Court Opinion

ID: 8010880
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:58:03.340271+00
Date Added: 2024-06-11T16:36:04.340232
License: Public Domain

Sheewood, J.
(dissenting.) — Action on a negotiable promissory note for $4,000, of which the defendant is indorser. Bancroft, the maker, was also sued, but the cause was dismissed as to him prior to trial. The substance of the petition is as follows: The note was dated Chicago, October 6, 1888, and by it Bancroft promised to pay to the order of the Union Tie Company, Chicago, said sum on the first day of July, 1889, at room 70, Home Insurance Building, Chicago, Illinois.
Before maturity the tie company, for value, indorsed and delivered the note to defendant, who, for value, and before maturity, indorsed and delivered the same to plaintiff, who afterwards, for value, indorsed and delivered said note to the Bank of Minneapolis, and the latter indorsed the same to the Continental *355National bank, of Chicago, Illinois, for collection, and at maturity the note was presented to plaintiff as therein provided for payment, which was refused.
Allegations of protest and notice are then made, resulting finally in plaintiff having to take up the note from the Bank of Minneapolis and become thereby legal owner of the same. The answer Was a general denial.
It also set forth that defendant was a mere accommodation indorser for the maker Bancroft. The answer concludes thus: “This defendant further states that the said note was obtained from the said Bancroft by fraud and misrepresentation and without consideration, and that the plaintiff at the time he took said note knew that the same had been obtained from said Bancroft by fraud and misrepresentation and without consideration, and that he never paid value for the same, and that said Holden was merely an accommodation indorser of said note.”
The reply in effect was a general denial, and also alleged that the note before maturity was, for value received, indorsed and delivered to plaintiff, and that he is now the owner and holder thereof in good faith, without any knowledge of fraud, defect or failure of consideration.
The trial resulted in a verdict for the plaintiff for the principal of the note, interest, etc., , and the defendant appeals.
Various errors are assigned, to-wit: An erroneous instruction given for plaintiff; exclusion of testimony offered by and refusal of instructions asked by defendant.
It appeared by the testimony of Bancroft that the note sued on was given in renewal of certain other notes held by plaintiff, and defendant offered evidence to the effect that said notes for which the one sued on was executed in renewal were given in part payment of the *356price of a lumber camp and' mill sold by one Leland to1 said Bancroft; that said Leland had misrepresented the quantity and quality of the lumber on hand and the value of the property; that, though Bancroft had discovered this fraud before the execution of the notes sued on, he believed the plaintiff was not connected therewith and that he was an innocent holder of said notes for value, and that after executing the note sued on, he discovered that plaintiff had been a party to the fraud. This testimony the court refused to admit, on the ground that the fraud had not been sufficiently pleaded. ' The correspondence that passed between plaintiff and Bancroft offered in evidence by respondent showed however that Bancroft had been greatly defrauded and that the compromise which was then made, wherein Clough accepted $500 in cash and a secured note for $4,000 in exchange for $6,900 of doubtful paper, was grounded wholly on Bancroft’s, disability resulting from the losses he had incurred because of his transactions with Leland, and did not involve any question of the bona Jides of Clough’s ownership of the notes, that matter not then being at issue between Clough and Bancroft and not then being suspected by Bancroft; but, after the note sued on had been given, Bancroft discovered that Clough was a full partner with Leland and equally guilty with Leland in the frauds that had been practiced, and that therefore the note was equally without consideration in Clough’s hands as it would have been in Leland’s hands, and defendant offered and sought to prove these facts on the trial of the case, but was not permitted by the court, to do so. •
It also appeared from letters of Bancroft, read in, evidence by plaintiff that the proposal to compromise which was afterwards effectuated by plaintiff surrendering the notes for $6,900 and $10,000 in stock which he *357held as collateral security for said notes, and receiving in lieu thereof the litigated note and $500 cash, came from Bancroft to plaintiff. These letters were dated at the office in Chicago mentioned in the notary’s certificate of protest. And these letters also show that the note was signed by the maker at Chicago, sent to Holden at Kansas City to be indorsed, returned by Holden to Bancroft at Chicago, and sent from there by. Bancroft to Clough at Minneapolis.
The notarial certificate is.in usual form; the only portion necessary to quote is that the notary “went with the original note, of which a true copy is above written, to the office of John D. Bancroft, room 70, Home Insurance Building at 5:20.p. m. to demand payment thereon and found the door locked, * * * whereupon I, the said notary, at the request of the aforesaid did protest.”
I. The first point considered will be the admissibility of testimony offered by defendant to show fraud in Leland in procuring the execution by Bancroft to him of the original notes for $6,900 and the connection of plaintiff therewith. There are several answers to the contention that such testimoney was admissible as, c. g.:
(1) In the first place there ivas no such fraud pleaded. The fraud relied on was that charged in the answer as being connected with the note in suit, and of course it would be violative of all rules of pleading to allow a party defendant to -plead one fraud and then at the trial to prove another.
(2) Besides the testimony offered had no tendency to show that the note in litigation had been obtained by fraud or misrepresentation. That note and the $500 in cash were given and the notes for $6,900 and the $10,000 collateral were surrendered as the result of Bancroft’s own offer.
*358(8) That the surrender of the old notes and collateral prevented litigation appears clearly from the letters mentioned, and from them it also appears that Bancroft received something valuable from Leland in exchange for the $6,900 in notes. The law favors the settlement of disputes, and the mere “prevention of litigation is not only a sufficient but a highly favored consideration, and no investigation into the character or value of the different claims submitted will be entered into for the purpose of . setting aside a compromise, it being sufficient if the parties entering into the compromise thought at the time that there was a question between them.” 1 Parsons on Contracts [7 Ed.] 468. Upon this basis the compromise of a doubtful claim has been upheld where the settlement of conflicting titles was held a sufficient consideration to support a purchase by one party, although the title he thus purchased was afterwards found out- to be bad. Cavode v. McKelvey, Addison, 56. So, too, a compromise in an action for slander was upheld, as upon sufficient consideration, for the promise to pay a certain sum though the words laid in the declaration were not actionable. O’Keson v. Barclay, 2 Pa. 531.
(4) As long as that compromise between Bancroft and plaintiff remained intact, it was a complete barrier to any defense Bancroft himself could make against an action on the note which resulted from that compromise. And the only way in which, and condition precedent upon which, Bancroft could have defended against that note was by rescinding the contract of compromise and surrendering its fruits, thus placing plaintiff in static quo.
Until repudiation of the compromise contract had thus occurred there would be no ground on which the maker could defend an action on the note and prevent a recovery. Jarrett v. Morton, 44 Mo. 275; 1 Daniel on *359Negotiable Instruments [4 Ed.] sec. 193; Bigelow on Law of Fraud, 75, et seq.
“Something must then be done by the party defrauded before the contract can cease to be binding; * * * so that it is specific performance reversed, the literal undoing * * * of the contract.” 1 Bigelow on Law of Fraud, 74. See also, 2 Chitty on Contracts [11 Am. Ed.] 1089, note m, 1092; Ackerman v. McShane, 9 South. Rep. 483; Kinne v. Webb, 49 Fed. Rep. 512.
(5) And if a party defrauded would exercise the right to rescind he must do so promptly on discovery of the fraud. Masson v. Boyet, 1 Denio, 69; Selway v. Fogg, 5 M. & W. 83; Railroad v. Row, 24 Wend. 74; Jarrett v. Morton, supra; Estes v. Reynolds, 75 Mo. 563; Hart v. Handlin, 43 Mo. 171.
No evidence was offered in this case of a rescission or offer to rescind, nor at what time the alleged connection of plaintiff with the fraud practiced by Leland was, or could by reasonable diligence have been, discovered. 1 Bigelow on Law of Fraud, 438.
(6) If Bancroft the maker could not successfully plead fraud in the original contract unless upon performance of the condition precedent of rescission or offer to rescind the subsequent one, assuredly the defendant indorser could not in any event, in the absence of such rescission, be in any better condition.
(7) Again, it is only theparty injured by the fraud can claim active relief (Bigelow on Law of Fraud, 197, 209), and only then upon the terms already stated. Here, defendant cannot justly claim to occupy any such position, and at any rate he could not raise the question of fraud in the original contract, so long as the substituted contract evidenced and represented by t'he note in suit remains unrescinded and in full force. In which case, the transaction, in legal contemplation, *360stands upon as secure a foundation of valuable consideration as any other contract whatsoever.
(8) In circumstances such as already related, it does not lie in the mouth of defendant to plead that he is merely an accomodation indorser of the note, and that the same is without consideration.
(9) Indeed he cannot be regarded as an accomodation indorser for the further reason that the note is no longer in first hands. Miller v. Mellier, 59 Mo. 388; Faulkner v. Faulkner, 73 Mo. 327; 1 Daniel on Negotiable Instruments, sec. 189.
II. The nest point for consideration is whether error occurred in reference to an offer of testimony to show that the note was presented after business hours, and if so, whether ■ the presentment was valid. The authorities all agree that a note or bill made payable at a lank must be presented during banking hours, but, with reference to paper payable at a place other than a bank, the rule does not seem to be so well settled.
This divergence is recognized in Swan v. Hodges, 3 Head, 251, a case relied on by defendant; and Byles on Bills, 262, and Story’s Promissory Notes, 226, are there cited to show this variance in the adjudicated cases.
In Bank v. Hunt, 2 Hill, 635; Nelson v. Fotterall, 7 Leigh, 179; Dana v. Sawyer, 22 Me. 244; Bank v. Burton, 58 N. Y. 430; DeWolf v. Murray, 2 Sandf. 166, the rule is announced that, aside from banks, business hours range through the whole day down to the hours of rest in the evening. To the same effect see 1 Daniel on Negotiable Instruments [4 Ed.] sec. 602.
Other cases announce the same doctrine. Thus a bill payable at • the office of an attorney was held presented “in quite reasonable time” as remarked by Best, O. J., though presented at eight o’clock in the *361evening in the month of February. Triggs v. Newnham 1 C. & P. 631.
Lord Ellenborough, in Morgan v. Davison, 1 Starkie, 114, ruled that a bill payable at a counting house was presented at a proper time, though presented between six and seven o’clock in the evening, when no one was left there but a girl to take care of the premises.
In another case the note was made payáble at “number 15, G-odliman street, Doctor’s Commons.” It wes presented between seven and eight o’clock in the evening when the door was found locked, and the messenger unable upon knocking to obtain admission, and Lord Tenterden, C. J., after adverting to the well-known custom in regard to bankers, requiring presentment should be made within business hours, said that, “in other cases the rule of law is, that the bill must be presented at a reasonable hour; ” and it was accordingly ruled that the presentment was made in a reasonable time. Wilkins v. Jadis, 2 B. & Ad. 188.
In Barclay v. Bailey, 2 Campb. 527, Lord Ebbenborough, who had at an earlier date delivered the opinion in Parker v. Gordon, 7 East, 385, relied on by defendant, and at a subsequent date the opinion in Morgan v. Davison, supra, held that a bill payable at the’ residence of the drawee and presented at eight o’clock in the evening, was not presented at an unseasonable hour.
The case of Parker v. Gordon, supra, was a bill made payable at a banker’s, and therefore without relevancy here.
The cases of Shed v. Brett, 1 Pick. 412; Dana v. Sawyer, 22 Me. 244; Lunt v. Adams, 17 Me. 230; Baumgardner v. Reeves, 35 Pa. St. 250; Sulzbacher v. Bank, 86 Tenn. 201, sustain the view that presentment at a place other than a bank must be made during business *362hours. Of the two cases cited from Maine, the first one cited was where the presentment was made a few minutes before midnight, the maker being awakened at his residence, and the otherwhere it was made at eight o’clock, a. m., at the maker’s storehouses, and held insufficient in both instances. In Shed v. Brett, supra, “the note not being made payable at the counting-house of the promisors,” and both of them residing in Boston, it was held proper diligence had not been used where the notary witness went to the business house and found it shut, but it did not appear that this was during business hours nor that he made proper inquiry for the places of residence of the promisors.
Swan v. Hodges, 3 Head, 251, cited by defendant, is a bank case, but it announces the doctrine that: “Business' hours, however, except in the case of banks, include the whole day unless there be some known custom or usage of trade to the contrary,” An eminent jurist and author gives utterance to the same idea. Story on Promissory Notes [3 Ed.] sec. 226.
In the absence of such known custom or usage, then a presentment if made within reasonable hours is sufficient. Story on Promissory Notes [3 Ed.] sec. 226. And it has been often ruled that if the certificate of the notary contains the averment that he called at - the maker’s or acceptor’s place of business to make demand is sufficient; if he be not there to respond, the presumption is that the demand was made in business hours. Sulzbacher v. Bank, 86 Tenn. 201; Baumgardner v. Reeves, supra; Wiseman v. Chiappella, 23 How. U. S. 368; Wallace v. Crilley, 46 Wis. 577.
In the present instance the offer was to show, “that this presentation was not made in usuaLhours of office men and business 'men of the city of Chicago.” No proper foundation for the introduction of this testimony was laid, however, by showing that the witness, who had *363resided in Chicago for a year and a half, was acquainted with a well known usage or custom in that city as to the time presentments were accustomed to be made.
Unless such a foundation were laid, his testimony would, if received, have been valueless- and immaterial, and no error occurred in rejecting it. Bank v. Aull, 80 Mo. 199; State v. Douglass, 81 Mo. 231; State ex rel. v. Leland, 82 Mo. 260; Jackson v. Hardin, 83 Mo. 187; Kraxberger v. Roiter, 91 Mo. 404. Besides testimony which is to establish a known usage which would limit the reasonable hours in which presentment and claim could be made would have to be of a vefy satisfactory and cogent character. 2 Daniel on Negotiable Instruments, sec. 1013. And it is a matter within judicial notice that 5:20 p. m., on the third day of July, was long before sunset, and not an unreasonable hour at which to make presentment and demand under the rule announced by the authorities already cited.
But apart from all other considerations is the controlling one, that the note in question being drawn and made payable in Chicago, Illinois, is to be governed as to the time and manner and the sufficiency of its presentment, demand and protest by the laws of that state. 1 Daniel on Negotiable Instruments, secs. 911, 912; Wooley v. Lyon, 117 Ill. 244.
The supreme court of the state of Illinois has adopted the rule already announced in some of the cases above cited, that the certificate is presumptive evidence of presentment during proper hours of business, and that such hours except in ease of bank paper range through the whole day down to bedtime in the evening. Skelton v. Dustin, 92 Ill. 49. This direct ruling by the court of last resort in that state must be held to be conclusive of the question. Roquette v. Overmann, L. R. 10 Q. B. 525.
*364In concluding this paragraph we shall follow the ruling of the supreme court of Illinois, indulge the usual presumptions aforesaid in favor of the presentment and demand made by the notary, and hold them to have been made at a reasonable hour, and therefore properly admitted in evidence.
III. Holding this view it must result that the plaintiff has made out such a case as would warrant a direction to the jury to find in his favor.
On this theory it becomes unnecessary to closely scan the instruction which the court gave at his instance. Because whether instructions are erroneously given or refused, becomes immaterial if a peremptory instruction to the jury to find for the successful party would have been sustained. Fitzgerald v. Barker, 96 Mo. loc. cit. 666; Brobst v: Brock, 10 Wall. 519; 2 Thompson on Trials, sec. 2265.
IV. Some question has been raised as to the right of plaintiff to dismiss his action as to Bancroft, the maker, but of this there can be no doubt under statutory provisions. 1 Revised Statutes, secs. 2384, 2387; 1 McQuillin’s Missouri Practice, secs. 123, 124.
For the foregoing reasons the judgment should be affirmed.
As I do not concur in the. conclusion reached that the judgment in this cause should be reversed, I have herewith filed as reasons for my dissent herein the original opinion filed by me in Division number one of this court, and which received at the time the unanimous assent of all the members of that division, and now add thereto these additional remarks:
That opinion has been followed sub modo by the majority as to paragraph 1, which in-effect declares that you cannot plead one fraud and prove another; but, when the majority come to the question discussed both in the brief of plaintiff and in that of defendant in *365his motion for rehearing, as to the necessity of rescission or offering to rescind the compromise contract in order to make the plea of fraud good, as all the authorities hold, it is said:
“It becomes unnecessary to discuss the other propositions referred to in the brief of respondents for the reason that we cannot anticipate either that defendant will not tender back the old notes and Chippewa Lumber Company stock nor that plaintiff will rely upon the compromise. It will be ample time to pass upon those questions when they are fairly in the record.”
But if, as the authorities show, after a contract of compromise has been entered into, the fraud in securing that contract cannot be successfully pleaded without being coupled with a plea of recission or offer to rescind that contract, and as both parties discuss the point in their briefs, it seems to me it was absolutely necessary for this court to rule the point, unless it is thought advisable to compel the parties to come back again to this court in order to learn whether a plea of fraud in making a contract is good uncoupled with a return or offer to return that which was obtained under that fraudulent contract. .
Here we have the plaintiffs contending that rescission or offer to rescind is absolutely necessary, the defendant denying this; in such circumstances of antagnonism it really does not seem that it would require any very great stretch of either inference or imagination to “miicipate” “that defendant will not tender back the old notes,” etc., or that plaintiff will rely upon the compromise contract. But the necessity of such return or offer to return is “fairly in the record, ” if it be true that, in the circumstances stated, the plea of fraud is not good, where it stands alone uncoupled with the averment aforesaid. And where a petition or *366answer is bad on its face, though no objection be raised to its sufficiency, this court of its own motion will raise and rule the point here for the first time. Walker v. Bradbury, 57 Mo. 66; Smith v. Burrus, 106 Mo. loc. cit. 97, and cases cited.