Sink v. Allen

Mr. Justice McBride

delivered the opinion of the court.

1. This case having been tried before a jury, it follows that, if there is any substantial evidence tending to support the defense interposed, the verdict, in the absence of error of law, is conclusive, and a discussion of the comparative weight of the evidence is therefore unnecessary.

2. It seems clear to us that Moore perpetrated a cruel fraud upon a confiding old friend in obtaining the note. Allen received nothing for it whatever, and it was put into circulation in violation of Moore’s solemn promise not to so use it. All the evidence indicates that Allen was inexperienced in business, that he relied upon Moore as an old and confidential friend to guide and assist him in the deal, and that the execution of the written contract was hurried up by Moore with a view to prevent Allen from observing that an important stipulation in the contract had been omitted.

3. Under the circumstances Moore could never have enforced payment of the note, and, if Harbke was not a purchaser in good faith and without notice of the infirmity of the note, he and plaintiff, to whom he transferred it without indorsement, are in no better position.

4. Moore’s fraud being shown, the burden of proof to show the good faith of Harbke was upon the plaintiff: Owens v. Snell, 29 Or. 483 (44 Pac. 827); Brown v. Feldwert, 46 Or. 363 (80 Pac. 414).

5. It is contended that the court erred in admitting evidence of fraud upon the part of Moore in obtaining the note before the defendant had shown that Harbke took it with notice of the defenses which defendant had against it, and the case of Dreilling v. First Nat. Bank, 43 Kan. 197 (23 Pac. 94, 19 Am. St. Rep. 126), is cited in support of this proposition. The case merely holds that under the particular circumstances there disclosed the court had the right to determine the order of proof, and that it did not err in requiring the defendant to introduce evidence of plaintiff’s bad faith before attempting to show fraud in the execution of the note. As there observed, the order of proof is a matter largely in the discretion of the court, and in the case at bar the court, in the exercise of a like discretion, allowed proof of the original fraud to be first introduced.

6. In this case the natural course of inquiry would seem to direct itself to the following propositions: (1) Was the note procured by fraud and without consideration? (2) Did the indorsees of the note have knowledge of such circumstances as should have put them upon inquiry as to any fraud in the procurement of the note ? The first proposition is too clearly proved to admit of doubt. Was there any evidence to sustain the second?. While the evidence might not satisfy the members of this court sitting as triers of the fact, yet, if from the whole case there was any evidence tending to support defendant’s contention, we are bound' by it; and we think there is such evidence. It tended to show that Harbke and Moore were partners in the real estate business, and that Harbke was present when the original negotiations were broached with Springer. A few days afterward the note turns up in the bank at Moro as security for a partnership note of Moore & Harbke. It is inconceivable under the circumstances that Harbke did not know that no sale had been effected by Moore for defendant, and incredible that he did not know that the note was given for commission not yet earned, and which any business man ought to know would probably never be earned. He says that later he paid off the partnership note and it was turned over to him, but his testimony indicates that he considered himself only a part owner until he and Moore dissolved partnership, whereupon finding, as he says, that the plaintiff would take it, he turned it over to him without indorsement and received credit upon an alleged $27,000 note which he had given plaintiff, but which he kept in his own safe. In addition to this, there is evidence tending to show that Harbke and Sink were doing business as partners, and that their relations were very intimate. Prom these and other circumstances the jury probably concluded that Harbke and Moore were partners in the attempt to swindle defendant in the first place by getting him to enter into an impossible deal and giving a note for which there was no honest consideration, and that plaintiff was merely helping Harbke to play the game. They had the witnesses before them, and could observe their appearance and manner, of testifying. While courts should be slow to question the validity of negotiable paper, they should be vigilant to protect the ignorant and unwary from the machinations of those who by transactions such as these have brought much discredit upon the real estate business in this state and who are the bane of those who are legitimately and honestly conducting it.

The judgment is affirmed. Affirmed.

Mr. Chief Justice Moore, Mr. Justice Burnett and Mr. Justice Benson concur.