Holland Banking Co. v. Haynes , 125 Ark. 10 ( 1916 )

Kirby, J.,

(after stating the facts.) (1) The court erred in giving said instructions. When the holder of a negotiable instrument shows that he purchased it before maturity in the usual course of business for a valuable consideration, a prima facie case is made and the burden of proof shifts to the defendant who alleges it to prove that the purchaser had notice or knowledge of such facts as required him to take notice of the defense existing in favor of the makers. White v. Moffett, — Ark. —, 158 S. W. 505; Keathley v. Holland Banking Co., 166 S.W. 953, — Ark. —.

(2) The purchasers of the horse could not have defended against the payment of the notes in the hands of the seller on the ground that the horse was of a less market value than the price agreed to be paid therefor in the notes or failed to come up in performance to the terms of the guaranty, since the contract of guaranty provided the exclusive method of settlement if the stallion should not prove as warranted. Highsmith v. Hammonds, 99 Ark. 403.

The undisputed testimony shows that no notice of dissatisfaction as to the condition or performance of the stalhon was given to the seller until long after the time designated in the contract for his return in accordance with the terms of the contract, if he should prove unsatisfactory and not as warranted, nor was any attempt made to return him and receive another in his place in accordance with the terms of the contract. It was likewise undisputed •that the purchasers did not insure the stallion in accordance with the agreement that they might do so in the contract of guaranty and had no claim against the seller on that account.

Since the testimony does not disclose that the makers on the note had any legal defense thereto, the court likewise erred in not directing a verdict for appellant.

The judgment is reversed and judgment will be entered here in appellant’s favor, for the amount of the notes sued on. It is so ordered.