burden is on the owner to prove that he or some person under whom he claims was a holder in due course.
Bills and Notes — Actions—Admissibility of Evidence.
8. In an action by an indorsee on a note for $5,000, evidence that the plaintiff acquired the note for $4,000 is admissible, especially in connection with information received by plaintiff as to one indorser and inquiries made or omitted concerning other indorsers and the maker, as bearing on the question whether the holder was chargeable-with bad faith.
Bills and Notes — Actions—Admissibility of Evidence.
9. A person may resort to circumstantial evidence to show that the owner of a negotiable instrument is not a holder in due course.
Bills and Notes — Actions—Question for Jury.
10. In an action by an indorsee on a note, evidence held to present, a question for the jury as to the good faith of the plaintiff.
Bills and Notes — Actions—Issues and Proof.
11. Where a complaint on a note charges a defendant with being an indorser in due course of business, he cannot be held liable as a. maker or guarantor.
Bills and Notes — Liabilities of Parties — “Primarily Liable” — “Secondarily Liable.”
12. Under Section 6023, L. O. L., providing that the person who by the terms of an instrument is absolutely required to pay is primarily liable and all other parties are secondarily liable, the maker of a note is primarily liable while the indorser is secondarily liable.
Bills and Notes — Indorsement—“Discharge” of Indorser.
13. Section 5953, subdivision 3, L. O. L., declaring that a person secondarily liable on an instrument is discharged by discharge of a prior party, applies only to a discharge by aet of the creditor, and does not include discharges by operation of law, nor where, after a trial on the merits, the note is destroyed because of a vice inherent in the transaction.
Bills and Notes — Actions—Instructions.
14. Where, after a trial on the merits, it is determined that because of fraud and notice there is no subsisting debt of the maker of a note, there is no debt of an indorser, and it is error to instruct that there may be a verdiet in favor of the maker, but against the indorser.
From Multnomah: Calvin U. Gantenbein, Judge.
This is an action by Everding & Farrell, a corporation, against John F. Toft, J. L. Hoffman and others. There was a judgment in favor of plaintiff against John F. Toft, and one against plaintiff in favor of J. L. Hoffman for his costs and disbursements. From that part of the judgment in favor of defendant Hoffman, plaintiff appeals. Respondent files motion to dismiss the appeal.
Motion Denied.
Mr. Alfred E. Clark and Mr. Malcolm H. Clark, for the motion.
Messrs. Reed S Bell, contra.
As to the question of evidence of fraud or illegality in the inception of the instrument, see notes in 10 L. R. A. (N. S.) 679; 17 L. R. A. 328; ■36 Ii. R. A. 434.
As to effect of exchange of commercial title to constitute one a holder in due course for value, see note in 17 L. R. A. (N. S.) 747.
Upon the question as to what knowledge of consideration by put-chaser of a note which did not indicate the nature of its consideration is required by statute, see notes in 24 L. R. A. (N. S.) 1057; 29 L. R. A. (N. S.) 351; 42 L. R. A. (N. S.) 395. Bepobteb.

Opinion:
Opinion by
Mr. Chief Justice Moore.
This is a motion to dismiss an appeal. In order to understand the question involved, it is necessary to state the substance of the facts upon which a solution of the inquiry depends:
The defendant J. L. Hoffman on August 7, 1912, executed to the defendant the Colombian Timber Company, a corporation, his promissory note for $5,000, payable in one year, with interest at the rate of 8 per cent per annum. Prior to the maturity of the instrument the defendants John F. Toft, John F. Shorey and the payee in due course indorsed the note for value, and thereupon the plaintiff Everding & Farrell, a corporation, became the owner thereof and instituted an action to recover the amount due thereon; the complaint being in the usual form. Toft, separately answering, denied some of the averments of the initiatory pleading, and for a further defense alleged that he was induced to indorse the note by the fraudulent representations of an agent of the payee, setting forth the statements asserted to be false; that before the plaintiff obtained title to the instrument one of its officers, naming him, was informed by Toft that there was something wrong about the making and indorsing of the note, and advised not to purchase it expecting this defendant to pay the same. The statements of new matter in this answer were denied in the reply.
The defendant Hoffman, separately answering, admitted most of the averments of the complaint, and further alleged that he was induced to execute the note to evidence the purchase of 5,000 shares of the capital stock of the defendant corporation, which its agent fraudulently represented was valuable, but in fact was valueless, and that prior to plaintiff's purchase of the written promise its officer was informed of the invalidity thereof, by reason of false statements, setting them out. A reply put in issue the averments of new matter in this answer.
The defendants, the Colombian Timber Company and John F. Shorey, did not appear or answer. The 'cause being tried on the issues joined, the plaintiff secured a judgment against Toft for the amount of the note, while the defendant Hoffman obtained a judgment against the plaintiff for his costs and disbursé roents. The plaintiff's attorneys served upon the defendants Toft and Hoffman a notice of appeal, which, omitting the title and the signatures, is as follows:
"You, and each of you, will please take notice that an appeal is taken by Everding & Farrell, the above-named plaintiff, to the Supreme Court of the State of Oregon from a part of that certain judgment made and rendered in the Circuit Court of the State of Oregon for the county of Multnomah on the 8th day of February, 1915, in that certain cause entitled 'In the Circuit Court of the State of Oregon for the County of Multnomah. Everding & Farrell, Plaintiff, v. John F. Toft, Colombian Timber Company, a Corporation, J. L. Hoffman, and Jno. F. Shorey, Defendants, D. 7423.' The part of the judgment from which the ap-. peal is taken to the Supreme Court of the State of Oregon is specified in words and figures as follows, to wit: 'It is further ordered and adjudged that the plaintiff take nothing herein of or from the defendant' J. L. Hoffman, and that the defendant J. L. Hoffman recover of and from the plaintiff his costs and disbursements herein, and that execution issue therefor.' "
The transcript having been filed in this court, counsel for the defendant Hoffman have interposed a. motion to dismiss the appeal, on the grounds that a review of a part of the judgment only cannot legally be upheld, and that an execution on the judgment against Toft has been issued whereby some of his property has been sold and the proceeds thereof paid over to plaintiff.
In the case at bar it will be remembered that distinct issues were made by the separate answers of Toft and Hoffman. Based on these issues, judgments were rendered, which final determinations, as between Toft and Hoffman, were as well defined as though they had been given in separate actions; and, this being so, the plaintiff could appeal from that part of the judgment specified in its notice. No appeal having been taken by the plaintiff from the judgment rendered against Toft, an estoppel cannot arise from any proceedings undertaken to enforce the determination as against him.
Any party to a judgment or decree that was not given or rendered by confession or for want of an answer may appeal therefrom, "or some specified part thereof": Sections 549, 550, L. O. L. In construing these sections of the statute it has been held that a. party will not be permitted to maintain separate ap-, peals from parts of a judgment or decree. An apparent exception to this rule is recognized whereby an appeal will lie from a part of a judgment or decree, when an issue distinct, entire and complete has been formed between some of the parties, and upon which issue a final judgment or decree has been given, affecting only the interests and rights of the parties to that particular issue: Bush v. Mitchell, 28 Or. 92 (41 Pac. 155).
The motion must therefore be denied; and it is so ordered. Motion to Dismiss Denied.