Scandinavian American Bank v. Appleton

Citations

• 63 Wash. 203
• 115 P. 109
• 1911 Wash. LEXIS 1178

Syllabus

<p>Bills and Notes — Bona Fide Purchaser — Holder in Due Course —Evidence-—Sufficiency. Where the title to a note was defective by reason of fraud not discovered until after it was negotiated to a bank, and the bank established, by the undisputed evidence of disinterested witnesses, that it took the same before maturity for full value in good faith, it is entitled to a directed verdict as a holder in due course; and it is not evidence of bad faith, or sufficient to put the bank on inquiry, and prevent a directed verdict, that the maker had previously negotiated to the same bank the notes of another person the title to which was claimed to be defective, where the prior transaction was closed and settled three months before the note in question was negotiated to the bank, and bore no relation to it, and there was no occasion to prosecute any inquiry on the prior transaction.</p> <p>Pledges — Note as Collateral — Right of Pledgee — Corporations —Stockholders — Sureties on Principal Note. Where a stockholder’s notes for his stock subscription were negotiated by the corporation as collateral security for its own note, which was indorsed by other stockholders who had paid their stock subscription, the holder in due course of the principal and collateral notes may enforce the collateral, although it was fraudulently obtained, without first proceeding to collect the principal note, where the corporation had gone into the hands of a receiver and was not shown to be solvent, and the indorsers financially responsible on the principal note were only sureties for the corporation.</p> <p>Dunbae, C. J., dissents.</p>