Henley v. Holzer

1. Negotiable Paper — Bights of Transferee. — It is settled law in this state that the transferee of negotiable paper, to whom it has been transferred after maturity, acquires nothing but the actual right and title of the transferrer; and if the paper had been paid he cannot recover. 2. — Defences Connected with Note Itself. — But a negotiable promissory note transferred after maturity passes into the hands of the indorsee, subject only to such equities and defences as are connected with the note itself, not such as grow out of distinct and independent transactions.

Ebbob to Cole Circuit Court, Hon. Chables A. Winslow, Special Judge. Statement of case by the court. This is an action to foreclose a deed of trust, given to secure the payment of the following note: “Jefferson City, Mo., December 3, 1873. “ One day after date I promise, for valne received, to pay to the order of Austin A. King the sum of one hundred and twenty-five dollars, with ten per cent, interest from date till paid. “John Holzeb.” Which note was endorsed as follows : “Austin A. King.” Also, “Withoutrecourse, Austin A. King.” The answer averred, among other things, that after the maturity of the note, and long before it was transferred to plaintiff, the defendant paid it, principal and interest, as the plaintiff well knew at the time he received it. The court below, trying the case without the intervention of a jury, made a special finding of the facts, and declared the law thereon as follows : “Thecourt, sitting as a jury, finds as a matter of fact that the note in suit was on the third day of March, 1874, after its maturity, placed in the hands of the First - National Bank of Jefferson City, Missouri, as collateral security for the sum of one hundred and five dollars, then and there borrowed of said bank by Austin A. King, for which he executed his note, and endorsed, the note in suit, and delivered it to the bank as collateral, as aforesaid; that the note in suit was a partnership note-due the firm óf E. L., King & Bro.; that while the note remained in the hands of the bank as collateral, it was-fully paid off by the defendant to the original payees •, that on the 29th day of December, 1877, Austin A. King and the bank entered into an arrange’'” "nt whereby the bank became the absolute owner of th ; note, in consideration of the surrender of King’s not to him, and then and there the endorsement without recourse was-written on the back of said note; that within a few days-thereafter, in pursuance of an arrangement previously made, the bank sold the note to the plaintiff for the-amount then due on the loan to King, which amount the plaintiff paid, and the note and endorsement were delivered-to him, without recourse on the bank; that plaintiff’ is the owner of the note, and entitled to sue on it; that-neither bank nor- plaintiff notified defendant of the-assignment of said note to them, and that when he paid the note to the original payees, he had no notice of such assignment. “Upon these facts the court declares, as a matter of law, that the plaintiff cannot recover.” The plaintiff has appealed to this court. I. The court erred in declaring, under its finding of" facts, that defendant was entitled to recover. Cutler v. Cooke, 77 Mo. 388, and cases cited; Barnes v. McMuZlin^. 78 Mo. 260; Davis v. Miller, 14 Gfratt. (Ya.)l; Baxter v. Little, 6 Mete. 7; Coffman v. Bank, 41 Miss. 212; 2 Daniels on Negotiable Instruments, sect. 1233 a. A negotiable note after dioe is still a negotiable instrument, and does not fall within the designation “ non-negoliable instruments,” referred to in the Revised Statutes. Cutter v. Cooke, 77 Mo. 388. II. The payer, in making payment after maturity, must be sure that it is made to the holder. For if it should have been transferred, after maturity, and before payment, to a third party, a payment to the transferrer would be invalid, and the transferee holding the instrument could himself enforce payment. 2 Daniels on Negotiable Instruments, sect. 1233 a ; Davis v. Miller, 14 Graft. 1; Baxter v. Brown, 6 Mete. .(Mass.) 7. III. The fact that the note was received by the bank as collateral security does not affect it as a holder for value. Logan v. Smith, 62 Mo. 455; Davis v. Miller, 14 Gratt. 1. IY. It matters not that plaintiff had knowledge of the payment of the note to King before he purchased, provided the hank was a hona fide holder. 1 Daniels on Negotiable Instruments (3 Ed.) sect. 803; Funkhouser v. Lay, 78 Mo. 459. I. The note, in this case, if negotiable, is governed by section 547 of Revised Statutes. The transfer is after maturity, and the holder takes it as a dishonored bill, and is affected by all the equities, whether he has any notice thereof or not. Story on Bills, sect. 220 ; Chitty on Bills (8 Am. Ed.) 240; Wheeler v. Barrett, 20 Mo. 573 ; Cutler v. Cooke, 77 Mo. 388. II. The answer in the -case at bar pleads no set-off, nor equity, nor defence, not connected with the note itself. It simply pleads payment; and certainly this is not a collateral or outside matter. It is true the payment was made by the maker to the payee in the note, the original parties to the transaction, but the plaintiff in this case had full notice of the payment at the time and before the pretended purchase from the bank. The evidence fully supported the averments of the answer. The plaintiff is not an innocent purchaser. Wheeler v. Barrett, 20 Mo. 575.