Mammoth Vein Coal Co. v. Bishop ( 1914 )

Kirby, J.,

(after stating the facts). The court erred in not directing a verdict for appellant. The undisputed testimony shows that appellee executed the note sued on to the bank, that the bank transferred and delivered it to appellant company for value, and it was due and unpaid at the time suit was brought. It is also true that R. A. McEachin, in trying to effect a settlement of his wife’s account with the bank to prevent loss of her deposit, asked Bishop if it would be satisfactory for him (Mc-Eachin) to pay off this note to the bank and let Bishop execute him a new note therefor. That Bishop agreed to this, and McEachin did pay the bank $600 by a check from his wife on her account and took a receipt from the bank, already set out in the statement of facts. He was told at the time that the Bishop note was not in the bank, but was in Fort Smith, and would be gotten and turned over to him.

In Block v. Kirtland, 21 Ark. 393, the court said: “A payment by the maker of a negotiable note to the original payee after the note has been assigned, is not a' good defense to an action by the assignee against the maker under the statute, nor by the Law Merchant. The maker must take care that the person to whom he pays a negotiable note is its holder or in possession of it.” And in State National Bank v. Hyatt, 75 Ark. 174, “Payment to'a bank of the amount due on a note made payable there, when the bank does not have possession of the note or authority to collect it, does not discharge the maker. ”

McEachin, who claims to have paid the note to the bank for the maker, knew at the time that the note was not in the possession of the bank, but that it was at Fort Smith, and the maker of the note was notified by the appellant, the assignee thereof, that it held the note and was the owner, before he paid any money to McEachin on the new note executed to him. Of course, the bank had no authority to collect the note after its delivery to appellant, and could not release any part of the consideration after its assignment. State Nal’t Bank v. Hyatt, supra; Kirby’s Digest, § 521. This was a negotiable note transferred and delivered to the appellant, it is true, after it became due, but this did not prevent it continuing negotiable, and gave the assignee the right to collect it, subject only to defenses existing at the time of the transfer. Appellant can not be deprived of his right to collect the note because appellee saw fit to execute a new note to another person, without first requiring the delivery to him of this one, and thereafter paid one-half the amount of the new note, notwithstanding the notice to him that appellant was the owner of the note sued on. The judgment is reversed, and judgment will be entered here in appellant’s favor for the amount of the note and interest. It is so ordered.