Page images

evidently was aware of the fact that his par- discovery of the mistake, and were in no betticular description might not be sufficient to ter position to maintain an action that he would

have been. convey all the lands of Moses F. Ingram; and for the purpose of aiding his particular actions, Cent. Dig. 8 657; Dec. Dig. $ 172.* ]

(Ed. Note.-For other cases, see Limitation of description he added 'the general description, certifying that the "above described land

Appeal from Circuit Court, Leslie County. and boundary contains

Action by Eversole & Co. against the Burt

one fifty acre survey in his name bearing date the & Brabb Lumber Company and others. Judg. 29th of May, 1855," and the other surveys ment for defendants, and plaintiffs appeal. therein mentioned. Under that deed Powell

Affirmed. Centers and William H. Ingram and their

See, also, 132 Ky. 112, 116 $. W. 316. grantees held undisturbed and unquestioned Cleon K. Calvert, of Hyden, for appellants. possession of this 50-acre tract for about 35 Metcalf & Jeffries, of Pineville, for appelyears, and during 11 years of that time Mos- lees. es F. Ingram lived in the neighborhood, and upon rented land.

SETTLE, J. This action was brought by It has been shown that upon one occasion, the appellants, A. B. and Abner Eversole, as irly perhaps as 1866 or 1868, Moses F. partners loing business ‘under the style of Ingram said in the presence of his son, Mar- Eversole & Co., in the court below, to recus D. Ingram, that he still owned a tract cover of the appellees, Burt & Brabb Lumber of land in this neighborhood. And it is fur- Company and others, $250, with interest, as ther shown by the witness Money, who is the value of 125 acres of land in Leslie now an old man over 80 years of age, that county, of which the appellee Burt & Brabb Moses F. Ingram once said to the witness Lumber Company has been adjudged the that he still owned a tract of land in that owner, but for which, it was alleged, it paid neighborhood which he would keep as a nothing. The action, though brought at law, "nest egg" in case he ever returned there to was by consent of the parties transferred to live. We give little weight, however, to these the equity docket and decided by the court

al expressions, in view of the conduct as if it were an action in equity. The cause of Moses F. Ingram throughout the remain- of action asserted grew out of the following der of his lifetime. Moreover, we are of opin- state of facts: April 3, 1876, there issued to ion that the deed of 1877 to Centers and Wil- Leslie Harris a patent for 200 acres of land liam H. Ingram, under the rules of construc- then in Harlan, but now in Leslie county, tion above laid down, conveyed the 50 acres lying on Lick branch of Greasy creek, a in question, thus rendering the statements of tributary of the Middle fork of the KenMoses F. Ingram ineffectual, even conceding tucky river. The patent was based upon a they were made as claimed.

survey made on August 8, 1873. In NovemJudgment affirmed.

ber, 1889, Harris conveyed this land to John C. Chappell, G. M. Asher, and H. M. Asher,

by deed describi the land according to EVERSOLE & CO. v. BURT & BRABB

the boundary given in the patent. This deed LUMBER CO. et al.

was acknowledged before John C. Chappell, (Court of Appeals of Kentucky. Oct. 21, 1914.) of the clerk of the Leslie county court, and

one of the grantees, at the time a deputy 1. LIMITATION OF ACTIONS ($ 96*)-RECOVERY OF REAL PROPERTY-EQUITABLE ACTION.

was recorded in the proper office in DecemUnder Ky. St. $$ 2515, 2519, providing ber, 1889. As Chappell was one of the granthat if one injured by fraud or mistake is aware tees in the deed, he and the Ashers became of it when it is perpetrated, he must bring afraid that that fact might invalidate the his action within 5 years, but if he is not then aware of it, within 5 years after it is discov- deed, so on the 16th day of July, 1890, they ered, but in no case more than 10 years after obtained from Harris a second deed, conthe making of the contract or the perpetration veying them the same land, bounded as in of the fraud, a cause of action arising from an the first deed and in the patent, with the implied contract by defendants as purchasers from plaintiff's grantor to pay for land convey- following additional description: ed to them in excess of the quantity agreed to "Containing two hundred acres, more or less, be conveyed for which they had not paid, the and being the same land granted by the comstatute ran from the time they paid for what monwealth of Kentucky to the said Lewis Harland the grantor supposed he had conveyed, ris by patent bearing date. April 3. 1876, No. and an action to recover payment therefor, 51929, recorded in the register's office in book brought more than 5 years after the discovery | 94, page 350." of such mistake and nearly 18 years after it

Following the execution of the second was made, was barred.

[Ed. Note.-For other cases, see Limitation of deed, the partnership of Asher brothers and Actions, Cent. Dig. 88 337, 475, 476; Dec. Dig. Chappell was incorporated, under the laws $ 96.*]

of the state of Michigan, its corporate name 2. LIMITATION OF ACTIONS ($ 172*)-EFFECT-being the Asher Lumber Company; and PARTIES.

later by resolution of the stockholders and Plaintiffs, in an action to recover compensation for land conveyed by their grantor to de supplemental articles of incorporation, duly fendants by mistake, even if subrogated to the adopted, the name of the corporation was rights of their grantor, were chargeable with his changed from the Asher Lumber Company to *For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes

Burt & Brabb Lumber Company. On the patent calls, obviously erroneous, by the 22d day of August, 1890, John C. Chappell, correct calls of boundary contained in the George M. and Hugh L. Asher, together certificate of the survey previously made with their wives, conveyed by deed to the of the land, and then by subtracting from Asher Lumber Company the land which had that correct boundary the boundary given theretofore been conveyed them by the two by the patentee's deed to Chappell and the deeds from Lewis Harris; the land being Ashers. It was held by this court on Hensbounded and otherwise described in the last-ley's appeal that the patent boundary was mentioned deed as in the deeds from Har- incorrect and contained a smaller quantity ris to Chappell and the Ashers and in the of land than the survey, on which it was patent to Harris. After the change of the based, manifested, but that, as the patent name of the corporation of Asher Lumber referred to the certificate of the survey made Company to that of Burt & Brabb Lumber of the land and the survey contained a corCompany the land was owned and held by rect boundary of the land, the quantity inthe latter. On the 10th day of May, 1904, tended to be granted the patentee, and James L. Lewis and H. M. Hensley pur- showed the error in the boundary given by chased from Lewis Harris what they and the patent, the patent boundary was to be Harris believed to be a part of the land em- regarded as corrected by that given in the braced in the 200-acre patent boundary he certificate of survey, and the latter as showhad theretofore conveyed to the Asher broth-ing the actual quantity of land granted the ers and J. C. Chappell, and obtained from patentee. It was further held that the deeds Harris a deed which was duly recorded in from Harris conveying the land to Chappell the Leslie county court clerk's office. On and the Ashers, though containing the boundOctober 11, 1904, James L. Lewis and wife ary as shown by the patent, should be conmade to, H. M. Hensley a deed purporting strued as was the patent, and corrected and to convey to Hensley J. M. Lewis' undivided controlled by the boundary and description half of the land, for which Lewis and Hens- furnished by the certificate of survey. On ley had theretofore obtained the deed from these grounds the deeds from the patentee Harris. The deed from Lewis and wife to Harris to Chappell and the Ashers were Hensley was also properly recorded. On held to have conveyed all the land intended June 10, 1905, H. M. Hensley sold and con- to be granted Harris by the patent, and veyed to the appellants, A. B. Eversole and that Hensley and Lewis took nothing by Abner Eversole, partners as Eversole & Co., their subsequent deed from the patentee. the land which had previously been convey. In closing the opinion, however, the court ed Hensley and Lewis by Harris and in part said: by Lewis to Hensley. Before the sale from

“Appellant took the deposition of the patentee Hensley to Eversole & Co., and while he was Harris, who testified that Chappell had the claiming to own the land embraced in the land surveyed when he bought it, and reportdeed from Lewis Harris to J. M. Lewis and for that quantity only; but it is clear from the

ed that it contained but 79 acres, and paid him himself, Hensley cut and removed there testimony of this witness that his intention from certain merchantable timber, and for at the time was, and such was the purpose of the alleged trespass thus committed by the parties, to convey his title to all the land Hensley he was sued by the appellee Burt a mistake as to its quantity; but that would

covered by his patent. They may have made & Brabb Lumber Company. As the cutting not affect the conveyance of his title, particuof the timber was attempted to be justified/larly after it had passed into the hands of an

innocent purchaser for value. The patentee by Hensley upon the ground that the title may have a claim against Chappell for the to the land upon which it stood was in him, balance of the purchase money. The only misthis defense put in issue the question of take was as to the amount to be paid for the title, which was decided by the circuit court land, not as to the piece of land sold and inin favor of the appellee Burt & Brabb Lum- tended to be conveyed.” ber Company. From that judgment Hensley

The above statement in the opinion as to prosecuted an appeal to this court, which the probable mistake made by the patentee affirmed the judgment. See Hensley v. Burt Harris in the quantity of land conveyed & Brabb Lbr. Co., 132 Ky. 112, 116 s. w. Chappell and the Ashers, together with the 310.

intimation that the former might have a Hensley's claim of title was based upon claim against them for the money lost to him the theory that the boundary of the land by reason of the mistake, furnished the basis contained in the patent issued to Harris and for the present action; it being the contenthe deeds from the latter to Chappell and tion of the appellants that, though the deed the Ashers, and from them to the Asher from the patentee Harris to Lewis and HensLumber Company, predecessor of the Burtley, that of Lewis to Hensley, and the deed & Brabb Lumber Company, did not contain of the latter to appellants, did not in fact all the land actually granted to Harris by pass to them the title to the land included the patent, and that the residuum was con- by mistake in the deed from Harris to Chapveyed him and Lewis by the deed which pell and the Ashers, for which they did not Harris made them, such residuum being dis- pay, they did, by subrogation, assign and

might have enforced, to recover of the ap-, made; and the present action was not inpellee, as the vendee of Chappell and the stituted by the appellants until July 15, 1909, Ashers, compensation for the land obtained which was, not only more than 5 years after by them on account of the mistake in the the discovery of the alleged mistake, but also deed from Harris, and for which Harris was nearly 18 years after the mistake was made. not paid, the agreed price of which, it was [2] Appellants, even if it be granted that alleged, was $250.

they, as his vendees, are subrogated to the [1] Without determining whether there is rights of the patentee Harris, by and against any merit in this contention of appellants we whom the mistake complained of was made, are constrained to hold that the recovery are chargeable with his discovery of the missought by them is barred by the statute of take, and are consequently in no better posilimitations, aptly pleaded by the answer of tion to maintain this action than he would appellee. Section 2515, Kentucky Statutes, have been. provides that an action for relief on the It is patent from what has been said that ground of fraud or mistake must be com- the action of the circuit court in dismissing menced within five years next after the cause appellants' petition properly determined the of action accrues, and section 2519 provides rights of the parties, and the judgment is that in an action for relief on the ground therefore affirmed. of fraud or inistake the cause of action shall not be deemed to have accrued until the discovery of the fraud or mistake, but no such action shall be brought 10 years after the

PRATT V. ROUNDS. time of making the contract or perpetration of the fraud. In other words, if the party (Court of Appeals of Kentucky. Oct. 20, 1914.) who is injured by the fraud or mistake is 1. TRIAL ($ 251*)-INSTRUCTIONS - APPLICAaware of it at the time it is perpetrated, he

BILITY TO ISSUES. must bring his action within 5 years there the price of a piano, the issue was whether

Where, in an action on a note given for after, but if he is not apprised of it at the plaintiff was a holder in due course for value time it is perpetrated, he must bring his and without notice, the action of the court in action 5 years after the discovery; but in of the piano and authorizing a recovery for the

injecting into the case the issue of the value no case can he bring it after the lapse of 10 fair market value thereof was erroneous. years from the making of the contract or [Ed. Note.--For other cases, see Trial, Cent. the perpetration of the fraud. Brown, etc., Dig. 88 587–595; Dec. Dig. § 251.*] v. Brown, 91 Ky. 641, 11 S. W. 4; Nave v. 2. BILLS AND NOTES (8 494*) - BURDEN OF Price, 108 Ky. 107, 55 S. W. 882, 21 Ky. Law


MATURITY. Rep. 1538; Crane v. Prather, 4 J. J. Marsh.

Where the execution of notes sued on by a 75; Dye v. Holland, 4 Bush, 635; Young v. transferee before maturity is admitted by deCraig, 2 Bibb, 270; Harrison v. Talbot, 2 fendant, the burden of proof is on defendant to

establish the defense of fraud in the procure Dana, 258.

ment of the note. The cause of action upon which appellants

[Ed. Note.-For other cases, see Bills and rely does not rest upon a deed or contract | Notes, Dec. Dig. $ 494.*] of sale of the land, nor upon any fraudulent 3. BILLS AND NOTES ($ 525*)—"HOLDEB IN representation made by either vendor or DUE COURSE"-EVIDENCE. vendee at the time of the sale, but wholly The mere fact that a purchaser of notes at upon an implied contract on the part of the a discount of 25 per cent. had purchased many vendees of the land to pay the vendor for a

notes from the payee at the same discount did

not, standing alone, show that he was not a quantity of land, by mistake conveyed them holder in due course, within Negotiable Instruby the vendor in excess of the quantity ment Act (Laws 1904, c. 102) $$ 25, 52, 56, agreed to be conveyed them, and for which 57, defining a holder in due course. excess they did not pay. So the statute of Notes, Cent. Dig. ss 1832–1839; Dec. Dig. $

[Ed. Note.-For other

cases, see Bills and limitations began to run from the date the 525.* law implied a contract on the part of the For other definitions, see Words and Phrases, vendees to pay for the excess in the quan- First and Second Series, Holder in Due Course.) tity of land conveyed, which was when they 4. BILLS AND NOTES ($ 373*)—Bona FIDE paid for what land Harris supposed he had

HOLDER IN DUE COURSE-EVIDENCE. conveyed them, viz., November 7, 1889. So if 1904, c. 102) 124, providing that, where 2

Under Negotiable Instrument Act (Laws it be assumed that Lewis Harris' discovery negotiable instrument is materially altered with of the mistake made by him in the sale and out the assent of all parties thereon, it is aroid: conveyance of the land to Chappell and the ed, except as against a party who has himself Ashers was not made until he made the deed dorsers, a maker of a note attached to a con:

authorized the alteration and subsequent enconveying to Lewis and Hensley the land tract by a perforated line cannot complain that supposed to be covered by his patent, which the note was detached and sold to a third perhe had not intended to convey to Chappell son, where the contract gave authority to the and the Ashers, as the deed to Lewis and payee to detach the note.

[Ed. Note.-For other cases, see Bills and Hensley was executed May 10, 1904, this was Notes, Cent. Dig. 88 966–970; Dec. Dig. I more than 10 years after the mistake was / 373.*] For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indesei


5. BILLS AND NOTES (8 343*)—BONA FIDE came to the store, representing that HOLDER IN DUE COURSE-EVIDENCE. the Brenard Manufacturing Company was

The mere fact that a purchaser before ma- going to put pianos in Owensboro on sale, turity of a note detached from a contract knew that the contract empowered the payee to de- and they had a copyrighted plan of contest tach the note did not bring home to him knowl- which he had misplaced, saying: edge of any fraud practiced on the maker at the time of the making of the contract and note, commission on every piano that every man sells.

“Now, we will give in this contest so much which fraud was not discovered by the maker | We will handle this contest for you, and all until after the purchase.

these contestants will be at work selling for [Ed. Note.-- For other cases, see Bills and your store." Notes, Cent. Dig. $S 853–855, 864, 865; Dec. Dig. & 343.*]

Rounds signed the contract, and gave the 6. BILLS AND NOTES (8 365*)—Bona Fide notes on this basis, without seeing the copy. PURCHASER-NEGOTIABLE INSTRUMENT Act. righted plan of contest. The contract was

Under the Negotiable Instrument Act then sent to the Brenard Manufacuring Com. (Laws 1904, c. 102), promissory notes, which pany and was approved by them. Ten days have been transferred to a bona fide purchaser later Rounds, on examining the copyrighted without notice before maturity, are placed on the footing of a bill of exchange, and are not plan of contest, which in the meantime had subject to any equities obtaining between the been sent to him, saw that it was altogether maker and payee, and a maker takes the risk the note being transferred to a bona fide pur- him by the drummer.

a different proposition from that stated to chaser without notice.

In the copyrighted [Ed. Note. For other cases, see Bills and plan the merchant was to get the contestants Notes, Cent. Dig. $$ 944, 958, 959; Dec. Dig. and keep them going. He was to have sole § 365.*]

charge of it. The Brenard Manufacturing Appeal from Circuit Court, Daviess County. Company was not to send any man to Owens

Action by W. I. Pratt against Elizabeth boro to assist in the contest or to sell any M. Rounds. From a judgment for defend- piano there. Finding that the proposition ant, plaintiff appeals. Reversed, and re- was entirely different from what it was repmanded for new trial,

resented to him, he on February 12th wired Louis I. Igleheart, of Owensboro, and Ed- the Brenard Manufacturing Company, reward A. Kennedy, of Iowa City, Iowa, for voking his order, and on the same day wrote

There appellant. W. Foster Hayes and C. w. to them stating fully the reasons. Wells, both of Owensboro, for appellee.

was no contradictory evidence offered by the

plaintiff. The only evidence offered by him HOBSON, C. J. On February 2, 1912,

was the deposition of Theodore 0. Loveland,

one of the firm of the Brenard ManufacturElizabeth M. Rounds, doing business in the name of B. H. Rounds & Sons, executed to ing Company. He testified that, after receivthe Brenard Manufacturing Company six ing the contract and approving it, they imnotes each for $50, due, respectively, in two, sent to Mrs. Rounds; that the piano was

mediately bought the piano and ordered it three, four, five, six, and seven months. W. I. Pratt brought this suit upon the notes, shipped by the makers of the piano on Feb

bought on February 5th, and was in fact alleging that the Brenard Manufacturing Company had assigned them to him for ruary 15th; that they sold the notes to w. value before maturity in due course. Mrs.

I. Pratt on February 8th, or four days beRounds answered in substance that the notes

fore they had notice by wire of the disafhad been obtained by fraud, and denied that firmance of the contract by Mrs. Rounds, and they had been assigned to Pratt. Pratt re

seven days before they received her letter; plied, denying that the notes were obtained that they at the time had no notice of anyby fraud, and pleaded that he was a bona thing being wrong; that Pratt was not confide purchaser in due course for a valuable nected with the Brenard Manufacturing Comconsideration and without notice of any in- pany and never had been; that they bought firmity in them. The case

their pianos each day, as they received ortrial before a jury, who found for the de- ders handling from 500 to 1,000 a year; fendant. The plaintiff appeals.

that they received the order on February Mrs. Rounds is the owner of a jewelry 3d; that the piano was shipped from Chistore in Owensboro, Ky. The Brenard Man-cago; that in all they had sold Pratt about ufacturing Company is a partnership doing $40,000 worth of notes from time to time; business at Iowa City, Iowa. They own a

that, at the time of the transfer of these copyrighted plan under which pianos are put notes to Pratt, they got $1,000 from him, and in the stores of merchants, and the success

transferred to him $1,250 worth of notes. ful contestant in the contest gets the piano. These questions and answers occur in his They send out traveling men, who make con


"Q. Then for each dollar you received, you tracts with the merchants. One of their transferred to him $1.25 face value of the notes? traveling men went to Owensboro, made a A. Yes, sir. Q. Were these_notes transferred contract with Mrs. Rounds, through her son, without recourse, or is the Brenard Manufacand obtained the notes in suit. The son's turing Company responsible, providing they are evidence as to the fraud in the obtaining of recourse that those words were written upon

not collected ? A. Do you mean by 'without the notes is in substance this: The traveling the note? Q. Yes. A. No; these words were •For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes


on for

not written on the note. They never were, mitted. The burden of proof was therefore written on any note that we ever disposed of, on the defendant, as the circuit court properto the best of my knowledge. Q. In case Mr. Pratt is unsuccessful in this suit and should

ly held. fail to collect these notes, would it be Mr. The remaining question is: Should the Pratt's loss, or would the Brenard Manufac- court under the testimony of Loveland, which turing Company have to reimburse him for

was not contradicted, have instructed the the money paid, at the time they were transferred? A. We have no contract with Mr. jury to find for Pratt on the notes upon the Pratt to that effect. Q. Well, in the $40,000 ground that he was a holder in due course? worth of notes transferred to Mr. Pratt, have Under the evidence, which was undisputed, there been any which he has failed to collect? the notes were assigned by the Brenard ManA. Not that I know of. If there have been, it has not been called to my attention. Q. The ufacturing Company to Pratt on February company, then, is in no way responsible to Mr. 8th, or four days before Rounds himself knew Pratt for the payments of these notes, if he that a fraud had been perpetrated upon him, should fail to recover in this suit? A. I think not; the $1.25 has always covered it.Q. In and four days before he sent the telegram to your transactions in this kind of notes, it has the Brenard Manufacturing Company revokbeen found that the deposit of $1.25 worth of ing his order. It is very evident, therefore, notes for one dollar in money advanced.cov that there was nothing in the case to show ers all shrinkage and losses in the way of collections? A. That has been our experience. Q. that Pratt could have had notice of any inAnd these notes were transferred to Mr. Pratt firmity in the notes, when he purchased them on that basis? A. Yes, sir."

on February 8th, by reason of what had taken The defendant offered no evidence con- place in Owensboro between the salesman and tradicting Loveland, and the plaintiff, Pratt, Rounds. did not testify on the trial. During the Section 56 of the Negotiable Instrument examination of a witness for the defendant, Act is in these words: this occurred:

“To constitute notice of an infirmity in the "The Court: Have you any evidence as to the instrument or defect in the title of the person fair market value of that piano, Mr. Wells? negotiating the same, the person to whom it is Mr. Wells: No, sir; I think not."

negotiated must have had actual knowledge of Again, at the conclusion of the defendant's facts that his action in taking the instrument'

the infirmity or defect, or knowledge of such testimony, this occurred:

amounted to bad faith.” “The Court: I think that it is very material Section 57 also provides: that the jury should know the fair market val

"A holder in due course holds the instrument ue of the piano. (The court allows the defend- free from any defect of title of prior parties ant time in which to try and find a witness who and free from defenses available to prior parwill testify as to the value of the piano, and ties among themselves, and may enforce payafter due deliberation the defendant announced ment of the instrument for the full amount that he could find no witness who would testify thereof against all parties liable thereon." on this point.)”

The notes being complete and regular on [1] The court, by the fourth instruction which he gave the jury, told them in sub- their face and having been transferred to

Pratt before their maturity or dishonor, he stance that, although a fraud was practiced was a holder in due course under subsection on the defendant at the time the notes were 52, if he took them “in good faith and for executed, yet, if the Brenard Manufacturing value” and “at the time had no notice of inCompany sent the defendant goods of value, firmity" in them, or “defect in the title of they might in their discretion find for the the person negotiating" them. plaintiff the fair market value of the goods

Subsection 25 provides: so sent. The instruction was erroneous, and,

"Value is any consideration sufficient to supin view of the remarks made by the court in port a simple contract. the hearing of the jury, we are not assured

That, under the evidence, Pratt took the that this may not have been prejudicial to notes for value must be admitted. He is the plaintiff, in view of the fact that the therefore entitled to recover on them, unless plaintiff gave no evidence as to the value of he did not take them in good faith, or bad the piano, which had been shipped to Owens- actual knowledge of some infirmity in them boro, and had been left in the railway sta

or defect in the title of the person negotiattion; the consignee declining to receive it. ing them, or had knowledge of such facts The suit was brought by W. I. Pratt, as hold that his action in taking them amounted to er of the notes. He must recover, if at all, i bad faith. on the notes. The evidence offered by the de

[3] It is insisted that as Pratt did not tesfendant as to the fraud in the obtaining of the tify on the trial, and as it appeared that he notes was not contradicted, and so the essen- had bought $40,000 worth of notes from the tial question in the case was whether Pratt Brenard Manufacturing Company, and as he was a holder in due course for value and bought these notes at a discount of 25 per without notice. No question as to the value cent., the jury were warranted in inferring of the piano should have been injected into that he was not a holder in due course. But the case, for no fraud as to the piano was the plain meaning of the statute, above quotcomplained of; the fraud complained of re ed, is that the rights of a purchaser of negolated entirely as to the plan of contest. tiable paper are not to be defeated upon sus

[2] The notes made out a prima facie case picion. To defeat him under the statute, the for the plaintiff; their execution being ad-facts known to him must be such that his

« PreviousContinue »