Court Opinion

ID: 7196736
Source: CourtListenerOpinion
Date Created: 2022-07-24 17:03:30.429609+00
Date Added: 2024-06-11T16:16:22.197912
License: Public Domain

The opinion of the court was delivered by
Nicholls, 0. J.
Defendant claims that the" note sued upon represented the purchase price of the interest of one Martial Oasse in a partnership between Oasse and himself; that that sale was very shortly after it was made rescinded, and the note declared by Oasse to have been destroyed. That he was under the belief that this was so until it was presented to him for payment nearly five years after its maturity by the sister-in-law of Oasse as the holder. He contends that plaintiff did not acquire the note until March, 1895. That although the note was payable on demand, and no demand had been made until after she became the owner, her acquisition at that late date threw open for inquiry the equities between Oasse and himself. Plaintiff testified that although she acquired the note in full ownership in March, 1895, she had held it as collateral security from some time in July, 1890, for a note given by Oasse to herself at that time for money loaned to him, which note was renewed in 1894, and the collateral note still held until 1895. Defendant calls our attention to the fact that plaintiff shows by her own testimony that after Oasse had given her the note as collateral, in 1890, she placed it, as she says, in the custody of her sister, the wife of Oasse, for safe keeping, in whose possession it continued until just before it was transferred in full ownership, in March, 1895. He says that if the pledge was *434originally good, it fell by the .placing of the note in Mrs. Oasse’s possession, and plaintiff’s rights must be determined by considering her connection with the note as having originated in 1895. He denies as a fact that the note was held as collateral by the plaintiff be - tween 1890 and 1895, and as evidence that he is correct in that position he shows that in that interval the collateral note was credited with seven hundred and ñfty-nine dollars as having been paid thereon, by an amount due by Oasse to Boudreau, during that period —a partial payment, he says, which would not have been recognized by plaintiff had she really held the note as collateral at that time. The case before us bears a close resemblance to that of Louisiana State Bank vs. Gaiennie, 21 An. 555. In that case the bank had had transferred to it, on the 13th of April, 1861, as collateral security, for-a note of Toledano & Taylor, a note of defendant, dated 20th of April, 1860, payable three years after date, to the maker’s own order, and by him endorsed. Toledano & Taylor went into insolvency, and the syndic, under orders of court, sold on the 8th of June, 1867, the note, among others, subject to the right of the pledgees, and the bank itself became the purchaser. The bank, however, had never given up the note, but had already instituted suit against the maker. Among other defences defendant-contended that the note had been advertised and sold with the knowledge and consent of the plaintiff; that the title and ownership of th6 same had been re-transferred to Toledano & Taylor, and the note being only accommodation paper, had become subject to the equities between the latter and defendant. Defendant also contended that as the collateral note had not been endorsed by Toledano & Taylor, the pledge to the bank was not valid.
In reference to this last contention, this court said: “When, as in this case, the note drawn to the order of the maker is endorsed by him in blank and before maturity transferred for value to the plaintiff, the maker can not be heard upon a question which con - cerns only other creditors of the pledgor.” Citing Matthews vs. Rutherford, 7 An. 227.
Referring to the fact that the note had been originally held as collateral security, the court said: “It is further urged that the plaintiffs are not holders for value, because ;they received the note as collateral security only, but the contrary doctrine is well settled (Swift vs. Tyson, 16 Peters 20; Succession of Dolhonde, 21 An. 3). *435And in such a case as this, where there is no evidence that the principal obligation has been discharged, even in part, the rights of the plaintiff are, for all practical purposes, the same as they would have been if plaintiffs had purchased the note before maturity.”
In the case at bar, if, in point of fact, the plaintiff held the note as collateral security from July, 1890, until her holding was changed into one of absolute ownership in March, 1895, and during that period inquiry into the equities upon the note was cut off by reason of her having had the same transferred to her just after its issue, for a valuable consideration in due course of trade, and without notice, we do not think the mere change of the tenure by which she held the note, from holding it as security into holding it as owner, would open the equities as if her first dealings in connection with the note had commenced in 1895. Had the first connection with it begun with its acquisition as owner in 1895, possibly defendant’s contention that its staleness at that time was a matter sufficient to have placed her on inquiry as to the equities, even though it was a demand note, might be correct. Thompson vs. Hall, 6 Pick. 260 (referred to in Matthews vs. Rutherford, 7 An. 226), seems to have been a case where a demand note was raken as collateral “ six months after it was due, and under circumstances which might reasonably excite suspicion that it was affected by equities.” What the facts of that case were, however, we do not know, but in the present one the relations of parties originated within a few days after the collateral note was issued, and the protection against equities, which was the result of the first transaction, was not, as we have said, forfeited by the fact that by and through a later transaction she became the actual owner of the note. The fact that plaintiff turned over this note immediately after having herself received it, to her sister, the wife of Oasse (for safe keeping, as she says), and that she permitted it to remain so long in her hands, might be a circumstance going to throw doubt as to whether the note ever was held as collateral, but that fact itself' being established, we do not think the pledgee’s rights 'were injuriously affected by her placing it in her sister’s hands. There were no creditor’s rights involved.
In so far as the circumstances themselves under which plaintiff first took the note are concerned, the presumption resting from her holding the same would be that she acquired it in good faith before *436maturity for valuable consideration and in due course of trade. Plaintiff supports this presumption by her testimony. She under oath declares that having in July, 1890, over four thousand dollars of her own, her brother-in-law, Casse, asked her to lend it to him, which she agreed to do if he gave her security; that he told her he had this note of Boudreau and gave it to her as collateral security; that she knew nothing then nor afterward of any legal reason why it should not be paid; that Casse told her Boudreau owed him that amount, and she took the note in absolute good faith. Her testimony is direct, absolute and positive, and has not been contradicted. Defendant did not place Casse on the stand, though he was present at the trial.
There is but one single feature of the original transaction calculated to throw any suspicion about it, and that is a statement volunteered by plaintiff herself, in her testimony, that Casse told her when he gave her the note that he would never collect it himself. Plaintiff evidently attached no particular signifinance to the statement at that time or afterward. We do not think the circumstance sufficient to withdraw from the plaintiff the protection of the rule of the commercial law relative to the cutting off of the equities.
Defendant objected to evidence going to show that plaintiff ever held the note as collateral, on the ground that it was not admissible under the pleadings, as she said nothing in her petition on that sub - j'ect, but claimed to hold the note as owner. She did hold the note as owner at the time of the institution of the suit and therefore her pleadings were unobjectionable. When her good faith was attacked and the equities were sought to be opened she had the right to resist or repel the effort to do so by showing the facts connected with her holding the note prior to her acquiring the absolute ownership of the same.
Defendant has not established with any certainty the time at which the purchase by him of Oasse’s interest in the partnership was set aside; it was certainly not until after the note had been placed by him in Oasse’s possession, in a form such as would enable him to deal with it as strictly negotiable paper with third parties. It is not shown as a fact (even if that fact would have had any legal effect in the case) that this rescission took place prior to the transfer of the note to plaintiff as collateral. If defendant should suffer loss in this matter, it will be the result of his having so implicitly trusted *437his partner Casse. The fact that he may suffer loss is a matter over which we have no control.
We think the judgment correct, and it is hereby affirmed.