Smith v. Wood

36 S.E. 649, 111 Ga. 221, 1900 Ga. LEXIS 519

Opinion

Fish, J.

There was no error in the judgment of the court sustaining the demurrer to so much of the plea as set up that the note sued upon was illegal and void. The note was not void, although it failed to comply with the act approved Dec. 21, 1897. (Acts 1897, p. 81.) A failure to comply with the' requirements of that act, by expressing in the face of a note or contract given for the purchase-price of any patent right, or territory for the sale of such right, the consideration, stating the thing or article for which the same was given, does not render the note or contract void, but makes the seller, who takes such note or contract, guilty of a misdemeanor. Had the purpose of the legislature been to render void every note and contract for the purchase of a patent right, which failed to express upon its face the consideration and the particular thing or article for which it was given, doubtless the act wmuld have declared such notes or contracts to be illegal and void. Instead of doing this, however, the act imposes upon the seller of a patent right, who-takes a note or contract for the purchase-money of the same, the legal duty of expressing in the note or contract the consideration of the same, and makes his failure to do so a misdemeanor; and further provides that when the consideration is expressed in the writing as required by the act, any one who purchases the note or contract shall take it subject, to all the equities existing between the original parties. It is true that the title of the act, after stating the requirements of the act in reference to such notes and contracts, does indicate a purpose to declare void all notes and contracts which fail to comply therewith, but there is nothing in the act itself which declares them to be void, nor is there anything which indicates an intention to render them void. If the meaning of the act itself were doubtful, resort might be had to the title, in order, if possible, to resolve the doubt. But as the provisions of the act are clear and unambiguous, it is neither necessary nor proper to resort to its title in order to ascertain its meaning. Counsel for plaintiff in error contend that the note is void, “because based upon a crime,” and in support of this contention cite Kleckley v. Leyden, 63 Ga. 215, Johnston v. McConnell, 65 Ga. 129, and Conley v. Sims & Blalock, 71 Ga. 161. It is undoubted^ true, from these decisions, that a note based upon an illegal consideration is void, even in the hands of a bona fide holder thereof. In each of the cases cited the note involved was founded upon an illegal consideration, having been given for the purchase-price of commercial fertilizers which had not been inspected, branded, and tagged as required by law. The law made it a crime to sell such fertilizers. A note given for something the sale of which the law absolutely prohibits and makes penal is based upon an illegal consideration, and is consequently void in the hands of any holder thereof. The thing for which the note is given is outlawed, and the note standing upon such a foundation is outlawed also. There is a wide difference between those cases and the one now under consideration. In the present case the consideration for the note was perfectly legal. It is not illegal to sell a patent right. The crime consists, not in the sale of the patent right, but in the failure of the seller to express in the note the article or thing which forms its consideration. The note in question was not “based upon a crime; ” if it had been, no matter how it might have been written, or with what particularity it described the consideration, it would have been void. The consideration of .a note given for a patent right may be perfectly legal, and the maker of the note may have even received full value .for the note, and jmt the seller of the patent right may have violated the law by not properly expressing in the note the consideration for which it was given. It is one thing to sell an article the sale of which the law prohibits and makes penal; it is quite another thing to sell an article the sale of which is perfectly lawful, and to violate the law by taking a note for the purchase-money which does not properly express the consideration for which the note was given. In the one case the consideration upon which the contract is based is illegal; while in the other the consideration of the contract is perfectly legal.

2. The only other ground to be considered is, whether, as alleged in the motion for a new trial, the judgment was contrary to the evidence. The court tried the case without the intervention of a jury, and rendered judgment in favor of the plaintiff for the full amount of the note. Was this judgment con trary to the evidence? The only defense to the merits was the plea of partial failure of consideration. This plea was not stricken, and the question to be considered is, did the defendant, as against the plaintiff, sustain this defense? Failure of 'consideration is no defense against one who purchases a negotiable instrument before its maturity, unless at the time of the purchase he knew, or had reasonable grounds to suspect, that the consideration had failed. The note, while not complying with the statute by stating the particular thing for which if was given, did show that it was given for a patent right. While it is only when the consideration of a note given for the purchase of a patent right “is expressed in the face thereof as is provided in section 1” of the act of 1897, that the note carries upon its face such notice of its consideration as necessarily subjects any one who purchases the note before its maturity to the equities which may exist between the original parties, in view of the policy of the law, as shown by the act of 1897, with reference to notes given for the purchase of patent rights, it maybe that the statement of the consideration in this note was sufficient to put a prospective purchaser upon inquiry as to its consideration and what equities, if any, might exist between the maker and the payee. Granting this to be true, we are of opinion that, under the evidence, the defense of partial failure of consideration was not available as against the plaintiff. It appears from the testimony of the defendant himself that “the consideration for the note sued on was a patent right for a gate, for the counties of Floyd and.Bartow.” On January 18, 1898, he bought the right for Floyd county for $125, for which amount he gave his note. Afterwards he purchased of Gregory the right for Bartow county, for which he was to pay $75. Gregory “said he would destroy the noté and deed that had been executed in January, and give [the defendant] a deed to Bartow and Floyd together.” The note sued on was executed on the 16th of March, 1898, and ithnay be inferred from the defendant’s testimony — he nowhere expressly states it — that its consideration was the right to the patent for both Floyd and Bartow counties. According to the agreement, the note should have been for only $200, instead of $210. The consideration for this note has partially failed, because Gregory failed to convey to the defendant the right to Bartow county. On April 7,1898, which was more than three weeks after the note sued on was executed, the defendant gave to Gregory, who then held the note, a certificate stating that he had given the note to Gregory for a patent right, “that he expected to pay it when due, that he had value received therefor, and that he was whiling for Gregory to sell or trade it.” So much appears from the defendant’s own testimony. Gregory presented this certificate to the plaintiff before the plaintiff traded for the note.’ At the time that the defendant gave this certificate to Gregory he was obliged to have known that he had received no conveyance of the right for the county of Bartow. The “deed,” to use his expression, which he had received when he purchased the right for Floyd county,, covered only Floyd county, and this he knew. He testified that Gregory “said he would destroy the note and deed that had been executed in January, and give me a deed to Bartow and Floyd together, and this I thought he had done until I Game-to look at the papers last December, when I found I had only the paper’s I got in January, 1898, which only called'for Floyd.”’ It is extremely difficult to conceive how the defendant could, have thought that Gregory had destroyed the conveyance of the-patent right for Floyd county, which the defendant still retained in his possession, and had given to him another conveyance covering both Floyd and Bartow counties, when Gregory had given to him' no paper of any kind from the time that the defendant-had received the conveyance covering only the right to Floyd county until April 7, when he purchased of Gregory a half-interest in six other counties. The defendant himself testified that the only papers he got were the one covering Floyd county, which he received in January, and the one given him when he purchased the half-interest in the six counties, and that he “did not-know that Bartow had been stuck in the last paper.” It- would be an insult to his intelligence, therefore, to believe that he did not know of the partial failure of cd'nsideration for the note sued on, on April 7,1898, when he signed the certificate which Gregory used in inducing the plaintiff to purchase the note. After-ample opportunity to know'- that there had been a failure of consideration in the respect alleged, he, over his own signature^ said — in effect to all whom it might concern — that he gave this note tb Gregory fór a-patent right, “that he expected to pay it when due, that he had value received therefor, and that he was willing for Gregory to sell or trade it; ” and this written statement of the defendant was presented by Gregory to the plaintiff, who was thus induced to exchange valuable property for the note. Irrespective, therefore, of the plaintiff’s testimony in reference to the conversation which he testified he had with the defendant before the purchase of the note from Gregory we think that the defendant was estopped from setting up failure of consideration against the plaintiff. Greenhood, Pub. Pol., Rule 10.

Judgment affirmed.

All the Justices concurring.