Scandinavian American Bank v. Johnston

Citations

• 63 Wash. 187
• 115 P. 102
• 1911 Wash. LEXIS 1177

Syllabus

<p>Bills and Notes — Bona Fide Purchaser — Holder in Due Course —Good Faith — Burden of Proof — Statutes—Construction. The negotiable instruments act, Rem. & Bal. Code, § 3443, providing that a holder in due course is one who takes in good faith for value, and § 3450, providing that, if the title of one who negotiates a note is defective, the burden is upon the holder to prove that he is a holder in due course, must be construed in connection with § 3447, which provides that to constitute notice of an infirmity or defect in title, there must be actual knowledge thereof or of such facts that the taking of the note amounts to bad faith; hence, where the holder has established by undisputed evidence that it is a holder in due course without actual notice, the burden then devolves upon the maker to show that the holder was guilty of some act, neglect or inexcusable omission amounting to mala fldes on its part sufficient to show dishonest dealing preventing it from being a holder in due course; negligence or the omission of precautions or the mere suspicion of an infirmity not being sufficient to constitute bad faith or to put upon inquiry.</p> <p>Same — 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 other note was in existence, and bore no relation to it, there was no occasion to prosecute any inquiry on the prior occasion, and inquiry would have disclosed no