Cochran v. Shull

170 S.W. 997, 115 Ark. 226, 1914 Ark. LEXIS 99

• Court: Supreme Court of Arkansas
• Decided: November 9, 1914
• Status: Published

Opinion

Wood, J.,

(after stating the facts). In Barr C. & P. Co. v. Brooks-Ozan Merc. Co., 82 Ark. 219, we held that parol evidence was admissible to prove that a written contract was executed upon condition that it was not to be a completed contract until certain precedent conditions had been fulfilled. And in American Sales Book Co. v. Whitaker, 100 Ark. 360-365, we said; “Parol evidence is admissible to show that a written instrument was not signed or delivered as a concluded contract, but was only signed and delivered to be held pending the happening of a contingency or the performance of some condition, and that subsequently such contingency did not happen, or such condition was not performed, and therefore that the written instrument did not become effective as a completed contract.” See, also, Graham v. Remmel, 76 Ark. 140.

The appellee showed here that the order and note were not to be sent to the company for a day or two, until he had an opportunity to look over copies of the same and determine whether they were satisfactory, and if not satisfactory, that he might countermand the order. The company’s agent who took the order and note violated this agreement by immediately sending in the order and note. This was a fraud upon the appellee.

“Evidence of illegality or fraud in the origin or transfer of commercial paper throws on the holder the burden of proving his good faith.” 2 Randolph on Commercial Paper, § 1026. See, also, Daniel on Negotiable Instruments, § 815.

The presumption which the law merchant raises in favor of the holder, in due course, of commercial paper was overcome by the proof on -the part of the appellee, and shifted the burden to the appellant to show that he was the holder for value. Ark. Natl. Bank v. Martin, 110 Ark. 578-587.

The judgment is therefore correct, and it is affirmed.