Court Opinion

ID: 7066453
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:27:12.645301+00
Date Added: 2024-06-11T16:12:24.727649
License: Public Domain

On Petition for Rehearing.
Lairy, C. J.
6. Appellants in their reply brief, strongly insist that the verified second and fifth paragraphs of answer are sufficient as answers of non est facinm. Counsel direct the attention of the court to certain averments in each of these paragraphs which, if considered apart from the other averments of the pleading, would be a sufficient statement of the fact that the execution of the note was never completed by delivery.
The averments denying the delivery of the note in general terms are to be considered and construed in connection with the other averments of the pleading in which they occur. When the other averments are considered, it becomes apparent that the appellants did not intend to deny under oath that the note was placed in the hands of the payee by the makers after it was signed, or at least that they did not intend to deny that the makers without objection suffered it to be in the possession of the payees. The averments of the answers show that the note in suit was given to McCabe and Lindsey as payees for the purchase price of a stallion and that by agreement with the payees the purchase price was to be divided into ten shares of $200 each; that John Bombolaski was to take two shares and that each of: the other defendants was to take one, and that each should be liable on the note signed for the amount represented by the shares which he had agreed to take and for no greater amount. It is further averred that it was expressly agreed by and between the payees of said note and these appellants, that the note was not to be delivered or made effective as a note until the same was signed by all of the persons who had agreed to take the remainder of the shares in such stallion; and that, in pursuance of this agreement, the *188appellants named signed the note, hut others who had agreed to take shares in' the stallion did not sign it or pay their share in cash; and that the appellants demanded a return of said note as soon as they discovered that the payees had carried it away and had it in their possession. The averments on the subject of nondelivery as found in the fifth paragraph are as follows: “They say said note was never delivered by them to the said McCabe and Lindsey, or any other person; that the said note was never delivered by the agent of these defendants to the said McCabe and Lindsey, or their agent, or any other person authorized to receive the same. # * * and said defendants further say that they specifically deny the delivery of the note sued on in plaintiff’s complaint.”
7. When the latter averments which we have quoted are considered in connection with the other averments of the answer, we think that it is manifest that the pleading proceeds upon the theory that the possession of the note by the payees was not the result of a valid and effective delivery for the reason that they betrayed the confidence which had been reposed in them by the appellants and carried the note away before it had been signed by all who had agreed to sign it. If such facts were pleaded as a defense in an action by the payees of the note, a different question would be presented, but such facts do not constitute a defense as against an innocent holder. The answers disclose that the note was in the possession of the payees after it had been signed by the appellants, and such possession is not accounted for or explained. It is not averred that McCabe and Lindsey obtained its possession without the consent of appellants, by stealth, or by any fraud, trick, or artifice. If it had been the intention of the appellants to deny that the execution of the note |iad ever been completed by delivery, they could have done so in plain and unequivocal language. The Supreme Court has held that an answer in non est factum is insufficient unless *189the execution of the instrument is denied under oath in terms so certain and specific as to warrant a conviction of perjury upon proof of the execution of the instrument. Woollen v. Whitacre (1880), 73 Ind. 198.
8. As a general rule the delivery of a written instrument •involves not only a change of possession but also an intent on the part of the one making the delivery that the instrument shall by that act become effective. This is the rule as affecting negotiable instruments where the question arises between the original parties, but there is a well recognized exception to the general rule where the rights of a Iona fide holder are involved. If the maker of a negotiable note, by negligence or through misplaced confidence permits the note to be in possession of the payee under such circumstances as enable him to place it in circulation, he will not be permitted to say that he did not intend that the note should become effective at the time he parted with its possession. Such a case calls for an application of the principle, that when one of two innocent parties must suffer because of the wrongful act of a third, the loss must be borne by that one whose fault, negligence, or credulity enabled the third party to do the wrong. Judy v. Warne (1913), 54 Ind. App. 82, 102 N. E. 386, and cases there cited.
It is evident that the paragraphs of answer under consideration proceed upon the theory that the payees were permitted to have the note in their possession but that by reason of the agreement set out in these answers, such possession did not constitute a legal delivery. The answers are insufficient on this theory and we are content to adhere to our former ruling as expressed in the original opinion.
Petition overruled.
Note.—Reported in 101 N. E. 837; 103 N. E. 422. As to who is bona fide holder of negotiable instrument, see 9 Am. Dec. 272; 44 Am. Dec. 698. As to fraud in inception or delivery of note as affecting bona fide holder, see 11 Am. St. 309; 37 Am. St. 458. As to the lit bility to bona fide purchaser of á note getting into circulation *190without maker’s consent, see 3 L. R. A. (N. S.) 212. As to agreement for other signatures before delivery of note, see 45 L. R. A. 321. As to the conflict of laws as to negotiable paper, see 61 L. R. A. 193; 19 L. R. A. (N. S.) 665. See, also, under (1) 7 Cyc. 636; (2) 7 Cyc. 635, 641; (3) 7 Cyc. 641; (4) 7 Cyc. 635, 638; (5, 8) 8 Cyc. 55; (6) 8 Cyc. 154; (7) 31 Cyc. 189, 529.