EN
BANC
B. A.
GREEN, ET
AL.,
Plaintiffs-appellees,
G.
R.
No. 11526
January
2, 1917
-versus-
M. LOPEZ,
ET AL.,
Defendants-Appellants.
D
E C I S I
O N
CARSON,
J :
This is an appeal from
a judgment for the face value of a negotiable note in favor of the
plaintiffs
who purchased the note, and against the makers, with a declaration of
the
subsidiary liability of the payee, from whom the note was purchased and
by whom it was indorsed to the plaintiffs.
The Complaint alleged
that the note was indorsed by the payee to the plaintiffs "for value
received,"
and this allegation was conclusively established by the evidence
adduced
at the trial. We are of opinion that this allegation was
substantially
equivalent to a formal allegation that the indorsement was made for a
valuable
consideration, and that the truth of this allegation having been
established
by the introduction of competent evidence establishing the fact that
the
indorsement was made for a valuable consideration, the purchasers were
clearly entitled to judgment for the face value of the note.
"By the decisive
weight
of authority in this country, where negotiable paper has been put in
circulation,
and there is no infirmity or defense between the antecedent parties
thereto,
a purchaser of such security is entitled to recover thereon, as against
the maker, the whole amount, irrespective of what he may have paid
therefor."
(149 U. S., 327[1]).
It
follows that any allegation
which sets forth the existence of a valuable consideration for the
transfer
by indorsement is sufficient, notwithstanding the failure to allege
expressly
the amount which was in fact paid by the indorser.
What has been said
disposes of the various contentions of appellants based upon the
failure
of the court below to sustain a demurrer to the complaint because of
the
lack of an allegation setting forth specifically the nature and amount
of the consideration paid by the plaintiffs to the payee of the note,
by
whom it was indorsed in their favor.
The real defense relied
upon in the Court below by the makers of the note was that the
plaintiffs
were not bona fide holders of the note by indorsement, in that they had
knowledge of the existence of certain equitable defenses which the
makers
were entitle to set up as against the payee of the noted, before they
acquired
it by indorsement from the payee.
But there was nothing
on the face of the note to put the purchasers on notice of the
existence
of such equitable defenses. It was entirely regular in form and
came
into their possession in the usual course of business. Under
these
circumstances, the burden of proof was manifestly upon the makers of
the
note to establish the fact of knowledge of the equitable defenses
before
they could be permitted to rely upon such defenses as against the
purchasers.
The only evidence
tending
to establish such knowledge was the testimony of Lopez, one of the
makers
of the note, that a person unknown to him and representing himself to
be
an employee of Green, one of the plaintiffs, came to him, and made
inquiries
as to the validity and genuineness of the note, stating that his
principal
desired this information because he was contemplating its purchase; and
that he then and there explained the nature of his equitable defenses
as
against the payee, and repudiated any obligation to meet the note.
There is no evidence
of record upon which to base a finding that these alleged disclosures
were
in truth and in fact made to an employee of either of the plaintiffs
other
than the testimony of Lopez to the effect that these alleged
disclosures
were made to a person unknown to him, who represented himself to be an
employee of one of the plaintiffs; and the testimony of Green, one of
the
plaintiffs, who stated that before purchasing the note, he sent an
employee
to call upon the makers of the note to inquire whether it was a good
note
which would be paid at maturity, and that upon his return, this
employee
stated that he had been informed by the makers of the note that it was
a good note duly executed by them and that it would be paid when
due.
We do not stop to consider whether this evidence is sufficient to
establish
the fact that the person to whom the maker of the note claims to have
disclosed
the alleged equitable defenses was in truth and in fact the employee
sent
by the plaintiffs to the makers of the note for the purpose of
inquiring
as to its validity, because We are satisfied that, admitting that the
person
with whom Lopez claims to have had the interview was an employee of one
or both of the purchasers, We do not think that the evidence sustains
an
affirmative finding that the plaintiffs had knowledge of the alleged
equitable
defenses when they purchased the note. One of the purchasers of
the
note is a broker, engaged in business in the city of Manila, and the
other
is an attorney, licensed to practice in the courts of these Islands,
and
it would require stronger and more convincing evidence than the
interested
testimony of one of the makers of the note to satisfy us, as against
their
testimony to the contrary, that these gentlemen were so imprudent as to
discount negotiable paper, in the ordinary course of business, after
having
received formal notice of the existence of equitable defenses against
the
payee; and our opinion in this regard is strengthened by the undoubted
fact that they took the precaution before purchasing the note to send
an
agent to make inquiries as to its validity. We are forced to
conclude
with the trial judge that the testimony of the maker of the note as to
the disclosures made to the purchasers' agent must be rejected, either
on the ground that it is wholly false, or upon the ground that he
failed
to make himself understood in the course of his alleged interview with
the plaintiffs' agent, with the result in either event that knowledge
of
the existence of equitable defenses was not brought home to the
purchasers
of the note. Equitable defenses of this nature can, in no event,
defeat the right of the holders of a negotiable note by indorsement and
for valuable consideration, until and unless knowledge of the existence
of such equitable defenses is brought home to them, or until it appears
that the holders had such knowledge of the existence of defects in the
instrument as to charge them with bad faith in acquiring it under all
the
attendant circumstances. [Confer numerous cases cited in notes, 7
Cyc., p. 945].
The judgment entered
in the Court below should be affirmed, with the costs of this instance
against the appellants. So ordered.
Torres, Moreland, Trent
and Araullo, JJ., concur. |