Davis v. Crozier & Co. ( 1921 )

I think that the petition should be granted for the following reasons:

The only ground relied upon in the leading opinion for a reversal of the judgment is that an issue of title to the oats was raised by the declarations of Crozier, the consignor and drawer of the draft, made over long-distance telephone to Pruitt, the consignee, after he had assigned the bill of lading and indorsed the draft to the bank, to the effect that he still held the bill of lading, and that the oats were his.

It does not seem to me that the question of the inadmissibility of this testimony is open to argument. Crozier had sold the oats to Pruitt. He had shipped them under an order notify bill of lading and drawn upon Pruitt for the purchase price. He had discounted the draft with the bank and indorsed it, assigning the bill of lading to the bank. The bank was as completely the owner of the draft and the commodity covered by the bill of lading as if Crozier had made a deed to it for both. After the bank had thus acquired the draft and the bill of lading, the plaintiff, an attaching creditor of Crozier, in order to sustain his attachment and prove title to the oats in Crozier, offered a witness to prove the declarations of Crozier, made after he had parted with title in disparagement of his assignee's title and in support of his own — a proposition offensive not only to the rule against hearsay testimony, but the principle of estoppel, which closes the mouth of the assignor who would impeach the title which he had transferred and received value for.

As far back as 1823, in the case of Crayton v. Collins, 2 McCord, 457, the court declared:

"Declarations of the payee of a note before he has indorsed it, when he alone is interested and against his interest, have been allowed to be given in evidence; but his declarations after indorsement, which go to affect the interest of third persons, cannot be received."

In De Bruhl v. Patterson, 12 Rich. Law, 363, it was held that the declarations of an assignor of a note, made after the transfer, were inadmissible when offered to invalidate the note. The Court quoted the following from Borough v.White, 10 Eng. C.L., 345:

"The right of a person holding a good title is not to be cut down by the acknowledgment of a former holder that he had no title."

In Stouffer v. Erwin, 81 S.C. 541, 62 S.E., 843, the plaintiff brought a suit as a holder in due course of a negotiable instrument. The defendant offered in evidence a letter written by the attorney for the original payee subsequently to the transfer, stating that he held the draft for the payee, and that it was its property. The circuit judge admitted the evidence. This court reversed the judgment for defendant upon the ground of error in admitting the letter, declaring:

"A declaration of an attorney for the (payee) cannot be evidence against this plaintiff, who is a different party. *

* * It was incompetent to allow any testimony which the defendant had against the original payees until the defendant first offered testimony going to show that plaintiff was not a purchaser of said drafts before maturity for value."

In 16 Cyc., 996, it is said:

"Declarations made by a former holder of a negotiable instrument after it has been transferred by him are incompetent as against a subsequent holder; and the burden of proving, although not necessarily by direct evidence, that the declarations were made before transfer, is on the party offering them as evidence" — citing many cases, including the two from this state referred to above.

In 22 C.J., 361, it is said:

"Declarations of an assignor made after the assignment and notice thereof to the debtor are not admissible against the assignee or those claiming under him, provided the assignment was made in good faith, and a party who offers the declaration of an assignor, as against an assignee or subsequent holder has the burden of showing affirmatively that the statement was made before the assignment."

In Wig. Ev., § 1984, it is said:

The holder of a negotiable instrument receives it from a prior holder free of equities and other defenses personal to the prior holder. In this lies the element of negotiability. Consequently the second holder's title is not identical with, and dependent upon, that of the first holder; and the admissions of the latter would (on the principle of section 1080) not be receivable against the former."

In Phillips, Evid. 608 (note by Cowan and Hill), it is said:

"But in other cases the bona fide holder, by his purchase of the bill or note, stands, in a great measure, independent of the former holder who indorsed or delivered the paper to him. The law disconnects him with the previous title, and takes him into its own charge, as deserving a right from itself. And hence, among other privileges, while it cuts him clear of all the previous hostile acts of his predecessors, it forbids that his declarations shall be used in derogation of those rights which he professed to confer."

The testimony of Pruitt was therefore clearly inadmissible and not binding upon the bank, which at that time was the owner of the draft and bill of lading. The declarations of Crozier could have been admissible only in impeachment of his testimony, after the grounds for contradiction had been properly laid, of which there is no showing.

This testimony constituting the sole ground for holding that an issue of fact was raised which should have been submitted to the jury, I think that the Court has overlooked the foregoing principle, and that the petition should be granted.