SHARP v. GOSSETT

SHARP v. GOSSETT
1938 OK 534
83 P.2d 599
183 Okla. 539
Case Number: 28495
Decided: 10/18/1938
Supreme Court of Oklahoma

Sharp
v.
Gossett

Syllabus by the Court.

¶0 1. BILLS AND NOTES--Title of Payee Defective Where Note Obtained by Fraud.
Where a promissory note is obtained by fraud, the title of the payee therein is defective. Sec. 11354, O.S.1931, 48 Okl.St.Ann. § 125.
2. SAME--Action by Indorsee Against Maker--Burden of Plaintiff to Prove Holding in Due Course After Payee's Title Shown Defective.
In an action by the indorsee of the payee against the maker to recover on a promissory note, the indorsee, by reason of Sec. 11358, O.S.1931, 48 Okl.St.Ann. § 129, is deemed to be a holder in due course, but when it is shown that the payee's title is defective within the meaning of Sec. 11354, O.S.1931, 48 Okl.St.Ann. § 125, the burden of proof is then upon the indorsee to establish that he took the note without notice of such defective title.
3. SAME--APPEAL AND ERROR--Conclusiveness of Finding Under Circumstatnces Shown That Plaintiff Was not holder in Due Course.
Record examined, and held that, although the plaintiff's uncorroborated testimony to the effect that he held the note in due course was undisputed by direct and positive evidence, the circumstances as revealed by the evidence were sufficient to raise a controverted question of fact, and the finding of the court thereon is conclusive of the question.

Appeal from District Court, Carter County; John B. Ogden, Judge.

Action on a note by H. H. Sharp against Grady Gossett. From a judgment of the district court in favor of the defendant after an appeal by the plaintiff from a judgment of a justice of the peace court, the plaintiff appeals.

Affirmed.

Rex H. Holden, Wm. O. Coe, and R. B. Holtzendorff, all of Oklahoma City, and John E. McCain, of Ardmore, for plaintiff in error.
Stephen A. George and John Clark Caldwell, both of Ardmore, for defendant in error.

HURST, Justice.

¶1 This is an action on a promissory note, originating in the justice of the peace court. Verdict was rendered for defendant and plaintiff appealed to the district court, where, on trial de novo, judgment was again rendered for defendant. Plaintiff appeals. The facts are as follows:

¶2 Defendant executed the promissory note in question to the Republic Life Insurance Company in payment of a premium on an insurance policy. Plaintiff acquired the note by transfer from the insurance company. Defendant proved at the trial of the cause that the note was obtained from him by fraud on the part of the agent of the insurance company. The question presented to us is whether the trial court erred in rendering judgment for defendant because, as plaintiff claims, there was no evidence to show that plaintiff took the note in question with notice of the defect in the title of his transferor, the insurance company.

¶3 When the insurance company obtained the note by fraud, its title was defective. Sec. 11354, O.S.1931, 48 Okl.St.Ann. § 125. The presumption that plaintiff held the note in due course was therefore overcome and it then devolved upon plaintiff to prove that he took the note without notice of the defect of title of his transferor. Sec. 11358, O.S.1931, 48 Okl.St.Ann. § 129; Sharp v. Young, 1938, 182 Okl. 596, 78 P.2d 815. Plaintiff's own testimony tends to show that he was a holder in due course, and we are therefore confronted with the same question as appeared in Sharp v. Young, supra, to-wit: Is the evidence relating to plaintiff's relationship and association with the insurance company and the other facts and circumstances appearing in the record sufficient to create an issue of fact on the question as to whether he had sustained the burden of proof cast upon him, and to sustain the trial court's judgment?

¶4 It was stipulated that plaintiff was a stockholder in the insurance company and the record discloses that plaintiff refused to produce or exhibit the check which he testified he gave for the note in question. He testified that he discounted notes for the company, and paid $40.73 for the note when the unpaid balance was $54.30. Our disposition of the case of Sharp v. Young, supra, is controlling here. Therein we stated [page 817]: "We hold, however, that plaintiff's interest in the litigation coupled with the evidence of his connection and association with the insurance company constituted facts and circumstances at variance with his testimony, and sufficiently contradictory thereof as to support the judgment of the court to the effect that plaintiff had failed to sustain the burden of proof cast upon him as aforesaid."

¶5 See, also, Sharp v. Dunlap, 1936, 176 Okl. 329, 55 P.2d 971, and Sharp v. Meyers, 1938, 182 Okl. 375, 77 P.2d 1135.

¶6 Our holding herein makes it unnecessary to determine whether there was a total failure of consideration for the note for the reason that the insurance policy was ultra vires the power of the Republic Life Insurance Company to issue it.

¶7 Affirmed.