King v. Doane

Citations

• 139 U.S. 166
• 11 S. Ct. 465
• 35 L. Ed. 84
• 1891 U.S. LEXIS 2370

Syllabus

<p>The mere renewal of a negotiable promissory note does not, as between the original parties, affect the essential nature of the transaction represented by it.</p> <p>If, in an action by an endorsee against the maker of a negotiable promissory note, the note is shown to have been obtained by fraud, the presumption, arising merely from the possession of the instrument, that the holder in good faith paid value, is so far overcome that he cannot have judgment unless it appears affirmatively from all the evidence, whether produced by the. one side or the other, that he in fact purchased for value.</p> <p>The rule which protects a bona fíele holder for value of commercial paper against defences or equities, that might be good, as between the original parties, does not require that the holder shall have paid full value: but if the amount paid is greatly disproportioned to the real value, the security may be regarded as having been obtained without paying anything for it.</p> <p>King agreed to take $10,000, par value, of the capital stock of a corporation being organized, and to pay $6666.66 for it. He executed his promissory note for the latter amount that it might be discounted and the proceeds applied on his subscription, his stock to be held as security until the note should be paid. Doane, who had already subscribed and paid his subscription, surrendered 100 shares to the company, which were allotted to King, and a certificate issued to him therefor, which certificate, being endorsed by him in blank, was given, with the note, to Doane as security for the payment of. it, in consideration of his surrender of the 100 shares. At maturity the note not being paid, a note of $7118.50' was given in renewal. King being sued on the renewal note, set up that he had been induced to make the subscription by false and fraudulent representation on the part of an agent of the company, and that Doane had not paid full value for the note. Held, that Doane had purchased the original no