Gibbes MacHinery Co. v. Roper , 77 S.C. 39 ( 1907 )

April 23, 1907. The opinion of the Court was delivered by The appeal herein raises the question whether the plaintiffs are creditors for valuable consideration without notice under the recording statute.

The facts are fully set out in the report of S.W.G. Shipp, Esq., special referee, which was confirmed by his Honor, the Circuit Judge.

While these exceptions are numerous, the appellants have not discussed them in detail, as they are dependent upon the question whether the plaintiffs are creditors for value without notice.

The first assignment of error which will be considered is, whether the presiding Judge properly ruled that the plaintiff, A.M. Gibbes, was not bound by the notice communicated to his salesman, J.A. Pate, that L.B. Roper, had conveyed the land to Pocahontas Roper and that she had mortgaged the same to C.S. McCall, prior to the following agreement entered into between said plaintiff (through his agent), and L.B. Roper:

"March 14, 1901.

"Mr. L.B. Roper, Single, S.C.: We propose to furnish you the following F.O.B. Charlotte, N.C., and Columbia, S.C. same to be complete as usually furnished, per manufacturer's catalogues and specifications, but no attachments, extra parts or other items are to be furnished unless mentioned specifically herein.

"First class materials are to be used and workmanship is to be the equal of that on any similar goods.

"Machines are warranted to do the work stated in manufacturers' catalogues, or indorsed hereon in writing by any authorized agent of this company, provided the necessary power is furnished, and belts, pulleys, etc., are of sufficient size, and the machines are properly set and operated. (When we furnish power, pulleys, belting, etc., we are responsible only when conditions and requirements are made known to us, and are explicitly stated.)

"Title to the above property remains in us until the same is fully paid for. Insurance to be taken for our benefit as our interest may appear, if required.

"Shipment to be made about June 15, 1901. Time is not guaranteed.

"Unless special instructions are given, shipments are made via the most advantageous routes.

"Payments to be made as follows: $370 69-100 dollars; one-third cash when machinery starts to work; one-half of balance January 1st, 1902; balance October 1st, 1902.

"Notes to bear interest at eight per cent. from September 1st, 1901, until paid.

"W.H. Gibbes Co.,

"By J.A. Pate.

"The foregoing proposition is accepted this 14th day of March, 1901, subject to confirmation by W.H. Gibbes Co., from their office in Columbia, S.C.L.B. Roper."

Pate unquestionably had authority as agent to enter into the agreement for the sale of the machinery, subject to the approval of his principal, and, in this instance, the sale of the machinery was ratified by the principal.

The contract showed upon its face that a due regard for business methods, made it the duty of the agent to take into consideration the financial responsibility of the purchaser, in the absence of a limitation upon the authority of the agent, of which the purchaser had notice.

And it appears from the testimony, that the agent, in discharging said duty, considered the fact that the land had been conveyed to Mrs. Roper, and by her mortgaged to C. S. McCall, in determining whether the credit of L.B. Roper was thereby affected.

As the financial condition of L.B. Roper was an element necessarily entering into the sale of the machinery by the agent, in the first instance, unless the purchaser had been notified that the agent was not authorized to consider this question, the fact that Roper had conveyed the land, and that it had been mortgaged was material, and had a direct bearing upon the contract. Under such circumstances notice communicated to the agent will be imputed to the principal. Salinas v. Turner, 33 S.C. 231, 11 S.E., 702;Bates v. Mortgage Co., 37 S.C. 88, 16 S.E., 883; AmericanCo. v. Felder, 44 S.C. 478, 22 S.E., 598; Blackwell v.Mortgage Co., 65 S.C. 105, 43 S.E., 395.

Therefore, there was error in the ruling that the plaintiff was a purchaser for value without notice.

The next question for consideration is whether there was error in the ruling that the plaintiff, Strauss, was a creditor for value without notice.

Even conceding that the notes which were payable to the order of Joe Cabell Davis, were subject to the defense of failure of consideration, nevertheless, they were indorsed in blank by Davis, and came into the hands of Hall and Clement before maturity, for valuable consideration, in due course of business.

Under these circumstances, the law will presume that they became the owners of the notes without notice of any equities that would defeat a recovery in an action thereon, between the original parties to the notes, and there was no testimony rebutting this presumption.

The plaintiff, Strauss, came into possession of the notes under the following special indorsement: "I hereby indorse the within obligation to ____, and I waive protest and notice of non-payment thereof, and agree to extension of time to debtor without further notice. B.M. Clement."

While it is true the time of payment was rendered uncertain by the indorsement, and the notes were thereby rendered unnegotiable as long as that indorsement remained upon them, nevertheless Strauss succeeded to the rights of Hall Clement, and as the notes in their hands were free from equities, the consideration could not be inquired into, after Strauss became the holder thereof.

It is the judgment of this Court that the judgment of the Circuit Court be modified in the particulars hereinbefore mentioned, and in all other respects affirmed.

MR. JUSTICE WOODS concurs in the result.