(after stating the facts.) The evidence on the part of the appellant is not sufficient to show that the check was tainted in its inception with illegality or fraud, or obtained from the maker by duress. Its president stated that the account for the claim was submitted to him and examined by himself and his inspector for some days before the check was finally given. That, while he regarded it an injustice, he gave the check for the amount claimed to be due by the Dry Dock Company, on completion of the vessel, in order to have same released and turned over to him, saying: “I wrote that check and delivered it to Mr. Smith, who was the office man, and also wrote my note in compliance with the contract for the last payment. Mr. Smith went up there, and Murnan told Smith to sue me. He said: ‘Mr. Murnan said you couldn’t leave here without a certified check for $530.21.’ I said: ‘You go tell Mr. Murnan that I won’t give him a certified check for that amount.’ That was the first time they ever asked me for a certified check. He said: ‘Well, what will you do, Mr. Roberts?’ I said: T will give you a check for it- — anything on earth to get out of here. ’ ”
In his protest and notice to the attorney for said Ship Yard Company, he stated that he had written the check under duress on account of the statement of the bookkeeper that “unless I did he did not think Mr. Muman would let the boat go. * * * Hence I submitted to this injustice with a view to getting the boat released from their control. And this protest will serve as a notice to the Helena Ship Yard & Dry Dock Company, H. C. Muman and Don G. Owens, as principals, that on my arrival at Little Rock I will file suit for damages against them.”
He gave no intimation to any of the parties in interest that he intended to stop payment of the' check, or that it would not be paid in the usual course of business upon presentation, and his protest, which was directed to the attorney for the Ship Yard Company, was only intended as a notice that he did not propose to be bound by the giving of said check to release any claim he might otherwise have for damages against said company because of its failure to comply with the contract. In other words, the check in payment for the claim was given with a full understanding of all the circumstances, and. the boat was turned over to appellant upon its delivery, and we see no reason why the maker of it should not be estopped to deny its validity. Springfield & Memphis. Rd. Co. v. Allen, 46 Ark. 220.
If, however, it be conceded that the transaction was so tainted with duress that it would have been available to appellant as a defense, had the suit been brought by the payee of the check, we still are of the opinion that appellant can not avail himself of such a defense herein.
The undisputed testimony shows that the plaintiff had no notice of any such defense between the original parties to the check nor of any facts that should have put it upon inquiry.
The conversation of Mr. Roberts of the appellant company with the president of the bank and the attorney of the Ship Yard Company occurred four or five days before the final settlement with the Ship Yard Company and the giving of the check sued upon, and related chiefly to the failure of said company to complete the boat on time, and his complaint that it was not then making the proper effort to complete it, and that it should take men off another boat and finish appellant’s, so he could remove it on the approaching rise of the river. Mr. Quarles, at this time, told him he had no interest whatever in the Ship Yard Company, and called in Judge Moore, who was its attorney, and who, as Mr. Roberts says, agreed to go down and see if he could not have the boat completed. Nothing was said about any claim of the Ship Yard Company for extras, nor was there any suggestion of the injustice of such a claim, and such conversation could not have put the bank on notice that a check thereafter given in all respects apparently valid was made under duress and affected by the terms of a written protest said to have been pinned to it. The reasonable and fair inference would have been that the matters in controversy between the appellant and the Ship Yard Company had been adjusted satisfactorily and finally settled by the giving of the note and the checks.
All the officials of the bank, who had anything to do with the transaction, testified that the bank had no notice whatever of any defect or irregularity about the check or its terms, or that it was other than it appeared to be, and that it was taken in the usual course of business, and the whole amount of it credited to the account of the payee. It is true, some of the witnesses on this point stated that “the proceeds” were credited to the payee’s account; but from their statements it is evident that they used such expressions as synonymous with “the amount” of the check. The check was presented to the bank in the usual course of business on the day of its date, without any notice on its face of any invalidity or defense, accepted by the bank and credited to the payee on its books.
In Burton v. United States, 196 U. S. 303, the court said: “When a check is taken to a bank, and the bank receives it and places the amount to the credit of the customer, the relation of creditor and debtor between them subsists, and it is not that of principal and agent.”
And also quoting from Craige v. Hadley, 99 N. Y. 131, 52 Am. Rep. 9, 1 N. E. 537: “The general doctrine that, upon a deposit made by a customer in a bank, in the ordinary course of business, of money, or of drafts or checks received and credited as money, the title to the money, or to the drafts or checks, is immediately vested in, and becomes the property of, the bank, is not open to question.” * * * The transaction, in legal effect, is a transfer of the money, or drafts, or checks, as the case may be, by the customer to the bank, upon an implied contract upon the part of the latter to repay the amount of the deposit upon the checks of the depositor. The bank acquires title to the money, drafts, or checks, on an implied agreement to pay an equivalent consideration when called upon by the depositor in the usual course of business.”
It is true that the account of the payee of the check, the Ship Yard Company, was overdrawn in a large amount when this check was presented by it, and the amount thereof credited upon its account; but it has been held by our court that one who takes negotiable paper in payment of an antecedent debt before maturity and without notice of any defect receives it in the due course of business, and becomes, within the meaning of the commercial law, a holder for value, entitled to enforce payment without regard to the defense that may exist between the other parties to the paper; and this is in accord with the very general concurrence of judicial authority. Tabor v. Merchants’ National Bank, 48 Ark 458; Evans v. Speer Hdw. Co., 65 Ark. 210.
The undisputed testimony in this case shows that the appellee bank in effect cashed the check sued upon in the usual course of business upon the date it was drawn, without any notice of any infirmity in it or any defense that might be available between the parties to it, crediting the whole amount of it to the payee upon its account, and it thereby became a bona fide holder of the same for value, with the right to enforce it against the maker, free from any defense that may have existed between the original parties.
It is also contended by appellant that there was such an alteration of the check after it was made and delivered to the payee as should release it from payment. The undisputed testimony shows, however, that the check as sued upon was the same as made without any alterations or changes thereof, and that the bank had no notice at the time it was presented and credited to the account of the payee of the letter of protest, addressed to the attorney of the payee company, that had been pinned to the check at the time of delivery thereof to the payee, according to the statement of Mr. Roberts, the president of the appellant company.
This letter of protest was written upon a separate paper, without any memorandum on the face of the check, indicating that it was affected by any conditions not shown thereon, and only pinned to the check and easily detachable therefrom without leaving any evidence of any change in the terms of the check and, being detached therefrom at the time it was cashed without notice to the appellee bank, its rights were in no way affected by it being so severed and destroyed.
In Daniel on Negotiable Instruments, § 1407, it was said:
“But if the memorandum were so written upon the margin or any other part of the instrument that it could be readily separated from it, without giving it a mutilated appearance, a bona fide holder taking it without notice we should consider unaffected by its being so severed and destroyed. This view was well illustrated in a late Indiana case. If the memorandum were originally made upon a separate paper, there can be no doubt that, although a contract binding between the parties, it would be of no effect against a third party without notice, if the party who executes a negotiable instrument chooses to restrict its effect by a separate memorandum, instead of writing the entire contract in the body of the instrument, he should not be protected against a fraud of which he has laid the foundation.
“The holder should be protected, upon the principle that where one or two innocent persons must suffer, the loss should fall on the one who furnished the opportunity. The case is analogous to those in which blanks have been filled with excessive amounts. The promisor should be held bound when he has left his contract in a form to be mutilated by the cutting away of a part, as well as where he has left room for an alteration to be engrafted upon it.”
In this case the undisputed testimony shows that the appellee was the bona fide holder of the check for value without notice.
It was entitled to recover thereon, and the court correctly directed the jury to return a verdict, there being no disputed question of fact to be determined by them.
The judgment is affirmed.