Court Opinion

ID: 6738359
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:14.9162+00
Date Added: 2024-06-11T16:01:52.775368
License: Public Domain

Christianson, J.
(dissenting). I anx unable to agree with the conclusions reached by my associates in this case, _ for the following reasons: The If. Bumely Company was a manufacturing corporation. The Rumely Products Company was a corporation organized for the purpose of purchasing and selling agricultural implements. And while the latter company handled some of the goods manufactured by the M. Rumely Company, it also handled goods manufactured by other companies. The undisputed evidence is to the effect that the two corporations were entirely distinct and separate. That they were organized by different men. That the officers, directors, and stockholders were different. That not any of the stock in the Rumely Products Company was ever owned by the If. Rumely Company, and that not a single officer or director of the If. Bumely Company was either a stockholder in, or officer of, the Bumely Products Company. The evidence also shows that the M. Bumely Company was dissolved and its assets sold-by receivers appointed by the district court of the United States for the district of Indiana, and that the plaintiff, AdvanceBumely Thresher Company, purchased a portion of the assets at such *31receiver’s sale. The sale was conducted in the receivership proceeding in the usual manner; under the supervision and with the approval of the Federal court. The undisputed evidence is to the effect that the Advanee-Rumely Thresher Company was organized under the laws of New York, and that the organizers, directors, and stockholders were men who never had been either stockholders or officers in either the M. Rumely Company or the Rumely Products Company. In the face of this evidence, I am at a loss to understand how it can be held that these different companies were in fact one concern. The name “Rumely” was well known among men interested in agricultural, especially threshing, machinery; and it is easy to understand why it was deemed desirable to include this word as a part of the corporate-name of the different corporations. And the mere use of the word “Rumely” in the names of these different companies, in my opinion, does not justify the conclusion that the companies were in fact one, especially when the uncontradicted evidence in the case is all to the contrary.
Nor is there anything in the record to warrant the conclusion, that the M. Rumely Company was not a holder in due course of the promissory note involved in this action. Under the Negotiable Instruments Act, “a holder in due course is a holder who has taken the instrument under the following conditions:
“1. That it is complete and regular upon its face.
“2. That he became the holder of it before it was overdue, and without notice that it.had been previously dishonored, if such was the fact.
“3. That he took it in good faith and for value.
“4. That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of- the person negotiating it.” Comp. Laws 1913, § 6931.
And, “to constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is negotiated must have had actual knowledge of the infirmity or defect or knowledge of such facts that his action in taking the instrument amounted to had faith.Comp. Laws 1913, § 6941.
This statute is plain and specific, and leaves little room for construction. It provides that, in order to charge a purchaser of com*32mercial paper with notice of defenses thereto, it must appear that he had actual knowledge of the specific infirmity or defect set up as a defense, or knowledge of such facts that the purchase of the negotiable instrument amounts to bad faith. See American Nat. Bank v. Lundy, 21 N. D. 167, 129 N. W. 99; McPherrin v. Tittle, 36 Okla. 510, 44 L.R.A.(N.S.) 395, 129 Pac. 721; 3 R. C. L. § 277, pp. 1071, 1072.
As alreajdy stated, the undisputed evidence in the instant case is to the effect that the M. Rumely Company and the Rumely Products Company were entirely distinct and separate corporations, owned and officered by] different men. There is not a scintilla of evidence to the effect that the M. Rumely Company had any actual notice or knowledge of any defect or infirmity in, or of any existing defense to, the promissory note involved in this case. There is no contention that all of the machinery manufactured by the M. Rumely Company was defective or undesirable. On the contrary, it is a matter of common knowledge that a great deal of the farm machinery manufactured by this company was desirable and had been, and was then being, purchased and used generally throughout the state of North Dakota. And in this case, the evidence is to the effect that the note in controversy was executed and delivered in payment of certain Oliver plows, and there is not one word of testimony to indicate that there was any connection whatever between the M. Rumely Company and the Oliver Plow Company. But even though the M. Bumely Company had occasion to believe or was informed that the note purchased by it from the Rumely Products Company was received by the latter company in payment of Oliver plows sold by the Bumely Products Company, this would not of itself constitute notice to the M. Bumely Company of any defect or infirmity in the note, and that the makers thereof had any defense thereto. For it is well settled that mere knowledge of the consideration for which a negotiable instrument is given does not of itself impose upon the purchaser the duty to make inquiry with respect to the sufficiency, or charge him with notice of failure of the consideration. See Houston v. Keith, 100 Miss. 83, 56 So. 36; Bank of Sampson v. Hatcher, 151 N. C. 359, 134 Am. St Rep. 989, 66 S. E. 308; Dollar Sav. & T. Co. v. Crawford, 69 W. Va. 109, 33 L.R.A.(N.S.) 587, 70 S. E. 1089; Hakes v. Thayer, 165 Mich. 476, 131 N. W. 174; *33Park v. Zellars, 139 Ga. 585, 77 S. E. 922; Citizens Bank v. Greene, 12 Ga. App. 49, 76 S. E. 795; Stubbs v. Fourth Nat. Bank, 12 Ga. App. 539, 77 S. E. 893.
I am also of the opinion that §§ 5991-5993, Comp. Laws 1913, relating to the time and manner of giving notice of breach of warranty in personal property, have no application in this case, as the note involved was executed and transferred over a year before those sections became the law of this state.
In my opinion, the judgment should be reversed and judgment ordered for the plaintiff, or a new trial had.