This is the second time this case has reached this court on appeal. See 240 S.W. 478, to which reference is made for a complete statement of the facts. The only difference on this appeal, so far as the evidence is concerned, is that Giboney Houck, who acted for the defendant in the transaction, testified at the last trial that Feuerhahn told him at the time he delivered the government bonds and the certificate of deposit that, if the debt was not paid by September 30th, the collateral was to be sold or cashed by defendant. He also testified that, at the time he took the bonds and certificate he did not know that plaintiff made any claim to them; that he had noticed in the paper that Feuerhahn had bought $5,000 worth of Liberty Bonds, and that he thought he was getting a part of the bonds which Feuerhahn had purchased. There is nothing to indicate that defendant had any knowledge of the defect of Feuerhahn's title to the securities in question. The facts appear to be that Mrs. Eggimann, the plaintiff in this case, was about seventy-four years of age, and resided at the home of Feuerhahn and his wife. She and her deceased husband had raised Feuerhahn from boyhood. After her husband's death she went to live with him. She had two one thousand dollars government bonds, dated May, 1918, maturing ten years after date, and made payable to bearer. Feuerhahn obtained possession of a box which plaintiff kept under her bed, and in which she had placed the bonds and certificate of deposit. The certificate of deposit was made payable to her, and her endorsement thereon was a forgery by Feuerhahn. Feuerhahn took the certificate of deposit and the two bonds and deposited them as collateral for a debt which he owed defendant. Feuerhahn testified that the securities were to be returned if the debt was not paid by September 30, 1918, and that defendant was to proceed with an attachment suit which he *Page 514 had begun but later dismissed when Feuerhahn deposited the securities as collateral. This was denied by defendant's agent, that is that the securities were to be returned.
The defendant asked an instruction in the nature of a demurrer, both at the close of plaintiff's case, and at the close of the whole case, in so far as the government bonds were concerned. There was a verdict and judgment for plaintiff at the second trial for the possession of both the certificate of deposit and the government bonds. We do not understand from this record that defendant is contending that he is entitled to the certificate of deposit which was concededly made payable to plaintiff and her endorsement thereon forged by Feuerhahn. The instructions in the nature of a demurrer were overruled by the court.
Plaintiff requested, and was given one instruction, that one being to the effect, and amounting in substance, to the statement to the jury that, if Feuerhahn took possession of the certificate of deposit and the government bonds without the permission, knowledge, or consent of plaintiff, and pledged them to defendant as collateral security for notes of his own, the verdict must be for plaintiff.
It is clearly evident that this verdict and judgment cannot be permitted to stand. These bonds were negotiable, and payable to bearer. At common law it is the rule, that one who purchases or comes into possession of stolen property, acquires no title thereto except under certain conditions. But an exception to this rule is made as to negotiable paper. Bonds having a legal inception and payable to bearer are negotiable paper, and the purchaser of such bonds, although they have been stolen, acquires a good title thereto as against the true owner, provided he purchased in good faith and for a valuable consideration. [Morgan v. United States, 113 U.S. 476; Wylie v. Missouri Pacific R. Co., 41 F. 623; 1 A.L.R. 717.]
There is no suggestion in this record that defendant did not acquire the Government bonds in due course, *Page 515 without notice and while acting in good faith, and this being so, plaintiff could not recover them. [Downs v. Horton, 287 Mo. 414,230 S.W. 103.] And even though the bonds were held by defendant as collateral security, yet he held them in due course without notice, and is entitled to the same protection as though he was an absolute bona-fide purchaser. [Merchants' National Bank v. Abernathy, 32 Mo. App. 211; Logan v. Smith et al., 62 Mo. 455; Bank v. Eubanks, 124 Mo. App. 499, 101 S.W. 687.]
Defendant was holding the bonds as collateral security for a valid consideration, and the debt which Feuerhahn owed defendant being in excess of the amount of the bonds, plaintiff was entitled to no part of the same. [Fifth-Third National Bank v. McCrory, ___ Mo. App. ___, 177 S.W. 1058; Johnson v. Grayson,230 Mo. 380, 130 S.W. 673.]
The Commissioner recommends that the judgment be reversed, and the cause remanded, with directions to enter judgment for the plaintiff for the possession of the certificate of deposit, and for the defendant for the government bonds in question.