Clark v. Porter

63 S.W. 89, 162 Mo. 516, 1901 Mo. LEXIS 179
CourtSupreme Court of Missouri
DecidedMay 14, 1901
StatusPublished
Cited by4 cases

This text of 63 S.W. 89 (Clark v. Porter) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clark v. Porter, 63 S.W. 89, 162 Mo. 516, 1901 Mo. LEXIS 179 (Mo. 1901).

Opinion

MARSHALL, J.

This is an action upon two negotiable promissory notes for five hundred dollars each, with eight per cent interest, dated May 1,1891, executed at Muscogee, Indian Territory, by the defendant, to the order of R. L. Duvall, by him indorsed before maturity to the plaintiff, and payable at the Merchants Bank, in Eort Smith, Arkansas. The petition is in the usual form.

The answer is a general denial, with two special defenses: first, that the notes were procured by fraud, and that there has been a total failure of consideration; and, second, that the notes were given for a purchase of the right to use a certain patent within the Indian Territory, Oklahoma, and a portion of Arkansas, which Duvall and his associates claimed to own, and under the laws of Arkansas, they were subject to all the defenses that could have been made against them if they had remained in Duvall’s hands.

The fraud charged in the first special defense is, that he and his associates represented to the defendant and others that they owned the right to operate and to form companies to operate a certain patent for the successful construction and growth of a certain hedge fence, theretofore known to the people as a common osage orange fence; Duvall induced defendant and others to subscribe for stock in a company to be organized by him for such purpose, and caused defendant to execute the notes sued on in payment for his subscription to the stock of [518]*518the company upon a representation and agreement that the notes were not to be negotiated and that the business would be so profitable that none or only a small part of the notes would ever have to be paid; that Duvall and associates never owned any such patent or right under such patent; nor was the growing of an osage orange fence patentable; that the plaintiff took the notes with full knowledge of all these facts and hence she is not a bona fide purchaser for value.

The reply is a general denial of the special defenses set up in the answer, with two special matters of avoidance thereof. Eirst, that in January, 1891, she purchased for value and without notice, before their maturity, three promissory notes for one thousand dollars each, executed by defendant to the order of R. L. Duvall, and by him indorsed to George B. Graham; that in April or May, 1891, “in order to carry out and effectuate, as she is informed and believes to be true, a compromise adjustment of certain business transactions between the defendant and the said Duvall (of which she has no knowledge and to which she was in nowise a party and in noway related), the defendant undertook and did execute and deliver to the said Duvall his three certain promissory notes of date May 1, 1891, and of which the notes here sued on are two, in order that he might use the same in taking up and obtaining the surrender of the first three mentioned notes so executed and delivered by the defendant as aforesaid, in order that the said Duvall could, in pursuance of such compromise adjustment as aforesaid, surrender the same to the defendant; that thereafter, in pursuance of the said agreement between the said Duvall and the defendant and for the purpose thereof, said Duvall offered her in consideration of the sum of five hundred dollars and in further consideration that she would surrender the said notes of the defendant, so held by her and acquired by her as aforesaid, to him to be delivered to defend[519]*519ant as aforesaid, and herein sued on, which said offer or proposition, she thereupon in good faith accepted and thereupon and as cotémporaneous acts, she surrendered to the said Duvall, the said three notes of the defendant, so owned, acquired and held by her as aforesaid, to be surrendered by him to the defendant as aforesaid, and he delivered to her, among such new notes, the notes sued on in this cause, duly indorsed by him before the maturity thereof, and immediately thereafter delivered, as she is informed and believes and charges to be true, the three said notes for one thousand dollars each, surrendered by the said Duvall as aforesaid to the said defendant, who since then has been and now is in possession of same as she avers. Second. Eor reply to the second paragraph of the amended answer herein, plaintiff says it is not true and she therefore denies that the notes herein sued on were given for the purchase or payment of the right to use a certain patent as in said second paragraph alleged. Plaintiff says it is true that said notes are payable in said State of Arkansas, but she denies that under the laws in force in said State they are liable in the hands of this plaintiff to all of thee defenses, which the makers thereof have against the original payee, as defendant therein alleges; she denies that said note had its inception in fraud or that the consideration for same has failed.”

There is no substantial conflict in the evidence as to the origin or consideration for the notes sued on. Duvall represented to the defendant and others in the Indian Territory that he owned a certain patent for an osage orange fence, and induced persons to subscribe for stock in a proposed company to operate the patent, and to give their notes in payment for their stock subscriptions upon his promise not to transfer the notes, but to furnish the working capital for making the enterprise a success. No company was organized and no fences constructed, but the notes were negotiated. The defendant suh[520]*520scribed for three thousand dollars worth of stock, and gave three notes of $1,000 each therefor. Thereafter, the plaintiff, who had lately received an inheritance 'mostly in the shape of five per cent bonds from the East, was looking for a home in Missouri. She met Graham, an accomplice of Duvall, on a train. He induced her to buy notes so executed, defendant’s among them, to the amount of five thousand dollars, she paying therefor thirty-five hundred dollars. She did not know anything about the solvency of any of the makers of the notes, and says she had never seen a promissory note before, but as her bonds drew only five'per cent and as the notes drew eight per cent, and as she was getting the notes for fifteen hundred dollars less than their face value, she made the exchange and purchase. She was afterwards approached by Graham and told that there was trouble about the matter, the people were dissatisfied about the company and that there would probably be a lawsuit over it, and asked to lend her notes to Duvall so he could’ compromise the matter with the makers of the notes. She refused at first, but when Duvall himself saw her about it, and promised to give her $500 and the three new notes of the defendant for $500 each, she consented to the arrangement, delivered the three one thousand dollar notes to Duvall to be by him surrendered to the defendant, and thereafter accepted in lieu thereof the three five hundred dollar notes made by the defendant, of which the two notes sued on herein were a part. This compromise or adjustment was caused by the people, whom Duvall had induced to subscribe for stock originally, raising a row about the fraud he had perpetrated ■on them, in not organizing any company or building any hedge •fences, and in negotiating the notes they had given him. The compromise consisted of Duvall returning the original notes, and letting the subscribers off with one-half of their subscriptions, taking new notes for the other half, and organizing a [521]*521company under the laws of Arkansas. No patent osage orange hedge fences were ever constructed, however.

On the ninth of April, 1891, the statutes of Arkansas were amended so as to provide as follows:

“Sec. 492.

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Cite This Page — Counsel Stack

Bluebook (online)
63 S.W. 89, 162 Mo. 516, 1901 Mo. LEXIS 179, Counsel Stack Legal Research, https://law.counselstack.com/opinion/clark-v-porter-mo-1901.