Vaughan v. Brandt

123 P. 591, 21 Idaho 628, 1912 Ida. LEXIS 146

• Court: Idaho Supreme Court
• Decided: April 10, 1912
• Status: Published

Opinions

AILSHIE, J.

This action was instituted to recover on a promissory note. The defense was interposed that fraud was practiced by the payee in procuring the execution of the note and that it was given as payment of the purchase price for a stallion, and that the agent of the payee represented that the note should not be completed or delivered until sixteen signers had been procured, and that among them should be two persons who were well known to the other signers as men of good financial standing, and that in truth and fact neither of them ever signed or executed the note. A further defense was interposed that the horse was never delivered to the defendants, and that they never received any consideration whatever for the execution, of the note. It was also alleged that the plaintiff Vanghan had notice of the fraud practiced in the execution of the note and the failure of consideration, and that he was not an innocent purchaser.

Substantially the same defense was made in this case as was made in Vaughan v. Johnson, 20 Ida. 669, 119 Pac. 879; Park v. Brandt, 20 Ida. 660, 119 Pac. 877; Park v. Johnson, 20 Ida. 548, 119 Pac. 152; Winter v. Nobs, 19 Ida. 18, 112 Pac. 575.

The only serious question presented for our consideration on this appeal is whether there has been any substantial evidence produced to show or tend to show that Vaughan had notice of the fraud entering into the execution of this note or the failure of consideration. ¥e shall not undertake to review the evidence. It is sufficient to say that it is of a shadowy and vague character. We are not prepared, however, to say that there is no evidence whatever that would justify a jury in concluding that Vaughan had notice of the defects in this instrument or the nature and character of the transaction out of which it arose. For that reason we have concluded to affirm this judgment. We feel, however, like reiterating what was said by this court in Vaughan v. Johnson, supra, that:

‘ ‘ The frequency with which such defenses as the one set up in this ease are being pleaded reminds us that there is either a grave need of invoking the criminal statutes of this state against persons who are procuring the execution of negotiable paper through fraud, deception and1 misrepresentation, or else there is gross negligence on the part of many who are executing such paper, and sending it broadcast in the channels of commerce.”

It should be remembered, and we take this opportunity of saying, that the mere fact of the purchase by one who invests his money in commercial paper of a promissory note, fair and regular on its face, from a man who has had lawsuits over the collection of some of his paper, or even who has a shady reputation as to his business transactions, is not of itself sufficient to put an otherwise bona fide purchaser on notice that there was fraud practiced in the execution of the note.

The judgment in this case will be affirmed, and it is so ordered. Costs awarded in favor of respondents.

Sullivan, J., concurs.