Court Opinion

ID: 3277224
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:45:58.689643+00
Date Added: 2024-06-11T14:24:47.603146
License: Public Domain

I respectfully dissent from the majority opinion in this case.
The check involved in this case was properly indorsed by the payee thereof. There was no restriction in the indorsement. It therefore became in effect a check payable to bearer, and everyone had a right to deal with it as such. Sterling  Snapp v. Bender, 7 Ark. 201, *Page 1061 
44 Am. Dec. 539; Williamson Bank  Trust Co. v. Miles,113 Ark. 342, 169 S.W. 368, and since appellees paid full face value for the check before it was presented to the United States Treasury for payment, we have here a purchase for value of a negotiable bill before maturity. (Bull v. First National Bank of Kasson, 123 U.S. 105,8 S. Ct. 62, 31 L. Ed. 97; Story, Promissory Notes, 491.) The burden was shifted upon appellant to show that appellees had notice of some kind as to the infirmity of the title of the one who sold the check to appellees.
In the case of Conqueror Trust Co. v. Reves Drug Co., 118 Ark. 222, 176 S.W. 119, this court said through Justice Wood: "The court erred in not directing a verdict in favor of the appellant. The uncontroverted evidence showed that the appellant was an innocent purchaser of the notes sued on. The appellant established the fact by its evidence that it paid a valuable consideration for the notes before their maturity and without any notice of any fraud in their execution or of any defenses that the makers thereof might have against the payee. This shifted the burden to the appellee to show that the appellant was not an innocent purchaser. (Italics supplied.) Pinson v. Cobb, 113 Ark. 28, 166 S.W. 943; Bank of Monette v. Hale, 104 Ark. 388, 149 S.W. 845. The appellee did not meet this burden, and there were no circumstances developed in the testimony on behalf of the appellant that would warrant a conclusion that appellant was not an innocent holder of the notes. The circumstances did not even create a suspicion of that kind."
In the case of Holland Banking Co. v. Haynes,125 Ark. 10, 187 S.W. 632, it was said: "When the holder of a negotiable instrument shows that he purchased it before maturity in the usual course of business for a valuable consideration, a prima facie case is made and the burden of proof shifts to the defendant who alleges it to prove that the purchaser had notice or knowledge of such facts as required him to take notice of the defense existing in favor of the makers. White v. Moffett,108 Ark. 490, 158 S.W. 505; Keathley v. Holland Banking Co., 112 Ark. 608, 166 S.W. 953." *Page 1062 
The rule was thus expressed in the case of Hamburg Bank v. Ahrens, 118 Ark. 548, 177 S.W. 14: "The burden was upon appellees to show after the testimony disclosed that Doyle had purchased the notes for value before maturity that he had such notice of failure of consideration as would prevent his being a bona fide purchaser, the presumption otherwise being that he was a purchaser in good faith without notice. Harbison v. Hammons, 113 Ark. 120,167 S.W. 849; Little v. Arkansas National Bank,113 Ark. 72, 167 S.W. 75."
We said in the case of Metropolitan Discount Co. v. Fondren, 121 Ark. 250, 180 S.W. 975: "The burden was upon the plaintiff, of course, to show that it paid value for the paper (a negotiable bill), and then the burden shifted to the defendants to show that plaintiff purchased with notice of defects or such information as would put the purchaser upon notice. Tabor v. Merchants National Bank, 48 Ark. 454, 3 S.W. 805, 3 Am. St. Rep. 241; Arkansas National Bank v. Martin, 110 Ark. 578, 163 S.W. 795."
In the case of Cruce v. Dillard, 203 Ark. 451,156 S.W.2d 879, we said: "The burden was on appellants to show that appellee took the note either with actual knowledge of its infirmity or defect, or knowledge of such facts that his action in taking it amounted to bad faith. . . . Appellants did not meet this burden. All they did was to show that the note had been procured from them by Thomas through fraud and misrepresentation, that appellee stated to some of them that Thomas was a crook. This was not sufficient."
Now there was nothing whatever in the testimony that can be construed as showing that appellees had any knowledge of the theft of this check or of any suspicious circumstances surrounding the transaction. The majority refers to apparent inconsistencies in the testimony of appellee Graber, and to the fact that, since he was a party, his testimony should not be treated as undisputed. But his entire testimony may well be disregarded, because, in reality, he did not know and did not claim to *Page 1063 
know the actual facts surrounding the cashing of the check. Miss Holthoff, appellees' clerk, testified: "A. Of course quite a bit of government business was going on, as everyone knows, and the banks are never open in the late afternoon and usually they bring the checks to the store to get them cashed and we would cash them there out of the change in the register. Q. When this check was presented there and cashed at that store, was there quite a few government checks being cashed that day? A. Yes, sir. There was a line of people waiting to get checks cashed at that time. Q. Was part of that government check circulation due to the airport construction at that time? A. Yes, sir. Q. At the time you cashed this check, did you have any notice that this check had been stolen or there was any defect in the title of the person presenting this? A. I did not. Q. How much of Graber's Department Store's money did you give for this check? A. $238."
Thus we have here the uncontradicted testimony of a disinterested witness that the full face amount of the check was paid for it, and this, in my opinion was sufficient, in the absence of any testimony showing that appellee had notice of the invalidity of title of the person from whom he bought the check, to discharge any burden cast upon appellee to show a good faith purchase of the check. There was not the slightest intimation in the testimony of any witness, nor in any of the circumstances surrounding the transaction, to show that appellees purchased the check in bad faith or with any notice of its theft.
Retail merchants cash a large number of checks for their customers and, in the very nature of things, they do not have an opportunity to investigate the title of the holder of each check. They could not carry on their business and do this. The fact that the merchant may not know the holder of a check is not enough to show bad faith on the merchant's part — especially when the check, as was this one, is payable to bearer. In the case of Rose v. Spear, 187 Ark. 168, 58 S.W.2d 684, it was shown that certain bearer bonds aggregating in face value $4,500, *Page 1064 
were obtained by fraud amounting to a theft from Rose who owned them. The wrongdoers took the bonds to a gambling house in Hot Springs, Arkansas, where they borrowed $1,000 on them from Spear. Spear did not know the men who hypothecated the bonds, but had seen them playing in the gambling house before that time. The owner of the bonds sought to recover them from Spear, but this court held that Spear was an innocent holder for value and allowed him a lien thereon for the money he had loaned. If a man in a gambling house can take over stolen bonds from utter strangers and be held to be an innocent holder, it seems to me that a legitimate business man who, in the regular course of business, pays full face value for a bearer check, should not be held to be in a worse position.
The commerce of this country is largely carried on through checks, and these checks — especially those of the United States Government — pass as current funds, and, in my opinion, the holding of the majority, which in effect seems to indicate that one who cashes a bearer check must make some investigation of the title of the holder thereof, or, at least, must be in a position to convince a jury that he acted prudently in buying the check, imposes a new and uncalled for burden on those who carry on the mercantile business of the nation.
I am authorized to state that Mr. Justice HOLT joins in this dissenting opinion.