Saline Valley Bank v. Peckham

Citations

• 108 Kan. 560
• 196 P. 593
• 1921 Kan. LEXIS 223

Syllabus

<p>SYLLABUS BY THE COURT.</p> <p>1. Promissory Note — Procured by Fraud — Holder With Notice of Fraud —Note Not Controlled by Law of Commercial Paper. Where a promissory note is procured by the fraud of the payee, but such note never passed into the hands of an innocent holder in due course, the law of commercial paper does not control the obligation of the maker of such note.</p> <p>2. Same — Procured by Fraud — Subsequent Contract to Return Note to Maker — Note and Contract Construed Together. Where the' payee of a note has bound himself to the maker, in writing, that he would surrender the note to the maker at or before its maturity, the note and the contract in writing are to be read and construed together in an action by a plaintiff who acquired it with full notice of .its infirmities and who knew and had custody of the written contract.</p> <p>3. Same — Rights 'of Purchaser With Notice of Its Infirmities. One who purchases a note before maturity with full notice of the defenses thereto stands in the same position towards its possible enforcement as the payee himself.</p> <p>4. Same — Note Procured by Fraud — Subsequent Contract — No Waiver of Fraud — Purchaser with Notice of Fraud and Contract Cannot Recover on Note. Where a promissory note has been procured from the maker by the fraud of the payee, and after the discovery of the .fraud the maker and the payee make an agreement in writing that the maker will permit the note to run to maturity and permit the payee to discount it, upon condition that the payee will take' it' up and deliver it to the maker without payment and without cost to him, and the payee gives the maker a sum of money to cover any expense he might be put to in procuring the return of the note, and where pursuant thereto the payee discounts the note to a bank which had notice of the fraud and knew the contents of the agreement in writing and was the custodian of that agreement, and the payee fails to redeem and surrender the note to the make