Case Name: W. BENT WILSON et al., Trading as WILSON & ADAMS, v. DAVID J. LEWIS et als.
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1915-11-10
Citations: 170 N.C. 47
Docket Number: 
Parties: W. BENT WILSON et al., Trading as WILSON & ADAMS, v. DAVID J. LEWIS et als.
Judges: 
Reporter: North Carolina Reports
Volume: 170
Pages: 47–48

Head Matter:
W. BENT WILSON et al., Trading as WILSON & ADAMS, v. DAVID J. LEWIS et als.
(Filed 10 November, 1915.)
lo Bills and Notes — Negotiable Instrument — Holders—Fraud in Procurement —Burden of Proof.
Where fraud in the procurement of a note has been shown in an action brought by one claiming to be a holder in due course, the burden of proof is on the plaintiff to show that he acquired the paper before maturity, in good faith for value, without notice of any infirmity or defect in the title of the person negotiating it, and upon his failure to do so it sets aside the contract in its entirety, including, in this case, a stipulation that the maker will return the stallion for which the note was given, if not as warranted, and receive another of equal value. Robinson v. Suff-stetler, 165 N. C., 464, cited and distinguished.
2. Same — Trials—Issues.
Where a note given for a stallion is sent on by one claiming as holder in due course and the jury has rendered a verdict upon which the note was invalidated for fraud, an issue as to the indebtedness of the defendant for the horse does not arise.
Appeal by plaintiff from Allen, J., at tbe November Term, 1914, of Columbus.
Action upon three notes, aggregating $3,000, given for tbe'purchase ■of a German coach stallion. The notes were executed to J. Crouch & Son, and indorsed by them to the plaintiffs, who claim to be purchasers for value before maturity. The defendants allege that the notes were procured by fraud, and that the plaintiffs took the notes with notice.
There was a verdict and judgment in favor of the defendants and the plaintiffs appealed.
Schullcen, Toon & Schulhen for plaintiffs.
McLean, Varser & McLean and Homer L. Lyon for defendants.

Opinion:
AlleN, J.
We find no error in the exceptions relied on by the plaintiffs, which we have carefully examined, and as the legal principles involved have been so recently considered in the various appeals from judgments in actions to recover on. notes for the purchase price of stallions it is unncessary to further discuss them.
The evidence excepted to was competent and material on the issue of fraud, and when fraud was established it had the effect of easting the burden on the plaintiffs, as holders of the notes, of showing that they acquired them (1) before maturity, (2) in good faith for value, (3) without notice of any infirmity or defect in the title of the person negotiating them (Bank v. Fountain, 148 N. C., 590), and it also set aside the contract in its entirety, including the stipulation to return the horse, proved to be practically worthless, and to receive another of "equal value" to the one represented.
In eases like Manufacturing Co. v. Lumber Co., 159 N. C., 510, and Robinson v. Huffstetler, 165 N. C., 464, where "contracts of sale or return" were enforced, tbe party aggrieved was not attacking tbe contract, but was declaring on tbe warranty.
¥e are also of opinion that there is evidence that tbe plaintiffs bad notice of tbe fraud equally strong as that commented on and discussed in tbe learned opinion of Associate Justice Walker in Bank v. Branson, 165 N. C., 346.
There was also no error in refusing to require tbe jury to answer an issue as to indebtedness, as tbe plaintiffs bought nothing except tbe notes and bad no interest in tbe horse, and tbe plaintiffs were entitled to no judgment as tbe jury found tbe notes were procured by fraud, and that tbe plaintiffs took with notice of tbe infirmity.
No error.