James v. Yaeger

Citations

• 86 Cal. 184
• 24 P. 1005
• 1890 Cal. LEXIS 998

Syllabus

<p>Payment—Extinction oe Note—Purchase from Accommodation Maker —Action by Indorsee—Defense..—When one of the co-makers of a nonnegotiable note, who is merely a surety for the other makers, pays the note to the payee, and takes it up, the note becomes extinguished, and ceases to be a binding obligation, and a purchaser of the note from the surety after maturity, or if the note he non-negotiable, whether before or after maturity, takes it subject to the defense of payment, and can maintain no action upon it, either against the co-makers or against the surety who assigned the note to him.</p> <p>Id.—Presumption of Notice — Pleading — Bona Fide Purchase.— The fact that the purchase of the note was from one of the makers is sufficient to put the purchaser on inquiry as to the fact of its payment; and it must be presumed that he took with full knowledge of all the facts, if his complaint does not allege that he had no knowledge thereof at the time when the note came into his hands.</p> <p>Id.—Estoppel—Assignment by Maker after Payment of Note — Pleading. —The maker who puts out a note after it has been paid is not estopped to set up the defense of its extinguishment by payment, when it is not alleged that the assignee was ignorant of the facts, or that he was misled by any representations of the maker who assigned the note to him.</p> <p>Id.—Transfer of Note—Warranty against Worthlessness—Construction of Code. — Section 1774 of the Civil Code, which provides that one who sells or agrees to sell an instrument purporting to bind any one to the performance of an act, thereby warrants that he has no knowledge of any facts which tend to prove it wqrthless, extinct, or invalid, applies only to the transfer of paper in due course to an innocent holder, and does not apply to an indorsee with knowledge of the defense of payment, or who is put on inquiry as to the facts constituting such defense.</p>