Court Opinion

ID: 3680352
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:25:57.978269+00
Date Added: 2024-06-11T15:28:07.017751
License: Public Domain

I concur in the conclusion reached in the opinion prepared by Mr. Justice Johnson, and in the principle announced in the syllabus solely on the ground that the question involved is controlled by Stubbins Hotel Co. v. Beissbarth, 43 N.D. 191, 174 N.W. 217. It is highly desirable that the rules applicable to commercial paper should be settled, and, hence, the rule of staredecisis ought to be applied with full force. Scandinavian American Bank v. Westby, 41 N.D. 295, 172 N.W. 665. If the question involved were an original one, however, I should be constrained to disagree with the principle announced by Mr. Justice Johnson.
In my dissenting opinion in Stubbins Hotel Co. v. Beissbarth, supra, I said: "The trial court instructed the jury that it was incumbent upon the defendant to establish, by a preponderance of the evidence, that he had received no consideration for the note. Defendant predicates error upon this instruction. The majority hold that the instruction was proper. I believe that it was erroneous. There is no question but that the holding of the majority has some support in the authorities. But much of such support is more apparent than real. Corpus Juris (8 C.J. 996) says that the decisions sustaining the views of the majority, `while for the most part apparently without qualification on their face, are subject to explanation, at least according to the rules laid down in many jurisdictions, by adding that what is meant is that defendant must produce some evidence to overcome the *Page 267 
presumption of consideration arising from the production of the instrument, in order to shift to plaintiff the necessity for proving facts relating to the consideration. In other words, the rule, at least in most of the states, is that although a bill or a note imports in itself a consideration, yet when evidence has been introduced to rebut the presumption of consideration the burden shifts to plaintiff to show by a preponderance of the evidence that there was a consideration; and this is so even where the instrument on its face recites a consideration as by the use of the words `value received.' Ruling Case Law (3 R.C.L. p. 928) says: `There has been much discussion, not a little confusion, and some real conflict among the decisions, respecting the party on whom rests the burden of proof as to consideration vel non. There seems to be no doubt, however, but that the burden of proof is upon the plaintiff to establish the fact that the instrument was given for a valuable consideration. While the production of the note, with the admission or proof of the signature, makes a prima facie case, and upon the evidence of the instrument itself, the plaintiff is entitled to a verdict, unless there is some other evidence to affect it; yet when consideration is denied in the answer, there is an issue made upon that point, on which the plaintiff has the affirmative; and the presumption being prima facie only, and not conclusive, the burden of proof necessarily rests upon the plaintiff to show a consideration by a preponderance of the whole evidence given on the trial of the issue. There being other evidence on both sides, which has a bearing upon the question of consideration, the burden remains upon the plaintiff upon all the evidence produced, including the note itself and the presumption that arises from it, to establish what he, in the declaration of his writ, has necessarily alleged. The weight of the evidence, or, as it is otherwise expressed, the preponderance of the evidence, may vary from side to side as a trial progresses; but the burden, which rests upon the plaintiff, to establish the material averments of his cause of action by the preponderance of all the evidence, never shifts. The party who maintains the affirmative of an issue carries the burden of proof through the whole case, although he may be aided by such a rebuttable presumption of law, or such facts, as would prima facie support his contention. His opponent need do no more than counterbalance the presumption or prima facie case. Nor does it make any difference that the instrument *Page 268 
contains the words `value received.' In my opinion the rule just stated is the correct one.
The majority members, however, invoke § 5882, Comp. Laws, 1913, which provides that a party who seeks to invalidate or avoid a written instrument has the burden of showing want of consideration. This, and the preceding section, do not relate to negotiable instruments, but to other written contracts. Under the common law an adequate consideration was necessary to give validity to contracts not under seal. In case of suits upon simple contracts it was necessary to allege and prove a consideration. Peasley v. McFadden, 68 Cal. 611, 10 P. 179. This rule, however, did not apply to negotiable instruments; in suing upon them it was not necessary either to allege or, in the first instance, to prove consideration. 3 R.C.L. pp. 836, 837; 8 C.J. 867. The purpose of §§ 5881, 5882, Comp. Laws, 1913, was to change the common-law rule in this state with respect to simple contracts (Peasley v. McFadden, supra), and to extend to all simple contracts in writing the presumption which originally attached only to negotiable instruments (13 C.J. 760; 6 Am. 
Eng. Enc. Law, 762).
"The Negotiable Instruments Law provides: `Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration; and every person whose signature appears thereon to have become a party thereto for value.' Comp. Laws 1913, § 6909. `Absence or failure of consideration is matter of defense as against any person not a holder in due course.' Comp. Laws 1913, § 6913. Every holder is deemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some other person under whom he claims acquired the title as a holder in due course.' Comp. Laws 1913, § 6944.
"These provisions are applicable in this case. They are in harmony with the rule announced in Ruling Case Law quoted above, and in conflict with the rule announced by the majority members in this case. Under the rule adopted by the majority the ultimate burden of proof is cast upon the defendant to disprove the consideration, but the statutes referred to only cast upon him the burden of overcoming the presumption or prima facie case. In case the testimony is equally *Page 269 
balanced, defendant succeeds; not the plaintiff, as held by the majority." See also Comp. Laws 1913, § 7936, Subd. 21.
In the opinion prepared by Mr. Justice Johnson reference is made to certain decisions of the supreme judicial court of Massachusetts written or concurred in by Chief Justice Shaw. The latest of the several decisions mentioned is the one written by Chief Justice Shaw in Burnham v. Allen, 1 Gray, 496. In that case Mr. Chief Justice Shaw had occasion to consider directly the very question under consideration. He said:
"On the subject of the burden of proof, the court are of opinion that the directions were precise and correct, and well adapted to the case. The court ruled, that the burden of proof was on the plaintiff to show that the note was given upon a valuable consideration, and if that was doubtful upon the whole evidence he could not recover; that proof of the execution of the note and its production in evidence made a prima facie case for the plaintiff, upon which they might find a verdict for him, unless, etc. This is strictly correct, but being expressed in technical terms, it may be useful to explain it a little. A promissory note is given `for value received;' this is signed by the maker, and is an admission on his part that value has been received for it which is a good consideration. Its being produced by the holder is proof that after being signed it was delivered to the promisee, and is therefore evidence of a contract, on good consideration, between promisor and promisee, under the promisor's hand. But the law holds, and has long held, that, as between the original parties, such proof is not conclusive. It is therefore prima facie evidence, that is, it is competent evidence tending to prove a proposition of fact, and of course, if not rebutted or controlled by other evidence, will stand as sufficient proof of such proposition of fact. If then, on a trial, when a note is sued for by the promisee against the promisor, the plaintiff produces and reads his note for value received, and the signature is admitted or proved, he has ordinarily no occasion to go further. He has the burden of proof to show a consideration; but he sustains that burden by his prima facie evidence, which, if not rebutted, stands as conclusive evidence.
"This, though expressed in technical terms, is, we think, the common sense view taken of a promissory note by men of business, and reconciles the rules of law with the principles and practice of actual business. *Page 270 
When a man takes a promissory note, for value received, promising to pay money to him or his order, he believes that he has a security complete in itself, and that he has no occasion to provide and preserve other evidence, to show the consideration on which it was given. And in a vast majority of cases, the security is not only complete in itself, but is in fact conclusive, because no evidence can exist, which will control and rebut such proof of consideration. But the law has further provided, that whilst the note remains as a contract between the original parties, that is, not transferred to another by endorsement, the consideration may be inquired into; and therefore, if upon all the evidence in the case, whether offered by the plaintiff or the defendant, it appears that there was no consideration, or that the consideration has failed, by evidence sufficient to rebut the prima facie evidence arising from the signature and production of the note, it will constitute a good defense; and as the burden is on the plaintiff, to prove a good consideration, if the whole evidence, offered on both sides, leaves it in doubt whether there was a good consideration or not, the plaintiff fails of making out his case, and the defendant will be entitled to a verdict.
"We have said that the evidence may come from either side. It may come from the plaintiff, as where an attesting witness or other person testifies that the note was given on settlement of an account, and on the production of the account by the plaintiff, it appears that there were so many mistakes and errors, that there was no balance due; and if the note was given for such supposed balance only, it will appear that the note was given without consideration. In general, the proof of want or failure of consideration must commence on the part of the defendant, after the production and proof of the note by the plaintiff, not because the defendant has the burden, or the burden of proof has shifted, but because the plaintiff has offered prima facie proof, sufficient to sustain the burden of proof on his part, unless it is rebutted and controlled by counter proof.
"The view, we think, was expressed in the residue of the charge of the judge to the jury, that prima facie evidence would warrant a verdict for the plaintiff, unless the defendant introduce evidence, which either showed that the note was not given for a valuable consideration, or that the consideration failed, or evidence to render it doubtful in the minds of the jury whether the note was given on a valuable consideration, *Page 271 
or the consideration failed, or not, and if not, or if the consideration had failed, the plaintiff could not recover.
"When in the above sentence the learned judge used the phrase, `unless the defendant introduced evidence,' we understand him to mean, as above stated, that after the production and proof of the signing of the note, and after thus establishing a prima facie case, the plaintiff would be entitled to a verdict, unless the defendant could show, from the whole evidence, want or failure of consideration, or leave the proof so doubtful, as to enable the jury to say, that the plaintiff had not satisfactorily proved a consideration."
The instructions approved by the Massachusetts court in Burnham v. Allen, supra, were adopted by Blashfield and embodied in his work on Instructions to Juries. See, 2 Blashfield Instructions to Juries, form 2207.
The language of Chief Justice Shaw is too clear to admit of interpretation, and is, I think, equally applicable under the provisions of the Uniform Negotiable Instruments Law. In other words I still adhere to the views expressed in my dissenting opinion in Stubbins Hotel Co. v. Beissbarth, 43 N.D. 191, 174 N.W. 217; but inasmuch as this court in that case adopted a rule contrary to that for which I contended, the rule so adopted became and is the law of this state, and should be enforced as such.