J. E. Latham Co. v. Rogers

Civil action tried upon these issues:

1. Did the defendant E. C. Rogers procure from the plaintiff, J. E. Latham Company, the acceptance and payment of the draft described in the complaint by falsely and fraudulently representing by his invoices the grades of the cotton covered by said invoices, and paid for by said drafts? Answer: Yes.

2. What amount of damages, if any, is plaintiff entitled to recover of the defendant? Answer: One thousand dollars.

3. Did the intervener, the First National Bank of Mullins, South Carolina, purchase said drafts for value before maturity in good faith, and without notice of any infirmity, defect or fraud therein? Answer: Yes.

From the judgment rendered plaintiff appealed. This action is brought to recover damages against defendant Rogers on account of false and fraudulent representation of the grades of a certain lot of cotton covered by invoices (240) attached to certain drafts. The jury assessed the damages of the plaintiff against the defendant at the sum of $1,000.

As there is no appeal by defendant Rogers, it must be taken that there are no errors arising upon the findings of the jury in respect to him. The only assignments of error, therefore, to be discussed relate to the third issue.

The first assignment of error is because the court allowed the intervener to introduce in evidence upon the trial four paragraphs of the defendant Rogers' answer. These paragraphs tend to prove that the intervener paid Rogers full value for the drafts, the proceeds of which have been garnisheed in this action. The issue of fraud having been found against defendant Rogers, the burden of proof then rested upon the intervener to satisfy the jury that it paid full value for the drafts and that it was a bona fide purchaser without knowledge of the infirmity. Bankv. Fountain, 148 N.C. 590; Bank v. Exum, 163 N.C. 203.

Bank v. Brown, 160 N.C. 24, is relied upon by the intervener to establish the proposition that the burden rests upon the plaintiff to show that the intervener had knowledge of the infirmity. In that case there was no finding of fraud and no evidence tending to show it, and, therefore, the burden of proof was not shifted; and if the construction placed upon that opinion by the intervener's counsel is warranted, then the language used by the judge was inadvertently used. It is undoubtedly well settled that where fraud is shown in the execution of the note, or other evidence of debt, the holder thereof who claims to be a bona fide purchaser for value without notice must satisfy the jury of those facts.

We think the assignment of error must be sustained. There was no issue raised by the pleadings or submitted to the jury between the intervener and defendant Rogers. The whole contest, in respect to the third issue, was between the plaintiff and the intervener. Rogers' answer was, therefore, nothing more than an ex parte affidavit and was evidently offered for the purpose of getting before the jury Rogers' statement to the effect that the intervener was a bona fide purchaser of the drafts for value. The proper method would have been to have put Rogers on the witness stand or to have taken his deposition in the regular way.

It is said, however, that the court admitted the answer only as against Rogers and not as against the plaintiff. Assuming that to be true, the court should then have given the plaintiff's prayer for instruction, namely, that if the jury believe the evidence, they should answer the third issue "No." For there was no other evidence offered by the intervener except the answer of Rogers, and if that was offered only against Rogers, then there was no evidence as against the plaintiff tending (241) to prove that the intervener was a bona fide purchaser in good faith for value. So, whichever way you take it, there was error, for which there must be a

New trial.