Greve v. Schweitzer , 36 Wis. 554 ( 1875 )

Cole, J.

The matters alleged by defendant, as above stated, are insufficient to show a good counterclaim. The consideration for the note in suit was the note surrendered, which still remains in the possession of the defendant. It is very obvious, therefore, that there is no failure of consideration, and that the defendant cannot be relieved from the payment of the substituted note and mortgage upon any such ground. Besides, as is well remarked by the counsel for the plaintiff, the allegations in the answer, while they may show that a fraud was perpetrated by the plaintiff upon the creditors and legal representatives of Arnold H. Greve in obtaining the possession of the Keller note, still fail to show any fraud upon the defendant, and afford no reason why be should be permitted to recover back the money which he has already paid on his indebtedness. The Keller note was payable to bearer, and any arrangement which the defendant made for its extinguishment, or any payments which he has made in good faith upon the substituted paper, are protected in law, and valid. The plaintiff had the possession, and was presumably the lawful holder of the Keller note ; and the defendant had the right to deal with him upon that assumption. And he did discharge and extinguish that note by giving another note. Upon the latter note he has made payments in good faith, which he seeks to recover back. In equity and good conscience be owed tbis money to some one, and tbe question is, Can he possibly be compelled to pay it again ? We think not. He is protected in law, and even if tbe plaintiff was not the true owner of the Keller note, that will not deprive him of his rights in the transaction. For he has paid his note to the presumptive owner, the person producing it, and the party prima facie en-titled to receive payment thereof. The rule of law applicable to this question is clearly stated in Byles on Bills, in the following language:

“If a bill or note payable to bearer, either originally made so or become so by an indorsement in blank, be lost or stolen, we have seen that a bona fide holder may compel payment. Not only is the payment to a bona fide holder protected, but payment to the thief or finder himself will discharge the maker or acceptor, provided such payment were not made with knowledge or suspicion of the infirmity of the holder’s title, or under circumstances which might reasonably awaken the suspicions of a prudent man.” Ch. 15, p. 172.

In Story on Bills the doctrine is laid down in substantially the same language; and there can be no doubt of the rule upon the subject. Sections 415 and 416.

Now, within this rule, it is apparent that even if the plaintiff was a wrongful holder of the Keller note, yet the possession of it was presumptive evidence that he was the lawful owner ,• and any arrangement which the defendant entered into in good faith for its discharge, and any payments which he has made, are valid. It is quite immaterial whether these payments were made upon the original or substituted paper. In either case the payments will extinguish pro tanto his indebtedness, and he runs no risk of being compelled to pay it again, unless guilty of negligence, which is denied. Suppose the proceeds of the original note belong to the creditors or legal representatives of Arnold H. G-reve : that does not concern him so long as he is under no obligation to respond to any one for moneys already paid -in discharge of his debt. In any view we see no ground for holding that the defendant, upon- the facts alleged, is entitled to recover back the money paid the plaintiff. This disposes of all questions arising upon the merits of the counterclaim.

It is insisted that the motion of defendant for judgment on his counterclaim was not disposed of when the court rendered judgment on the verdict, and that this is such an error or irregularity as should reverse the order appealed from. Assuming that the objection is borne out by the record, still, upon the views expressed upon the merits of the counterclaim, the error could not have affected any substantial right of the defendant. The order, therefore, should not be reversed by reason of the error or irregularity complained of. Sec. 40, ch. 125, R. S.; 29 Wis., 502-510; Bonnell v. Gray, decided herewith.

By the Court. — The order of the circuit, court is affirmed.