Farmers' Loan & Trust Co. v. Rainer

Sales. Breach of warranty. Promissory notes. Bona fide holder. Where a buyer, with knowledge that the goods delivered him were inferior to those ordered, executed his notes to the seller for the purchase price, a breach of the seller’s warranty is no defense to a suit on the notes by a bona fide holder for value, to whom they were assigned before maturity.

From the circuit court of Yazoo county. HoN. Wiley H. Potter, Judge. The Farmers’ Loan & Trust Company, appellant, was plaintiff in the court below; Rainer, appellee, was defendant there. Prom a judgment in defendant’s favor plaintiff appealed to the supreme court. The defendant purchased, by sample, jewelry from the traveling salesman of the Equitable Manufacturing Company, wholesale jewelers domiciled in Iowa. After the delivery of the jewelry to defendant and his discovery that it was inferior to the samples, he sold some of it to his customers, and they returned it to him as unsatisfactory. Subsequently he executed the notes for the purchase price payable in Iowa City, Iowa, which were before maturity assigned by the Manufacturing Company, the payee, to the Parmer’s Loan & Trust Company of Iowa City, Iowa, the appellant, who brought this suit upon them. There was no competent evidence introduced in behalf of ap-pellee which in any way'affected the title of appellant. Biman-ual v. Barnett, 34 Miss. 63. The appellant was therefore entitled to a peremptory instruction regardless of the defense which appellant might have had if the suit had been brought on the notes by the Equitable Manufacturing Company. ' Even if fraud were perpetrated upon appellee by tbe vendor, and if tbe goods were not tbe -goods bought, yet appellee became liable for them wben, with knowledge of tbe situation, he accepted them, offered them for sale, and afterwards executed the notes representing the purchase money. It is further shown in evidence that appellee with knowledge of tbe situation paid two of tbe notes given in payment of tbe jewelry. We therefore insist that it is now-too late for appellee to claim that the goods were misrepresented by tbe seller. Granting that tbe introduction of tbe notes properly endorsed raised the presumption that plaintiff was tbe bona fide holder for value, before maturity, in tbe regular course of business, • this is merely a presumption; and when tbe appellee proved fraud in tbe inception of tbe contract, then tbe burden of proof ■shifted and it was incumbent on appellant to prove that it acquired tbe paper before maturity in regular course of business for a valuable consideration and without notice of any defects. 1 Daniel Negotiable Instr. (5th. ed.) § 812; Norton Bills & Notes (2d ed.) 310; 4 Am. & Eng. Ency. of Law (2d ed.) -321. It is well settled law that be who takes over-due paper takes it subject to all equities and defenses that might be raised between the original parties. See Daniel, supra> § 182; Money v. .Riclcelts, 62 Miss. 209.