Lamar v. Security Finance Co. , 147 Miss. 658 ( 1927 )

^* Corpus Juris-Cyc. References: Bills and Notes, 8CJ, p. 518, n. 50. Appellee brought this action in the circuit court of Quitman county against the appellants on five promissory notes, four of which were for one hundred dollars and the other for sixty-three dollars and forty cents. At the conclusion of the evidence, the court directed a verdict and judgment for appellee, from which judgment appellants prosecute this appeal.

The notes sued on were payable to the order of the Brenard Manufacturing Company and transferred to appellee. Appellants defended on the ground that the notes were procured from them by false and fraudulent representations on the part of the Brenard Manufacturing Company. To meet that defense, appellee contends that it purchased the notes from the payee, the Brenard Manufacturing Company, for value, before maturity, and without notice of any defense appellants had against the payee in the notes.

The evidence showed without conflict that appellee was engaged in the purchase of notes of this character, and that it had purchased a great many of such notes, a considerable number of which it had purchased from the Brenard Manufacturing Company; that appellee had been forced to resort to the courts to enforce the payment of some of the notes it had purchased from the Brenard Manufacturing Company; that in some of these cases the defense was made that the notes had been procured from the maker by the Brenard Manufacturing Company through false and fraudulent representations made by the latter — in some of which suits appellee had been unsuccessful, while in others it had been successful. The evidence showed as to these particular notes that appellee purchased them without notice of their having been procured by the Brenard Manufacturing Company by false and fraudulent representations, if it be a fact that they were so procured. Appellants' position is that the fact that appellee had purchased from the Brenard Manufacturing Company other notes than those here involved, which appellee had to resort to the courts to enforce, and in which suits the makers had defended on the ground that the Brenard Manufacturing Company had procured the notes through false and fraudulent representation, was sufficient to put appellee on notice and inquiry as to the validity of these particular notes. Appellants contend that thereby it became a question for the jury as to whether the notes sued on in this case had been procured by false and fraudulent representation.

We disagree with that contention. These notes were negotiable under our Negotiable Instruments Act (Laws 1916, chapter 244). Appellants knew that to be the fact when they issued the notes. They knew that the notes would probably be put in the channels of trade and would be purchased from the payee as an investment. Appellants should have known that such paper is purchased in the channels of trade by persons and corporations relying alone on the face of the notes and the solvency of the makers. If appellants' position be sound, no person could purchase negotiable paper with safety if he knew that at any time in the past the payee in such paper had procured other like paper through false and fraudulent representations. Some of the agents of the Brenard Manufacturing Company may have procured notes of this character through false and fraudulent representation, while its other agents taking such notes were free from such fraud.

It follows from these views that the trial court committed no error in directing a verdict for appellee.

Affirmed.