Hamilton v. Wilson & Co. , 67 Ga. 494 ( 1881 )

Jackson, Chief Justice.

Suit was brought by Wilson & Co. against Hamilton, on a promissory note, payable to the Atlantic and Virginia Fertilizing Company or order. The consideration expressed in the face of the note is a commercial fertilizer, known as Eureka. The defense was that the fertilizer was wholly worthless, and the proof was ample to show that it was so, and not reasonably suited to the use for which it was purchased, which is always warranted by the seller. The reply was that the plaintiffs are innocent purchasers of the note before due and without notice, and therefore are protected. So that the controlling question in the case became, are they innocent holders without notice? The jury found for plaintiffs, the court below refused a new trial, and on this refusal error is assigned here.

The iron clad part of the note was erased by a line drawn across it, the whole note being the printed form of a paper so drawn as to prevent the maker from defending on the implied warranty of suitableness of the fertilizer for the use for which it was bought, “ or on any other obligation of the payee of any kind, express or implied, as to character, quality or fitness of said fertilizer for the use to which it is devoted.” This part, though thus stricken, could still be easily read through the line drawn over it.

1. One error assigned is, that the court would not allow the defendant’s counsel to argue to the jury that this erasure was a circumstance tending to show notice to the indorsee, and to put him on inquiry. In our judgment it was such a circumstance. The fact was patent that the maker would not buy on the terms stipulated in the printed note as it stood, but required the erasure of all parts that precluded him from setting up any defense he pleased touching the consideration of the note, and thus put the purchaser on inquiry. The erasure showed this fact, and thus it was patent on the face of the paper, and the defendant had the clear right to argue that Wilson & Co. were bound to inquire touching this matter, and inquiry would have developed the fact that the value or suitableness for use of the fertilizer was warranted in law on the face of the paper which they bought. Our Code is explicit that any. circumstances which would put a prudent man on his guard shall be sufficient to constitute notice to a purchaser before due. Code, §3790.

2. But independently of this point, we are clear that the facts show unmistakably that Wilson & Co. are not innocent purchasers for value of this note under our Code, section 2785. Such a purchaser must be a holder for value. It, is not in evidence that a dime was .paid by them for this note, and we have no idea from the evidence that they ever did pay anything for it. It was a scheme to avoid the defense which the maker could have made to the note in the hands of the payee. A resolution was passed empowering Crenshaw to make transfer or indorse said paper over to Wilson & Co., in 1878. This note was not made until 1879, an<^ Crenshaw swears that the resolution was continued so as to embrace this note. No transcript, of the continuance of it appears from the books of the company, though a transcript from those books shows the original resolution which referred to paper then in existence, and not to this note, not then in existence. There is no date to the transfer, and the reason given is that such is the habit of the company. Wilson & Co. are members of the company, and are evidently mere men of straw, so far as this case is concerned, to be substituted for the company so as to avoid the defense, which the maker of the note had reserved.

The title of the holder can be inquired into by the maker of a note to let in his defense, and whenever it is necessary to do so in order fo protect himself. Code, §2789.

This title in these holders of this note smacks of fraud. The whole transaction is covert, subtle, concealed. It is not, to all appearance, open and undisguised. “ Said paper” in the resolution has no antecedent. Why is not the preamble as well as the resolution embodied in the transcript so as to show what “said paper” was? Was it paper where the iron-clad print had been erased, and was it passed to avoid defense to that paper? Was it the transfer or indorsement for value ? If so, what value ? Why was it the custom of the company not to date these indorsements?

Title thus full of the footprints of fraud, is void. Code, §2751. Being very cunning and exceedingly subtle in its very essence, slight circumstances are sufficient to carry conviction of its existence. Code, §2751. It is the very opposite of bona fides, and no man can be a bona fide holder whose fingers have touched it.

In view of the facts set out in the record and reported .at the head of this opinion, we are clear that not only-slight but overwhelming evidence is before us that this indorsement of this note is but part of a scheme to transfer to a p.ortion of the plaintiffs a quantity of paper for fertilizers not otherwise collectible, to avoid an issue as to the value or worthlessness of the fertilizer, and thus subtly and under color of title in a portion of the plaintiffs to recover what all the plaintiffs, as a joint stock company, being in that character the payees of the note, could not recover.

The case must therefore be remanded for a new trial, and the defenses of the defendant be let in. Of course, if on the new trial the plaintiffs shall be able to show that they are bona fide holders for value, that they bought this paper in due course of trade, and not as part of a scheme to defraud the defendant out of his rights of defense, that w-ould alter the case. But as the evidence now stands of record here the only issue, it seems to us, is was the fertilizer worthless, and the defendant had the right to make it as fully as if the payees had sued him in their own names.

On the ground, therefore, that the verdict of the jury on the question of the plaintiffs being bona fide purchasers for value of the note is against the overwhelming weight of the evidence disclosed in this record, and on the ground that the'court erred in restricting the argument of counsel in commenting on the erasures of portions of the note, a new trial is awarded, that the law may be given to the jury in accordance with the views expressed in this opinion, and that the apparently dark shifting of the title to this paper may be cleared up, if it can be done. If that be done, and the evidence shows that they are holders for value of the paper without notice and bona fide, let them be protected as such; but if not, let the defendant be protected from paying for a worthless article, if the jury shall find it to be worthless.

See cited for plaintiff in error, 50 Ga., 77; 5 Ga., 165; 1 Dan. on Nego. Inst., 151, 119, 120, 61, 602; 2 Ib., 358-9; 2 Pars, on Bills and Notes, 279, 539; Story on Prom. Notes, 197; Dudley’s Reports, 243.

For defendants in error, Code, §§2182, 2776, 2785, 1675, 2855; 60 Ga., 90, 654; 61 Ib., 208.

Judgment reversed.