Vermillion v. Teters

DRAPEAU, J. On September 17, 1951, defendant Teters executed and delivered to Wes Beeman Productions a promissory note for $3,800, payable November 1, 1951. Concurrently therewith, a preliminary agreement was executed by Wes Beeman Productions, as party of the first part, and John L. Carpenter and defendant Teters, as parties of the second part. This agreement provided that the note and property rights to a certain screenplay should “stand for a maximum of 45 days,” and gave parties of the second part the right “to pick this note up at any time prior to its maturity.”

Thereafter, on September 28, 1951, I. Wellesley Beeman, president of Wes Beeman Productions, endorsed and delivered the $3,800 note to plaintiff Vermillion. At the same time, Beeman also gave to plaintiff the unsecured note of the Productions company for $2,200. In return; plaintiff gave to Mr. Beeman a cashier’s cheek of Bank of America for $6,000 made payable to plaintiff and endorsed by him to Wes Beeman Productions.

[808]This $6,000 was given to pay a “deficit in the cost of production” of a television picture, which Mr. Beeman stated he did not have money available to take care of.

Before he acquired the $3,800 note, plaintiff knew the terms and covenants of the preliminary agreement.

When the note became due, plaintiff demanded payment and upon defendant’s refusal to pay, brought the instant action.

From the judgment in favor of plaintiff, defendant appeals.

It is here asserted that respondent Vermillion is not a holder in due course of the note sued upon. This for the reason that the preliminary agreement indicates that the note was conditionally delivered, was to be annexed thereto, and was to be retrievable by appellant Teters for a period of 45 days.

In order to be negotiable, an instrument must (1) be in writing and signed by the maker or drawer; (2) contain an unconditional promise or order to pay a sum certain in money; (3) be payable on demand, or at a fixed or determinable future time; (4) be payable to order or to bearer; and (5) where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty. (Civ. Code, § 3082.) - .

A holder in due course is one who has taken the instrument under the following conditions: (1) that it is complete and regular on its face; (2) that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; (3) that he took it in good faith and for value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it. (Civ. Code, § 3133.)