Court Opinion

ID: 3886459
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:16:05.882991+00
Date Added: 2024-06-11T07:45:49.350401
License: Public Domain

I cannot concur in the opinion of Mr. Justice Watts in this case. There is no binding authority in this State. I do not question the authority of the case of Bank v. Stackhouse. That is the leading case, and the strongest of them all. A negotiable note transferred before maturity must be paid, unless the maker can show actual notice. The Stackhouse case did not hold that the entire amount stated in the note must be due and unpaid before defenses could be let in. That question was not before the Court. Does the failure to pay interest when due give the same notice of defects that the failure to pay the principal gives? I know that the authorities differ on this question. When there is no binding authority, it seems to me, a Court should follow that line of authorities that is in its judgment most in accord with the reason of the rule. The presumption is that the obligation set forth in the note will be performed, and, when it is not, then the fact that the obligation is not met puts the purchaser on the inquiry. The payment of the interest on a note is as much a part of the obligation as the payment of the principal. The obligation is just as truly broken by the failure to pay the interest as the failure to pay the principal. Indeed, the failure to pay interest discredits the note more than the failure to pay the principal, because it is easier to pay interest than to pay the principal. I cannot find a basis for the presumption that one who cannot or will not do that which is comparatively easy will do that which is comparatively difficult. Besides this, the Negotiable Instrument Act — Acts 1914, p. 677, sec. 52 (4) — is comprehensive and says:
Section 52: "A holder in due course is a holder who has taken the instrument under the following conditions: * * * (4) That at the time it was negotiated to him he had no
notice of any infirmity in the instrument or defect in the title of the person negotiating it." (Italics mine.) *Page 465 
The failure to pay the principal is notice of infirmity. I cannot see how it can be that failure to pay installments of interest can be held to be "no notice of any infirmity."
For these reasons, I dissent.
MR. CHIEF JUSTICE GARY concurs with MR. JUSTICE FRASER.