Birch Tree State Bank v. Dowler , 163 Mo. App. 65 ( 1912 )

COX, J.

Action upon a promissory note given by defendant to one W. H. Hurt and by him endorsed without recourse to plaintiff. The defense was fraud and want of consideration. In reply to this, plaintiff claimed to be an innocent purchaser for value before matured. Trial by jury, judgment for defendant and plaintiff has appealed.

Instruction No. 1 for defendant given by the court was as follows: ‘ ‘ The court instructs the jury that if you should find from the evidence that the note sued on was without consideration and that it was obtained by fraud and misrepresentation as alleged by the defendant then in such event before the plaintiff would be entitled to recover, it must be shown by the greater weight of the evidence. First, that it is a bona fide owner of such note. Second. That it purchased said note for value before maturity. Third. That it had no knowledge of said want of consideration or fraud and misrepresentation.” (Italics are ours.) This instruction is erroneous. It is never permissible to refer the jury to the pleadings to ascertain what the issues are, but it is the duty of the court to tell the jury what facts must be found by them to be true to warrant a verdict. [Sinnamon v. Moore, 161 Mo. App. 168, 142 S. W. 494; Webb v. Carter, 121 Mo. App. 147, 98 S. W. 776; Proctor v. Loomis, 35 Mo. App. 488; McGinnis v. Railroad, 21 Mo. App. 399; Jaffi v. Railroad, 205 Mo. 450, 103 S. W. 1026.]

When defendant admits the execution of the note, and defends upon the ground that it was obtained by fraud or was without consideration, the burden in the first instance is upon him to make a prima facie showing sustaining his defense and when this is done, the burden then shifts to plaintiff to prove that he was an innocent purchaser for value before maturity. The legal proposition contained in the above instruction is correct and had the court declared therein that if the jury should find that Hurt with the intent to deceive made certain representations to defendant, naming them, and that defendant relied thereon and was deceived thereby etc. as is usually done in cases in which the party alleging fraud is the plaintiff instead of instructing them that if they should find that the note “was obtained by fraud and misrepresentation as alleged by the defendant” the instruction would have been correct. An unfortunate thing connected with this case is the fact that this instruction is almost a verbatim copy of an instruction given in Bank v. Hammond, 104 Mo. App. 403, 79 S. W. 493, and in that case it received the apparent approval of the appellate court. The objection now made against this instruction was not made in that case, however, and while the instruction was approved in that case, the question now before us was not passed on. The objection made to the instruction in that case was, that it wrongly placed the burden of proof upon plaintiff to show that he was an innocent holder of the note and all the court said in relation to the instruction in that case was as follows: “The first instruction given for defendant is correct on the showing made by the defendant that the notes were procured by fraud; on this showing the burden was shifted to the plaintiff to show by the preponderance of the evidence that it was a bona fide holder of the note for*value.” While the approval of this instruction in that case may have misled the trial court in this case, yet, it cannot be considered as authority in this case for the reason above stated that the question we are now called upon to decide was not raised or passed on in that cáse.

The other instructions were favorable to plaintiff. Since the case is to be retried we call attention to another instruction given in this case. No. 1 for plaintiff was as follows: “The court instructs the jury that although you may find that there was failure of consideration for the note executed by the defendant to W. H. Hurt yet, unless you, further find that the plaintiff bank, or its cashier had actual knoivledge of such¡ failu,re of consideration at the time the purchase of said note ivas made by plaintiff bank, yon mil find for the plaintiff . . .” (Italics are ours.) This instruetion tells the jury that even though the note was without consideration, yet, plaintiff should still recover unless plaintiff or its cashier had actual knowledge of the failure of consideration and impliedly places on defendant the burden of proving such actual knowledge. This was erroneous. Since the adoption of our Negotiable Instrument Law, when defendant has made a prima facie showing that the note was without consideration then the burden is on plaintiff to prove that he was an innocent holder for value, that is, that he had no knowledge of the want of consideration for the note just the same as where a prima facie showing that the note was procured by fraud has been made. [Stat. 1909, Sees. 10022, 10025, and 10029; Bank v. Mills, 143 Mo. App. 265, 127 S. W. 425; Jobes v. Wilson, 140 Mo. App. 281, 124 S. W. 548; Bank v. Brisch, 140 Mo. App. 246, 124 S. W. 76.]

The evidence on the question of consideration is that defendant bought from Hurt 122% kitchen cabinets to be shipped on his order and defendant was given the exclusive right to sell in Howell county for one year. His first order was for three cabinets which were sent to him and which he sold. There was no evidence that the kitchen cabinets were worthless but all the evidence shows that they were of some value. Under this state of the testimony the issue of want of consideration should not have been submitted to the jury, and upon a retrial unless the testimony is different, the question of want of consideration should be eliminated. On the question of the note being procured by fraud there was sufficient evidence to take the case to the jury and with the exception of instruction No. 1 for defendant above set out, the instructions given in so far as they related to the question of fraud were correct.

For the error of the court in giving instruction No. 1 for defendant, the judgment will be reversed and cause remanded.

All concur.