Case Name: Theodore S. Barnes v. Kosciusko P. Peet and Daniel C. Johnson
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1889-11-08
Citations: 77 Mich. 391
Docket Number: 
Parties: Theodore S. Barnes v. Kosciusko P. Peet and Daniel C. Johnson.
Judges: Champlin and Long, JJ., concurred with Morse, J.
Reporter: Michigan Reports
Volume: 77
Pages: 391–401

Head Matter:
Theodore S. Barnes v. Kosciusko P. Peet and Daniel C. Johnson.
Promissory note — Ownership of — Burden of proof — Charge to jury,
1. Where, in a suit upon a note delivered to the secretary of an insurance company as security for a loan made by him, the question of fact to be determined by the jury is whether the money loaned belonged to the secretary or to the company, they can determine such issue without any special instructions as to the law of ownership, or as to what would constitute an ownership of the note either in the secretary or in the insurance company.
2. While the unexplained possession of a note, indorsed in blank, is presumptive evidence of ownership and sufficient to warrant a recovery in a suit by the holder thereon, the introduction of evidence tending to show that the note belongs to an insurance company of which the holder is the secretary and treasurer, and ex officio the proper custodian of the note if it belongs to the company, will destroy such presumption, and cast the burden upon the holder to show his ownership. Bank v. Seymour, 64 Mich. 59.
Error to Gratiot. (Hart, J.)
Argued January 30, 1889.
Decided November 8, 1889.
Assumpsit. Plaintiff brings error.
Affirmed.
The facts are stated in the opinion.
H. & E. L. Walbridge and Huntington & Henderson, for appellant, contended:
1. The jury should have been instructed as to the rules of law by which they were to determine under what circumstances the note should be regarded as the note of the company, and of which company, or of the plaintiff; citing Sacket, Inst. Juries, chap. 35, §§ 1, 2; Provision Co. v. Tilton, 87 Ill. 547, 553; Kendall v. Brown, 74 Id, 232.
2. The jury should have been told that the burden of proof was, with the defendants; citing Hovey v. Sebring, 24 Mich. 232, 233 (note); Knapp v. Lee, 42 Id. 43; Burson v. Huntington, 21 Id. 415; Sewing Machine Co. v. Spears, 50 Id. 534-536; Hays v. Hathorn, 74 N. Y. 436.
3. The fact that the plaintiff paid for the note wholly with the funds of the company would be no legal defense unless the possession was obtained mala fldes; citing 2 Pars. N. & B. 437-443.
4, It is undisputed that the plaintiff was in the actual possession of whatever funds may have belonged to the first company at date of the note, and with the approbation of all parties concerned in the note; and, whether he made use of company funds or not, the legal title at least of the note went to the plaintiff; citing Boyd v. Corbitt, 37 Mich. 52; Moore v. Hall, 48 Id. 143-145; Story, Prom. Notes, 3, § 3; 2 Pars. N. & B. 436; and, assuming that the legal title was held in trust for the company, it would prevail until the equity was in some way asserted; citing Moore v. Hall, 48 Mich. 143-145; and the legal owner may bring suit; citing Thompson v. Hoagland, 65 Ill. 310; Palmer v. Gardiner, 77 Id. 143; Hotchkiss v. Thompson, 1 Morris (Iowa), 156.
6. Plaintiff was the secretary, treasurer, and general manager of the company, and, as such, could sue upon the note in his individual character and recover judgment, even though not the owner; citing Brigham v. Gurney, 1 Mich. 348; Boyd v. Corbitt, 37 Id. 52; Sanford v. McCreedy, 28 Wis. 103; Robinson v. Crandall, 9 Wend. 425; Gage v. Kendall, 15 Id. 640.
James L. Clark and George P. Stone, for defendants, contended:
1. Plaintiff alleged, and before resting his case offered evidence to prove, that he was the owner of the note at time suit was commenced, and the burden was upon him to establish such ownership; citing Stewart v. Ashley, 34 Mich. 183; Spicer v. Smith, 23 Id. 96; and it plaintiff thought he was entitled to a more specific charge on this branch of the case, he should have requested it; citing Rankin v. West, 25 Mich. 196; Driscoll v. People, 47 Id. 414.
2. There can be no question but that the non-ownership of a note at the time of the commencement of suit is a full defense and can be shown under the general issue; citing Reynolds v. Kent, 38 Mich. 246; Hovey v. Sebring, 24 Id. 232; Brigham v. Gurney, 1 Id. 351; Spicer v. Smith, 23 Id. 96; and, if the testimony, is conflicting as to such ownership, the question is for the jury; citing Davy v. Kelley, 66 Wis. 452.

Opinion:
Morse, J.
Plaintiff sued defendands in the circuit court for the county of Gratiot upon the following promissory note:
" 1,000. Ithaca, Mich., July 10, 1888.
"One year after date, for value received, I promise to pay to the order of R. A. Peet one thousand dollars, at the banking office of Steel, Turck & Co., Ithaca, Mich., with interest at 8 per cent.
"K. P. Peet.
"D. O. Johnson.
Indorsed on back: "R. A. Peet."
The defense on the trial of the case was substantially as follows: At the time the note in suit was made K. P. Peet was president, and Barnes the secretary and treasurer, of a mutual life insurance company, doing business at Ithaca, and known as "The Michigan State Mutual Relief Association." Peet wanted to borrow some money of Barnes, who said he had none of his own, but that he had some belonging to the company which Peet might have. The note in question was executed, and the money was drawn therefrom — from the company funds — and the note handed over to Barnes as secretary of the company; that the note was the property of the insurance company; that the old company was, after the note was given, merged in a new company, known as the " Peninsular State Mutual Benefit Association." Peet also claimed that he had paid the note, not by money, but in services for the company, for payment of which service Barnes said to him he should consider the note paid. The court, however, did not submit this defense to the jury. Barnes claimed the money was his own, and that the note had not been paid. Upon this issue the case went to the jury, who returned a verdict in favor of the defendants. The record, as presented to us, is very unsatisfactory, and the claims of both parties not made, as clear by the testimony as it seems they ought have been. Several objections were urged against the rulings of the court during the trial, and his charge to the jury.
It is assigned as error that the court improperly instructed the jury that there was but a single question pi the case, — to wit, whether the note in question, at the commencement of the suit, belonged to the plaintiff or the insurance company, — without also instructing them in relation to the rules of law by which such ownership could be determined by them upon the evidence before them; and in also charging that, should they find that the note belonged to the insurance company at the commencement of suit, the defendants were entitled to a verdict, and that the burden of proof to show ownership was on the plaintiff.
The plaintiff's counsel, in this Court, do not point out the rules of law applicable to the facts in the case which they desire the court below to specify as governing such facts; nor was the trial court informed by the plaintiff's requests, or- in any other way, of the instructions desired in this respect. It was a question of fact, it seems to me, to be determined by the jury, whether the money loaned to Peet, which,formed the consideration of this noté, belonged to plaintiff or the insurance company. If it belonged to plaintiff, that settled"the question in his favor. If it belonged to the insurance company, and was so-treated by the parties to the instrument, and Barnes had not acquired the title to the note after its inception, and before suit, he could not recover upon it. There was no testimony in the case tending to show that Barnes after-wards acquired any other or better title to the note than he had when he paid the money to Peet and received it. Therefore the only question to be determined was, to whom did the note belong when it was passed to Barnes, —to him or to the insurance company? And whoever owned it at that time owned it when the suit was com menced. I think a jury could determine this issue of fact without any special instructions from the court as to the law of ownership, or as to what facts would constitute an ownership either in Barnes or the insurance company.
The court correctly charged the jury that the burden of proof was upon the plaintiff. It is true the possession of the note, unexplained, was presumptive evidence of ownership, and sufficient; but when evidence was introduced tending to show that the note belonged to the insurance company, and.it was conceded, as it must have been upon Barnes' own testimony, that he was secretary and treasurer of the insurance company, and the person in whose possession the note would lawfully and naturally be as the property of the insurance company, then there remained no presumption in plaintiff's favor on account of such possession, and the burden was upon him to show that he was the owner of the note. Manistee Nat'l Bank v. Seymour, 64 Mich. 59 (31 N. W. Rep. 140).
I find no evidence in the ease, or any claim upon the part of the plaintiff, that he was an indorsee in the sense as indicated in the opinion of Mr. Justice Campbell. K. P. Peet was the maker of this note. Johnson was an accommodation maker, and R. A. Peet was an accommodation indorser. The note was not taken by. Barnes as indorsee in the usual course of business in the purchase of commercial paper. It was delivered to him at its inception, as security for the loan made by him. The question at issue was, did he make this loan for himself or for the insurance company, and did he take the note as his property or as the property of the company, of which he was an officer and agent? There was no obstacle in the way of this question being litigated in this suit any more than there would be in case a thief should attempt to sue the maker upon the note which he had stolen. Barnes was the first and only holder of this note, and the question was, for whom did he hold it, — himself or the insurance company? This could be litigated in the present suit. Hillman v. Schwenk, 68 Mich. 293, 297, 301 (36 N. W. Rep. 77, 670, also 40 N. W. Rep. 924).
I am unable to find any errors in the proceedings in the court below. The judgment should be and is affirmed, with costs.
Champlin and Long, JJ., concurred with Morse, J.