Court Opinion

ID: 9443774
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:30:20.942214+00
Date Added: 2024-06-11T17:29:36.066430
License: Public Domain

PICKETT, Circuit Judge
(dissenting).
Mrs. Twombly was the owner of the bonds in question and the trial court found that she destroyed them because she had been advised that they were worthless.1 It is admitted that the bonds had not been paid. The Traction Company recognized them as outstanding obligations and carried them on its books as such up to and during the reorganization proceedings. It included them in its reorganization plan in the same manner as the other bonds. Apparently it had not been notified of the destruction by Mrs. Twombly or anyone else.
It is conceded that there was no effective cancellation of the obligation created by the bonds, unless the destruction was with that intent. I am of the view that the finding of the court, together with the foregoing circumstances, negatives any intent on the part of Mrs. Twombly to discharge the obligation when she burned the bonds and that this is sufficient to overcome the presumption that arises from an intentional destruction of a negotiable instrument.
The authorities are generally in accord that where the holder of a negotiable in*924strument by mistake marks it paid, or surrenders it to the maker, or even mutilates or destroys it, the obligation is not necessarily cancelled. Clarendon County v. Curtis, S.C., 4 Cir., 46 F.2d 888; Gardner v. Rutherford, 57 Cal.App.2d 874, 136 P.2d 48; Fitzgerald v. Nelson, 159 Or. 264 , 79 P.2d 254; Gleason v. Brown, 129 Wash. 196, 224 P. 930; Proebstel v. Trout, 60 Or. 145, 118 P. 551; Morris v. Reyman, 55 Ind.App. 112, 103 N.E. 423; Bashus v. Abboud, 139 Neb. 579, 298 N.W. 153; Wilkins v. Skoglund, 127 Neb. 589, 256 N.W. 31; McDonald v. Loomis, 233 Mich. 174, 206 N.W. 348. The reasoning of these cases, I think, applies to this ease.
It is true, of course, that we are dealing with the Negotiable Instruments statutes of Oklahoma and the case must be determined by those statutes and not by equitable principles. The statutes, however, were primarily designed to prescribe a course of conduct in. the handling of negotiable instruments to prevent frauds and their use should not be permitted to perpetrate a fraud.
48 O.S.A. § 265 provides that a cancellation made unintentionally or by mistake is inoperative. Clearly, if the bonds had been burned under the mistaken belief that they were some other instruments there could have been a recovery. 8 Am.Jur., Bills and Notes, § 787. The mistake made by Mrs. Twombly comes within the statute and the definition set forth in Judge Murrah’s opinion.
The plaintiff in its demand for settlement offered to indemnify the Traction Company against loss if the bonds were recognized. The court in its discretion could have required such security prior to settlement. Buckman v. Hill Military Academy, 182 Or. 621, 189 P.2d 575, 581, Annotation, 129 A.L.R. 977. With this protection it seems to me to be unconscionable to permit a retention of these funds by the Traction Company.
I would reverse the judgment and direct judgment be entered for the plaintiff.

. The court’s findings 5 and 6 are:
“That on or about the first of October, 1939, Florence K. Twombly was the owner of bonds numbered 404-478 inclusive and bond number 495 of the series of bonds issued May 1, 1912, by the defendant, Muskogee Electric Traction Company.
“That the said Florence K. Twombly on or about said date was informed by a representative of the State Street Trust Company that these bonds were valueless and therefore she burned them.”