Court Opinion

ID: 3480788
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:56:44.30558+00
Date Added: 2024-06-11T13:37:36.722787
License: Public Domain

On further consideration of this case, we have reached the conclusion that our original decree is erroneous.
Mr. Caspari, the defendant, executed a mortgage and a series of notes in favor of the Securities Mortgage Company of Alexandria, La., on July 24, 1929. As to what he did with the notes sued on he says: "I gave them to the Securities Company of Alexandria to sell." He says that when he made the notes and delivered them to the Securities Mortgage Company, he understood that the company was "going to sell them to different investors, that they were going to negotiate them for me."
That the Securities Mortgage Company, agent for Caspari, did, through H.G. Root, Inc., its agent, sell the notes here involved is not disputed. It is also undisputed that the Addison County Trust Company, the plaintiff, acquired the notes and paid therefor $1,305.33 cash and for the balance gave the Fontenot notes, valued at $1,494.67. The cash and the Fontenot notes passed from the hands of the plaintiff to the hands of H.G. Root, Inc., and from it into the hands of the Securities Mortgage Company of Alexandria, the admitted agent of Caspari, the defendant. What Caspari's agent, the Securities Mortgage Company, did with the cash and the Fontenot notes is not disclosed by the record. Caspari says he got neither. Even so, the plaintiff is not precluded from recovery because of that fact. *Page 591 
These were negotiable promissory notes. They were put in commerce, put on the market for sale by the defendant, Caspari, through his "trusted agent," the Securities Mortgage Company, and were sold to the plaintiff. It is not charged, nor was there any attempt to show, that plaintiff, the purchaser of the notes, perpetrated any fraud against Caspari. The only fraud or bad faith disclosed is that perpetrated by Caspari's agent, the Securities Mortgage Company, which consisted only of its failure to account to Caspari for the proceeds of the notes which it had received. That fraud was perpetrated after the notes were negotiated, and was only one by the agent against its principal, for which plaintiff was not responsible and in which it had no part.
It is suggested that the Fontenot notes were of doubtful value to the knowledge of plaintiff. The record on that point shows that these notes were secured by first mortgage on 117 acres of land, and there is nothing to show, even to indicate, that the land was not ample security for the notes. The interest on the notes had not been paid, and Mr. Ufford, of the plaintiff company, said that for this reason it was considered that their value was somewhat impaired. He said his company was willing to exchange these notes for the Caspari notes "because we considered the Caspari loan more favorable than the Fontenot loan."
A default in the payment of interest on commercial paper always impairs its value to some extent in the eyes of those who deal in such paper, even though well secured. However that may be, the payment of $1,305.33 cash was alone a sufficient consideration *Page 592 
to support the transfer in so far as plaintiff is concerned. The Securities Mortgage Company was authorized by Caspari to sell the notes, and it is not shown that Caspari fixed the terms on which they were to be sold, much less that plaintiff knew that they were to be sold for their face value in cash.
It is suggested further that plaintiff knew that the Securities Mortgage Company did not own the Caspari notes and knew that these notes were loan notes to be disposed of by that company for the sole purpose of raising money. All that plaintiff knew about this was what Burton, representing the Securities Mortgage Company, and H.G. Root, secretary of H.G. Root, Inc., said to it, and as stated by Mr. Justice Rogers in his dissenting opinion:
"The proposal that the Fontenot notes be exchanged in part payment for the Caspari notes did not emanate from the plaintiff. The proposal was made to plaintiff by G.A. Burton, secretary of the Security Mortgage Company and H.G. Root, secretary of H.G. Root, Inc. There was no fraud or collusion in the transaction on the part of plaintiff, which, in the absence of any knowledge to the contrary, had the right to presume that the representatives of the Security Mortgage Company and H.G. Root, Inc., in negotiating defendant's notes, were authorized to make and accept any reasonable proposition on defendant's behalf."
These notes were negotiated by Caspari through his agents. They are complete and regular upon their face, disclosing no infirmities. The plaintiff purchased them before *Page 593 
maturity in good faith and for value. It is therefore a holder of them in due course. Negotiable Instruments Law (Act. No. 64 of 1904) § 52. The legal consequence is that plaintiff is entitled to recover. No citation of authority is necessary to support this proposition.
For the reasons assigned, it is now ordered and decreed that the judgment appealed from be reversed and that plaintiff, Addison County Trust Company, do have judgment against the defendant, Samuel Caspari, in the full sum of $2,800 in principal, with 6 per cent. interest thereon from November 1, 1929, to November 1, 1930, and 8 per cent. interest thereon from the latter date until paid, and 10 per cent. attorneys' fees, together with all costs of this suit.
The right of the defendant, Caspari, to apply for a rehearing is reserved.
OVERTON, LAND, and BRUNOT, JJ., dissent.