National Exchange Bank v. Venemans

This action is founded upon a negotiable promissory note made by the defendant Venemans for the-sum of $220, payable to his own order, and by him delivered to a person with whom he had a business transaction on the day the note bears date.

Before its maturity the plaintiff became a bona fide purchaser thereof for value. The maker interposed the defense that at the time he signed the note he understood and believed that it was a contract of a different import, not a note; that he was induced to sign and deliver the same by the false and fraudulent representations of the person to whom it was delivered as to its true nature and contents.

Upon the trial he also contended, that in view of all the attending facts and circumstances he was free from the imputation of loches and carelessness in relying upon the person to whom it was delivered as to the real character of the instrument. At the close of the evidence the plaintiff requested the court to direct a verdict in its favor upon the ground that upon the undisputed facts the defendant was guilty of loches and carelessness in signing the note without ascertaining its nature and import, and as the plaintiff purchased the same before its maturity, in good faith and for a valuable consideration, it was entitled to a verdict for the amount of the note as a matter of law. This request was denied by the court, and the plaintiff took an exception to the ruling. And this presents the only question for our consideration.

Most of the evidence bearing on the question of the defendant’s negligence was given by himself as a witness in his own behalf. If the jury believed his statements, they were justified in finding as facts that several days before the note was signed the defendant had negotiations with two persons at his own house, both of whom were strangers to him, which resulted in the execution and delivery of two separate instruments in writing, both of which were given in evidence. By the terms of one of them the defendant was appointed the agent of the “Port Huron Iron Works,” located at Port Huron, Michigan, with authority to sell in the township in which the defendant resided, cornshellers manufactured by that company. By the terms of the other agreement, signed by the defendant and one J. Perry, who claimed to be the agent of the said company, the company agreed that the defendant might return after

Before any of the machines were delivered to the defendant and on the day the note was given, another person, also a stranger to the defendant, called at his house and stated to him in substance, that he was the agent of the manufacturing company and that there was then at the railroad depot located some few miles from the defendant’s residence, twenty corn shellers which had been consigned to him in pursuance of the previous arrangement and that he desired the defendant to sign a memorandum or contract as evidence to be shown to the company that the defendant had received the corn shellers shipped to Mm and that he was pecuniarily responsible for the same. It does not appear from the case that this person disclosed his name, or that the defendant made any inquries as to his authority to represent the manufacturing company; nor does it appear that there was not a manufacturing company known by the name of the Port Huron Iron Works engaged in the manufacture -of corn shellers at Port Huron. But the jury were justified in reaching the conclusion that the defendant negotiated with the persons first namedin good faith, supposing that he was making a valid contract with a responsible party, intending on his part to carry out the agreement and also believed that one or more machines would be sent to him for the purpose of being sold as agreed upon in the written instrument. The last named person came to the defendant’s house in company with a young man some seventeen years of age, who was then also a stranger to the defendant, but upon the trial it appeared that he was a servant of the livery man who had been engaged to carry the stranger from the depot to the defendant’s house. Before the note was signed the defendant stated, that he had fears that the paper which he was asked to execute might turn out to be a note, and thereupon the stranger assured him, that it was not and was nothing but a contract of the nature already stated. The driver remained in charge of the horse and so near to the parties that he might have heard their conversation, and the note was signed and delivered in Ms presence. The note was partly written and partly printed and the defendant did not request the boy in charge of the horse to read the same to Mm. The defendant is a German by birth and a farmer. Neither he nor Ms wife could at that time read English written or prmted, and his nearest neighbor lived about half a mile distant. Before signing the paper the defendant consulted Ms wife as to its contents and she informed him that she was unable to read it and did not understand its meanrng. It was not

The jury were also justified in reaching the conclusion that when the defendant signed the note he believed it was a paper of a different character and did not contain a promise to pay money to any one unconditionally. The defendant admitted that he intended to execute.an instrument which would contain a promise on his part of some kind and that the form of the same and the extent of his liability was to be ascertained and measured by the writing itself. The general rule of Jaw applicable to the case is, that where a party is induced to sign a negotiable instrument by reason of fraud, artifice or deception practiced upon Mm by another as to the nature of the instrument, and the maker signs the same innocently and under the belief that it was a contract of a different character, then there can be no recovery upon the bill or note although the holder may be an innocent purchaser for value before maturity, unless the maker was guilty of loches or carelessness in omitting to read the same, or by some other means ascertaining the true nature and import of the instrument. If, however, the maker was guilty of loches or negligence in this respect he will be liable to a bona fide holder for value, who purchased the note before maturity. Daniel on Negotiable Instruments, •§ 850; Chapman v. Rose, 56 N. Y., 137 ; Foster v. McKinnon, 38 Law Jour. Rep. [N. S.], 310; Citizens National Bank v. Smith, 55 N. H., 593 ; Penn. R. R. Co. v. Shay, 82 Pa., 203 ; Bigelow on Bills and Notes, 583; Millard v. Barton, 13 R., 1 .

In his charge to the jury the learned judge stated the law applicable to the case in conformity to both of said propositions, neither party excepted to these instructions. The plaintiff’s counsel now concedes their accuracy as general legal propositions. His contention now is, that upon the undisputed facts the plaintiff was- entitled to a verdict and that it was error not to direct a finding in the plaintiff’s favor as requested on the trial. As the plaintiff was a bona fide purchaser for value before maturity the burden of proof was cast upon the defendant to show that he had been induced to sign the note by false and deceptive representations, and that he was free from loches or negligence on Ms part. We think a case was made for the consideration of the jury and that the question of the defendant’s negligence was properly submitted to them for their determination. As the maker could not read the English language he was obliged to rely upon the representations

The neglect to exhibit the paper to the boy in charge of the horse for the purpose of ascertaining from him its contents presents a more serious question. Because this was not done the plaintiff bases his whole argument that the defendant was guilty of negligence as matter of. law. The evidence tended to show that this young man was the apparent companion or servant of the party with whom the defendant was transacting the business, and were it not for that circumstance we should be of the decided opinion that it was the duty of the defendant to consult him as to the contents of the paper. A statement had been made to the defendant in the presence of the boy as to the contents of the paper, and the defendant had no good reason for supposing, if a fraud was contemplated, that the boy could be used as a means of exposing it. The lad was then a stranger to the defendant, and the defendant had some reason for believing that these persons visited him for a common purpose. Within the rule as laid down by the leading authorities, we are of the opinion that the defendant made a case which required the court to submit it to the jury, and it was for them to say whether he had excused himself in placing the confidence which he did in the other

As the exception to the refusal to direct a verdict in the plaintiff’s favor was ordered to be heard here in the first instance, we have no power on this motion to determine whether the verdict is against the weight of evidence. On the former trial of this case there was a verdict for the defendant which this court set aside, for the reason that it then appeared by the case that the wife of the defendant could read English, and that he did not consult with her for the purpose of ascertaining the contents of the paper, and that the omission to do so was negligence per se.

The plaintiff cites us to our decision in the case of this Plaintiff v. Ogden ( 31 Hun, 443 ), as an authority in support of his argument that the exception was well taken. In that case it was held that the defendant therein, the maker of a note, was guilty of negligence in omitting to consult the members of his own family, who could read and were present at the time of its execution.

In sustaining the ruling of the trial judge in submitting the question of negligence to the jury, we do not intend to depart from the rules of lay stated in our opinion in that case.

The plaintiff’s motion for a new trial is denied, and judgment ordered for the defendant on the verdict.

Haight, J. not sitting; Smith, P. J., and Bradley, J., concur.