Court Opinion

ID: 7060219
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:20:01.158035+00
Date Added: 2024-06-11T16:12:08.288921
License: Public Domain

On Petition foe a Reheaeing.
Reinhaed, C. J.
Appellee’s counsel have filed an ear-est and able brief in support of their motion for a rehearing. They insist very strenuously that, as the appellee in his complaint, averred, in substance, that he took the note for value and before maturity, the burden is upon the appellant to allege and prove not only the fraud relied upon, but that the appellee had notice of the same. Their contention is that “ if value was paid for the note, before maturity, fraud in its *295inception would not be a defence, and that the plaintiff has a right to rely on such an averment without going further.” From this they argue that the paragraph of answer to which the demurrer was addressed should have contained the averment that the appellee had notice of the fraudulent transaction by which the note was obtained from the maker, and having failed to do this the demurrer was correctly sustained. They insist that had the plaintiff simply declared on the note without alleging that he received it in good faith, the defendant could have answered by tire simple averment of the fraud; that it would then have devolved on the plaintiff to set up the bona fides of his ownership by alleging that he obtained the note for value, in the due course of business and before maturity, and that thereupon, under the old practice, it would have become the duty of the defendant to rejoin that the plaintiff had notice of the fraud, in order to prevent a recovery. The burden thus shifting alternately from the plaintiff to the defendant and back to the plaintiff and again to the defendant, it would at last be cast upon the defendant to show knowledge of the alleged fraud in the plaintiff, and this being so, in a case like the present one, the ■defendant must aver notice in his answer to make it good. In support of their contention, counsel assert that the question here presented has never been passed upon in Indiana, but refer us, as sustaining their position, to statements in a work of recognized merit on the subject of Notes and Bills, and to some decided cases in the English Exchequer reports, and a Missouri case. Wood Byles Bills and Notes, p. 124; Bailey v. Bidwell, 13 M. & W. 75; Oakeley v. Ooddeen, 2 F. & F. 656; Horton v. Bayne, 52 Mo. 531.
While it must be conceded that the authorities cited and, perhaps, others that might be named, in giving construction to the common law rule protecting holders of commercial paper, are strongly in the direction of supporting counsel’s position, we think counsel are in error when they say that the Supreme Court of our own State has not declared the *296opposite doctrine. In Giberson v. Jolley, 120 Ind. 301, cited in the original opinion, the authorities are fully reviewed, and, after a very full and elaborate discussion by Elliott, C. J., the conclusion is reached that the burden is upon the plaintiff to show that he is a bona fide holder, and that this includes proof that he obtained the paper without notice of the fraud. The principle upon which this conclusion is based is that the plaintiff’s possession or non-possession of the note is peculiarly within his own knowledge, and it would, therefore, be but fair to require him to furnish the proof. If required to prove notice, of course he must also allege it, and this embraces the entire question here involved.
Filed Oct. 15, 1892.
In First National Bank v. Ruhl, 122 Ind. 279, it is declared to be the law that where the answer sets up that the note was obtained by fraud without alleging notice to the plaintiff, it states a prima faoie defence, and the plaintiff must show that he is a purchaser in good faith in his reply. This is tile exact point involved in the case under consideration, and here is where our rule differs from that enunciated in the authorities cited by counsel.
In Scotten v. Randolph, 96 Ind. 581, it was said in passing upon an averment in the complaint: “ It can not be said, we think, that the averment of ‘ good faith ’ is equivalent to the averment that the endorsee took the note without notice of the maker’s defences.” See, also, Citizens’ Bank v. Leonhart, 126 Ind. 206; Farmers’, etc., Co. v. Canada, etc., R. W. Co., 127 Ind. 250; Sprinkle v. Taylor, 1 Ind. App. 74.
We think the law is settled in Indiana in accordance with the conclusions in the original opinion.
Petition overruled.