Guaranty Finance Corp. v. Mire

ON REHEARING. LECHE, J. The paramount issue involved in this case is whether the drafts or “trade acceptances” as they are called on their face, are negotiable instruments within the intendment of the law and whether the plaintiff is an innocent third holder for value or a holder in due course. There is no question here as to the liabil *797 ity of an acceptor of a bill of exchange for the face value of such bill, to the holder in due course. That is admittedly the law and that law is so well known, that it offers an easy method for the drawer of a bill affected with equities in favor of the acceptor or tainted with fraud, in order to evade the effect of such equities or to close the door to the introduction of evidence of such fraud, to transfer it before maturity to some third person. It therefore becomes the very essence of the enquiry, when such pleas are offered by the defense, to determine whether the instrument is negotiable and whether the holder is one in due course. The evident purpose of the law-maker is to protect innocent - persons who in ordinary commercial transactions, acquire negotiable instruments, relying upon the truth of the written engagement contained therein, duly signed by the maker or acceptor. It must also be kept in view that the holder always has the means to prove the facts necessary to show that he is a holder in due course, while the proof to contradict such fact is seldom within the reach of the maker or acceptor. The evidence in this case shows that the contract between the Lawrence Phonograph Corporation and the defendant, and the three drafts or trade acceptances are printed on one solid sheet of paper, blank spaces being left for dates, signatures and addresses. The contract is at the top of the page, double dark lines entirely across the sheet then follow, and below these is printed a guarantee also followed by' double lines. Then come blank spaces for dates, addresses and shipping direction. Then below this, are printed the three drafts separated from the contract by dark lines not perforated but extending entirely across the same sheet of paper. Defendant testified that he at first objected to sign these acceptances, but that the salesman who represented the Lawrence Phonograph Corporation, drew pencil lines across the face of each of the drafts and pursuaded him to aflix his signature on the bottom line of each draft as evidence of the fact that he had agreed to take the phonographs in order to sell them on commission. A duplicate printed blank form, showing the contract, the drafts and the pencil lines across the drafts, is contained in the record. The drafts were severed from the sheet of paper and were sent to the Bank of Slidell for collection. The assistant cashier of that bank testifies that the drafts showed on their face that marks had been erased, that the impression of the pencil had made a dent in the paper and that it could plainly be seen that something had been rubbed out. He says that the mark could be distinguished, that it appeared faint but that the impression of the pencil down against it showed. The Lawrence Phonograph Corporation and the plaintiff are two concerns located in St. Louis, Missouri, and the defendant is a storekeeper at Slidell, Louisiana. The personnel of the two concerns is unknown,to defendant. After the maturity of the acceptances, the Lawrence Phonograph Corporation wrote defendant and that letter contains this very signficant language: “Now Mr. Mire, all that we want is to protect our interests in the trade acceptances of yours which we hold and we must insist upon some payment being made at once.” If the acceptances were held by the Lawrence Corporation at the time that letter was dated, then the plaintiff could only have acquired them after maturity. The letter is not for the purpose of protecting an endorsement but to protect the Lawrence Corporation as holder of the drafts. *798 It is true that plaintiff is not hound by the letter, but taken in connection with the apparent erasures on the drafts, all of which remains unexplained and unaccounted for by plaintiff, such evidence is sufficient to destroy the presumption that plaintiff is a holder in due course. The district court so held and on reconsideration w'e believe the judgment appealed from should be affirmed. It is therefore ordered that our former judgment be set aside and that the judgment appealed from be affirmed.