Stouffer v. Fletcher

Bills and Notes — Bona Fide Purchasers —Burden of Proof, Where, in an action by a transferee on accepted drafts, it appears that the acceptances were obtained from the drawee by the drawer’s fraud, the burden is upon the plaintiff to show that he is a bona fide holder.

Error to Kent; Wolcott, J. Assumpsit by Joseph C. Stouffer against Edward Fletcher and Caroline Fletcher, copartners as E. Fletcher & Company, upon certain drafts. There was judgment for defendants, and plaintiff brings error. This suit is based upon two drafts for $95 each, drawn by the Puritan Manufacturing Company of Iowa City, Iowa, upon the defendants, a copartnership, doing business in Grand Rapids, Mich., under the firm name of E. Fletcher & Co., and accepted by them. One was payable four and the other six months after date. The Puritan Manufacturing Company is a manufacturer of cheap jewelry. Its agent, one McClain, a traveling salesman for the Puritan Manufacturing Company, visited • the defendants, and solicited an order. The defendants are father and daughter. The father was confined to the house from illness, and the daughter managed the business, a small dry goods store. The consideration for these two drafts, with two others executed at the same time, was an order for jewelry. This order was part of a contract which provided that, before becoming valid, it was to be accepted by the Puritan Manufacturing Company, and that company might at its option reduce the amount of the order. Defendants, with their plea, gave notice that they would show upon the trial that the order was obtained by fraud; that the contract was canceled and terminated before plaintiff had acquired any rights thereunder, and that he was not a bona fide purchaser for value before maturity. Plaintiff introduced the accepted drafts, and rested. Defendants gave evidence tending to show that McClain tried to induce defendant Caroline at defendants’ store to give an order; that she declined; that the agent and Caroline then went to the house of defendant Edward, and he refused; that Caroline returned to the store, leaving McClain and her father at the house; that McClain soon returned to the store and informed Caroline that her father had concluded to make the purchase, and, upon the strength of this representation, the order was given by her and a copy of the contract left with her. Returning to the house in a few hours, she informed her father what she had done, and what the agent McClain had said.. The father denied any such agreement. Thereupon, McClain was immediately notified by defendant Caroline of the fact, who demanded the cancellation of the order; that McClain agreed to this, and took up the contract; that some 10 days thereafter the Puritan Manufacturing Company notified defendants of the shipment of the goods. Defendants promptly notified the Puritan Manufacturing Company of the action of their agent, and refused to accept the goods. Two special questions were submitted to the jury, namely: “Did the plaintiff in this case purchase from the Puritan Manufacturing Company, of Iowa City, Iowa, on January 7, 1905, the two drafts for which this suit was brought, as plaintiff alleges in his deposition, and was the plaintiff the owner of the drafts when this suit was brought ? ■ “Did the plaintiff have actual notice at the time of such purchase that the defendants in this case claimed that said drafts had been procured through the fraud of the Puritan Manufacturing Company or its agent ? ” The first question was answered in the negative, the second in the affirmative. The case was submitted to the jury under instructions as to the law, and a verdict rendered for the defendants.