Sublette v. Brewington

1. BILLS AND NOTES: Negotiable Instruments. Tbe note in controversy is a negotiable instrument as defined in section 1 of the Act of 1905, page 247, entitled “Negotiable Instruments” and is such under the law merchant, and being payable to order it did not pass by the mere act of delivery. 2. -: Agents Authority: Liability of Principal. Where a person is given authority to negotiate a loan upon the credit of the principal’s note payable to the agent’s order the note would necessarily become the property of who ever could be induced to advance the money on the security offered. The agent’s authority was complete and he was empowered to dispose of the paper as freely as if it had been his own. 3. PRINCIPAL AND AGENT: Scope of Authority. There is no question better settled than that the acts of the agent within the scope, or apparent scope of his authority is binding upon the principal.

Appeal from the Adair Circuit Court. — Hon. Nat. M. Shelton, Judge. The court erred in finding the issues for defendants. The note was admittedly without consideration. The finding and judgment of the court should have been for the plaintiffs on both counts. The note was a negotiable instrument, payable to the order of Edwin L. Hilbert and was transferred to defendants simply by delivery, without indorsement. It was therefore not negotiated to defendants. Secs. 30, 49, 52, “Negotiable Instrument Laws;” Acts 1905, pp. 247, 249. The note being without consideration, was, therefore, subject to all equities and defense available against the payee. Rice v. McFarland, 34 Mo. App. 404; Pattison v. Cave, 61 Mo. 439; Weber v. Norton, 91 Mo. 677; Quingley v. Bank, 80 M'o. 294; Bishop v. Chase, 156 Mo. 173; Randall v. Glendenning, 92 Pac. 158; Bank v. McCullough, 93 Pac. 366; Story on Bills of Exchange, p. 252, sec. 201; Rapps v. Gottlieb, 142 N. Y. 164, 36 N. E. 1052. The rule that a boni fide holder of negotiable paper is not affected by prior equities, of which the purchaser has no notice, does not apply if he receives the paper from the original payee by assignment or delivery instead of indorsement. He thus obtains no title superior to that of the payee, and the maker is therefore not precluded from asserting equities that would have been valid as against the payee. Pattisen v. Cave, 61 Mo. 439. To constitute one a holder in due course, under the Negotiable Instrument Law, the instrument must be regularly indorsed. 8 Current Law, p. 1143; Mays v. McRammon (N. C.), 53 S. E. 447; Keel v. Co., 55 S. E. 826. So it was at common law —2 Cyc. 390, authorities, noté 7. The very fact that respondent took the note without indorsement or the right to require indorsement on any agreement for indorsement was sufficient to put any one on guard for section 30 of the Negotiable Instrument Law, makes an indorsement one of the conditions of negotiation and section 49 of the same act informed respondent that he was taking it subject to any and all equities of the maker, and that by taking it without indorsement he only acquired such interest as Hilbert had in it. The rule is: Notice is actual when one either has knowledge of a fact or is conscious of having the means of knowledge although he may not use them. 16 Am. and Eng. Ency. Law (1 Ed.), p. 790; 2 Cyc. 394. Mere knowledge on the purchaser’s part of dishonest business methods on the part of the seller has been held evidence of bad faith. 2 Cyc. 394, note 1. Weber v. Norton, 91 Mo. 677; Quingley v. Bank, 80 Mo. 294,17 Fed. 575; 47 Conn. 417; f)5 Ga. 22; 72 111. 559; 3 Bar. Chan. Ny., 441, 41 N. C. 199, 11 Ohio St. 626; 3 Tenn. 325; 16 Wis. 478; 73 Ind. 515; 18 Iowa 143; 11 Kan. 464. And in regard to the same principle as bearing directly on the Negotiable Instrument Law, see Randall v. Glendening (Okla.), 92 Pac. 158; Bank v. McCullaugh (Ore.), 93 Pac. 366; Rice v. McFarland, 34 Mo. App. 404. First: A negotiable promissory note may be sold or pledged and the title passed without indorsement or assignment. Willard v. Moies, 30 Mo. 142; Davis v. Carson, 69 Mo. 609. And the party to whom .it is thus sold or pledged may maintain an action thereon in his own name. Authorities above. Second: Was the note without consideration? We say not and assert that as it was executed by Sublettes to their own agent for the purpose of having him dispose of it to raise money for them, it is not necessary that there be a consideration moving from their own agent to them, but,. whenever a third party paid to the agent a consideration it is the same as if it had been paid to the makers of the note. Marling v. Jones, 119 N. W. 931. If a person act as an agent for a borrower in negotiating a mortgage loan and in receiving, handling and applying the money and for the lender in passing upon the sufficiency of the security and in delivering the executed mortgage and he after receiving the money embezzles it, the borrower is liable for the mortgage debts although the check for the amount of such loan was drawn upon the delivery of the mortgage to the order of the agent. . Pepper v. Cairns, 133 Pa. St. 214, 19 Am. St. Rep. 625. A person will become liable by suffering another to represent him with power to make a particular contract. Fanning v. Cobb, 20 Mo. App. 583. Acts of agent after revocation bind the principal and himself so far as they regard third persons who are ignorant of the revocation. Lamont v. St. L. & C., 17 Mo. 204; Oil Co. v. Zinc Co., 98 Mo. App. 324. Where one of the two innocent persons must suffer for the wrongful act of another, he must suffer who placed the party doing the wrong in a position to do it. Newhoff v. O’Reilly, 93 Mo. 164; Insurance Co. v. Bradford, 88 Am. St. 770; Turner v. Hayle, 95 M'o. 337. Party cannot defend on the ground of the .fraud of his agent. Whitmore v. O’Bear, 58 Mo. 286. A non-negotiable note indorsed by the payee for the accommodation of the maker will in the hands of a holder for value bind the assignor. Macy v. Kendall, 33 Mo. 164. One who makes or indorses a note to be used in a particular way takes the risk of its being used in another way or for another purpose and is answerable thereon to any bona fide holder into whose hands it may come. Sweetser v. French, 48 Am. Dec. 666; Whitmore v. Nickerson, 125 Mass. 468, 28 Am. Rep. 257.