Kopperud v. Cookson

BURNETT, J.

The action was brought by the indorsee of a promissory note given in consideration of the sale of a certain stallion. The defense is that there was a failure of consideration by reason of the false and fraudulent representations made by the seller as to the age, soundness, and procreative ability of the horse, and that “a pretended indorsement or assignment of said note was made by the said Norm W. Thompson [the payee] to plaintiff, but said indorsement or assignment was fraudulent and void; that plaintiff, at the time said note was indorsed and assigned to him, knew that the same was without consideration and void, and knew that the said stallion was unsound and diseased in body and was worthless to said defendants, and said plaintiff did then and there conspire with said Norm W. Thompson to cheat and defraud the said defendants by having said note indorsed by said Norm W. Thompson to said plaintiff for the purpose of preventing the said defendants from making their defense of want of consideration when suit should be brought upon said note.”

It may be that the defendants were “stung” as one of the witnesses expressed it; it is quite probable, indeed, that Thompson perpetrated a fraud in inducing the purchasers to rely upon his representations as to the character of the horse.

But be that as it may, there can be no serious doubt that the judgment of the trial court must be upheld upon the other ground that plaintiff was “an indorsee in due course,” —in other words, that he “in good faith, in the ordinary course of business, and for value, before its apparent maturity or presumptive dishonor, and without knowledge of its actual dishonor,” acquired the note duly indorsed

[182]

to Mm. (Sec. 3123, Civ. Code.) The learned trial judge gave to this question careful consideration, as is apparent from his opimon filed in the case. He points out that at the time of the transaction the “uniform negotiable instrument law” had not become operative, but that no substantial change was effected thereby as -far as this question is concerned and that the case is governed by the prineiplés announced in sections 3137 and 3140 of the Civil Code as amended by the legislature of 1917 [Stats. 1917, p. 1541]. He proceeds: “That the plaintiff acquired the note in question in due course is admitted. That he acquired it in good faith is denied, and the basis of denial is placed upon the circumstances that he purchased the note at a ten per cent discount, and made no inquiry of the makers of the note as to the consideration and the circumstances leading up to its execution by them.” He declares that if plaintiff had made such inquiry he probably would not have discovered any fact indicating the invalidity of the note, but at most that the defendants had paid for the horse more than he was worth, but that it was worth more than the note which he was about to buy. Thereupon follows this: