Boyd v. Bearce

California Court of Appeal Jun 2, 1920 No. Civ. No. 2168.Published

Before: Burnett

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Holding. The court held that a purchaser of a non-negotiable promissory note who acquires it for a grossly inadequate price under suspicious circumstances is not a bona fide purchaser and is charged with notice of the transferor's fraudulent title.

Issues

Whether a promissory note containing an acceleration clause is negotiable.
Whether a purchaser of a non-negotiable note who fails to inquire into the transferor's title despite suspicious circumstances can be considered a bona fide purchaser.

Disposition. affirmed

Quotations verified verbatim against the opinion

“the note, having a provision for acceleration of the time of payment of the principal if any installment of interest was not paid, was non-negotiable.”

“any subsequent purchaser or holder is held to a stricter accountability as to notice of any infirmity in the title of the one transferring it than in case of a negotiable instrument.”

“Inadequacy of consideration is, indeed, not conclusive, but the authorities generally hold that it is a circumstance proper to be considered in determining the question of good faith.”

Synopsis

The facts are stated in the opinion of the court.

BURNETT, J.

The appeal is from the judgment rendered in favor of plaintiff by the superior court of San Joaquin County. The defendant Bearce was indebted to plaintiff in the sum of $2,958.68, evidenced by his promis

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sory note in that amount, dated April 22, 1916, bearing interest at the rate of seven per cent per annum. Said note required the “interest to be paid annually, and if not so paid as it becomes due, to bear interest at the same rate as said principal sum, but if default be made in the payment of interest, then the principal sum of this note shall immediately become due at the option of the holder hereof.” The first year’s interest on the note was not paid and plaintiff’s attorneys wrote to defendant Bearee on May 11, 1917, demanding payment of the interest, and again on May 18th following, notifying said defendant that the plaintiff elected to declare the whole of said note due, and demanding payment of the sum. On May 22, 1917, defendant wrote to said, attorneys that he had paid the note in full, having purchased the same from the defendant M. P. Fries on or about the eighteenth day of May, 1917. About the fifteenth day of May, 1917, defendant Fries called upon plaintiff for the purpose of inducing her to let him have the Bearee note for collection. After some conversation Mrs. Boyd delivered the note to Fries and he in return gave, her his note for $1,600, and for security gave her 3,200 shares of the capital stock of Shasta National Copper Company and an agreement in writing as follows:

“Fresno, Calif., May 15, 1917.

“Mrs. Josephine P. Boyd,

“Fresno, Calif.

“Dear Madam: In addition to the secured note given you this date, I hereby promise and agree to pay all money collected on the Byron A. Bearee note given me this day, over and above the sum of $1,600.

“M. P. Fries.”

On May 15th Fries at Fresno called Mr. Bearee at Stoek'ton by telephone and asked him what he would pay for the Boyd note. Mr. Bearee finally agreed to pay fifty cents on the dollar and’ wired Fries to that effect. Several days later Fries came to Stockton with the note and Mr. Bearee, according to his testimony, on seeing that the same was properly indorsed, gave Fries a check for $1,350 and credited him with $250 on account of money which Fries at that time owed to Mr. Bearee. On November 6, 1917, Fries sent Mrs. Boyd a check for 'fifty-six dollars in payment of the sum semi-annually due on his note for $1,600. This

Boyd v. Bearce

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Synopsis

BURNETT, J.

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