Opinion
No. 28495.
October 18, 1938.
(Syllabus.)
1. Bills and Notes — Title of Payee Defective Where Note Obtained by Fraud.
Where a promissory note is obtained by fraud, the title of the payee therein is defective. Section 11354, O. S. 1931 (48 Okla. St. Ann. sec. 125).
2. Same — Action by Indorsee Against Maker — Burden on Plaintiff to Prove Holding in Due Course After Payee's Title Shown Defective.
In an action by the indorsee of the payee against the maker to recover on a promissory note, the indorsee, by reason of section 11358, O. S. 1931 (48 Okla. St. Ann. sec. 129), is deemed to be a holder in due course, but when it is shown that the payee's title is defective within the meaning of section 11354, O. S. 1931 (48 Okla. St. Ann. sec. 125), the burden of proof is then upon the indorsee to establish that he took the note without notice of such defective title.
3. Same — Appeal and Error — Conclusiveness of Finding Under Circumstances Shown That Plaintiff Was not Holder in Due Course.
Record examined, and held, that, although the plaintiff's uncorroborated testimony to the effect that he held the note in due course was undisputed by direct and positive evidence, the circumstances as revealed by the evidence were sufficient to raise a controverted question of fact, and the finding of the court thereon is conclusive of the question.
Appeal from District Court, Carter County; John B. Ogden, Judge.
Action by H.H. Sharp against Grady Gossett. Judgment for defendant, and plaintiff appeals. Affirmed.
Rex H. Holden, Wm. O. Coe, R.B. Holtzendorff, and John E. McCain, for plaintiff in error.
Stephen A. George and John Clark Caldwell, for defendant in error.
This is an action on a promissory note, originating in the justice of the peace court. Verdict was rendered for defendant, and plaintiff appealed to the district court, where, on trial de novo, judgment was again rendered for defendant. Plaintiff appeals. The facts are as follows:
Defendant executed the promissory note in question to the Republic Life Insurance Company in payment of a premium on an insurance policy. Plaintiff acquired the note by transfer from the insurance company. Defendant proved at the trial of the cause that the note was obtained from him by fraud on the part of the agent of the insurance company. The question presented to us is whether the trial court erred in rendering judgment for defendant because, as plaintiff claims, there was no evidence to show that plaintiff took the note in question with notice of the defect in the title of his transferor, the insurance company.
When the insurance company obtained the note by fraud, its title was defective. Section 11354, O. S. 1931 (48 Okla. St. Ann. sec. 125). The presumption that plaintiff held the note in due course was therefore overcome and it then devolved upon plaintiff to prove that he took the note without notice of the defect of title of his transferor. Section 11358, O. S. 1931 (48 Okla. St. Ann. sec. 129); Sharp v. Young (1938) 182 Okla. 596, 78 P.2d 815. Plaintiff's own testimony tends to show that he was a holder in due course, and we are therefore confronted with the same question as appeared in Sharp v. Young, supra, to wit: Is the evidence relating to plaintiff's relationship and association with the insurance company and the other facts and circumstances appearing in the record sufficient to create an issue of fact on the question as to whether he had sustained the burden of proof cast upon him, and to sustain the trial court's judgment?
It was stipulated that plaintiff was a stockholder in the insurance company and the record discloses that plaintiff refused to produce or exhibit the check which he testified he gave for the note in question. He testified that he discounted notes for the company, and paid $40.73 for the note when the unpaid balance was $54.30. Our disposition of the case of Sharp v. Young, supra, is controlling here. Therein we stated:
"We hold, however, that plaintiff's interest in the litigation coupled with the evidence of his connection and association with the insurance company constituted facts and circumstances at variance with his testimony, and sufficiently contradictory thereof as to support the judgment of the court to the effect that plaintiff had failed to sustain the burden of proof cast upon him as aforesaid."
See, also. Sharp v. Dunlap (1936) 176 Okla. 329, 55 P.2d 971, and Sharp v. Meyers (1938) 182 Okla. 375, 77 P.2d 1135.
Our holding herein makes it unnecessary to determine whether there was a total failure of consideration for the note for the reason that the insurance policy was ultra vires the power of the Republic Life Insurance Company to issue it.
Affirmed.
OSBORN, C. J., BAYLESS. V. C. J., and WELCH, GIBSON, and DAVISON, JJ., concur. RILEY and PHELPS, JJ., absent. CORN, J., dissents.