Good v. Good , 72 N.C. App. 312 ( 1985 )

324 S.E.2d 43 (1985)

Royce Lee GOOD, Executor of the Estate of Albert Lee Good
v.
Roy Lee GOOD, Milton Good, and Lar-Mil Knitting Mills, Inc.

No. 8425SC107.

Court of Appeals of North Carolina.

January 15, 1985.

Rudisill & Brackett by Keith Bridges, Hickory, for plaintiff-appellee.

Corne, Pitts, Corne & Grant by Robert M. Grant, Jr., Newton, for defendant-appellants.

EAGLES, Judge.

Defendants contend that plaintiff, A.L. Good's executor, cannot maintain the action on the note because he is not a holder and further contend that there is not sufficient evidence of nonpayment to withstand defendants' motions for directed verdict and judgment notwithstanding the verdict. We disagree.

Defendants contend that plaintiff executor did not qualify as a "holder" as contemplated by G.S. 25-3-301. As defendants contend, the holder, i.e. one "who is in possession of ... an instrument ... issued or endorsed to him or to his order or to bearer or in blank," has authority to enforce the note. G.S. 25-1-201(20). Contrary to defendants' contentions the mere absence of the note from the owner's possession does not defeat his right to bring the action to enforce the terms of the note. G.S. 25-1-201(20).

The Uniform Commercial Code on which defendants rely, also deals with the missing document situation by providing as follows:

The owner of an instrument which is lost, whether by destruction, theft, or otherwise, may maintain an action in his own name and recover from any party liable thereon upon due proof of his ownership, the facts which prevent his production of the instrument and its terms. The court may require security indemnifying the defendant against loss by reason of further claims on the instrument.

G.S. 25-3-804.

While plaintiff does not qualify as holder because he did not have possession, the official commentary to G.S. 25-3-804 makes it clear that he may maintain the action if the note's ownership and terms can be proven and its absence can be accounted for.

The plaintiff who claims to be the owner of such an instrument is not a holder as that term is defined in this act since he is not in possession of the paper, and he does not have the holder's prima facie right to recover under the section on the burden of establishing signatures. He must establish the terms of the instrument and his ownership and must account for its absence.

Official Comment, G.S. 25-3-804.

We hold that plaintiff has met the requirements of G.S. 25-3-804.

The ownership and terms of the note are largely undisputed; the note itself was before the court.

By way of accounting for the note not being in plaintiff's possession, there was evidence in the form of

(1) expert testimony that the alleged signature on the promissory note was a forgery;

(2) testimony that on 17 November 1980 (the day A.L. Good died), plaintiff discovered that his father's house had been ransacked and certain items were missing;

(3) defendant's possession of and presentation of the promissory note;

(4) defendant Roy Good's testimony that he used his personal savings of $25,000 plus $5,000 in borrowed funds to pay A.L. Good $30,000.00 in cash on October 1, 1980;

(5) defendant Roy Good's failure to produce any record of payment other than the note with A.L. Good's alleged signature;

(6) defendant Roy Good's testimony that his bank records for the end of September 1980 showed his balance was not over $5,000;

(7) defendant Roy Good's testimony that he kept $25,000 in savings in his house;

(8) plaintiff's testimony that A.L. Good's bank records did not show a deposit of $30,000.00; and

(9) testimony that previous payments on the note had been by check.

For the reasons stated we hold that the trial court was correct in denying defendants' motions for directed verdict and judgment notwithstanding the verdict.

II

Defendants next assign as error admission of rebuttal testimony from Grace Killian that in the Catawba County Clerk of Superior Court's office an uncancelled and unsatisfied federal tax lien against Lar-Mill existed on the clerk's Book of Judgments. This testimony contradicted the prior testimony of defendants Roy Good and Milton Good that in the past there had been a federal tax lien but that it was now paid in full.

Defendants assert that admission of the rebuttal testimony was error because it constituted impermissible impeachment through use of the collateral matter of nonpayment of the federal tax lien. "The proper test for determining what is material and what is collateral is whether the evidence offered in contradiction would be admissible if tendered for some purpose other than mere contradiction." State v. Long, 280 N.C. 633, 639, 187 S.E.2d 47, 51 (1972).

It is clear that this evidence was admissible for a purpose other than mere contradiction, to show the motive of the individual defendants. Evidence of financial status such as unpaid liens and similar obligations is recognized as a proper technique for showing motive. State v. Pate, 40 N.C.App. 580, 253 S.E.2d 266, cert. denied, 297 N.C. 616, 257 S.E.2d 222 (1979). McCorkle v. Beatty, 226 N.C. 338, 38 S.E.2d 102 (1946).

Further it is clear that evidence of motive is admissible where allegations of theft of documents, forgery and prior payment of a note are involved. Dean Brandis notes: "The existence of a motive is ... a circumstance tending to make it more probable that the person in question did the act, hence evidence of a motive is always admissible where the doing of the act is in dispute." 1 Brandis, North Carolina Evidence, Section 83, (2d ed. 1982).

The disputed evidence was material, relevant and admissible. That defendants' company was heavily in debt and failing financially tended to show a motive for theft and forgery of the corporation's note.

Defendants argue as an additional basis for reversal that Ms. Killian's testimony about the federal tax lien records was impermissible as incompetent and irrelevant character evidence about specific acts. We disagree, noting that if the specific acts are "relevant and competent as evidence of something other than character, they are not inadmissible because they incidentally reflect upon character." 1 Brandis, North Carolina Evidence, Section 111 (2d ed. 1982).

Having carefully reviewed all defendants' assignments of error, we find in the trial

No error.

VAUGHN, C.J., and BRASWELL, J., concur.

VAUGHN, Former C.J., concurred in the result reached in this case prior to 31 December 1984.

BRASWELL, J., concurred in the result reached in this case prior to 31 December 1984.