Pacific Acceptance Corp. v. Goodman

CONREY, P. J.

The defendant appeals from a judgment rendered against him for the amount due on a check of three thousand dollars made by him and delivered to plaintiff’s assignor. We have not been favored with any brief or argument on behalf of respondent.

Apparently it is a fact, and we shall so assume, that as against the Pacific Motors Corporation, named as payee in the check, the defendant at all times has had a good defense. The trial court, however, determined that the plaintiff is a holder of said check in due course and for value. If the record supports that decision, the judgment must be affirmed.

The payee’s title to the check was defective, within the meaning of the Civil Code title relating to negotiable instruments, by reason of the fact that the payee negotiated the instrument to the plaintiff in breach of faith and under such circumstances as amounted to a fraud on the part of the payee. (Civ. Code, sec. 3136.) It is admitted that respondent took the check under conditions sufficient to establish its position as a holder in due course in all respects, except that appellant contends that respondent did not receive the check for value or without notice of infirmity in the instrument or of the defect of the payee’s title. (Civ. Code, sec. 3133.) To be charged with notice of such infirmity or defect, respondent must have had knowledge thereof, or knowledge of such facts that its action in taking the instrument amounted to bad faith. (Civ. Code, sec. 3137.)

The facts relating to the negotiation of the check by the payee to plaintiff are as follows: The Pacific Motors Corporation being indebted to the plaintiff, its president, Mr. Kux, on June 18/1920, delivered to plaintiff several checks of the Pacific Motors Corporation, drawn on a bank in San Francisco. The bank advised plaintiff that there was not sufficient money to pay these checks. Thereupon an officer of plaintiff telephoned Kux in Los Angeles and advised him about said unpaid checks. In reply Kux stated that he was working on a deal in Los Angeles and expected to leave that night for San Francisco, and would bring an amount of money to plaintiff the following morning. Accordingly Kux

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did go to San Francisco and brought with him the check which he had obtained from defendant, and on behalf of the payee indorsed and delivered the same to the plaintiff. We are unable to discover in the circumstances shown" by the stipulation of facts that the plaintiff did not take the check in good faith, and without notice of any infirmity "in the instrument or defect in the title of the payee.