KAISER et al. v. FIRST NAT. BANK OF BRANDON, 78 F. 281

PARDEE, Circuit Judge (after slating the facts as above). Upon the foregoing facts, established by the evidence, the trial judge directed a verdict for the First National Bank of Brandon, upon which Kaiser & Bro. sued out this writ of error.

Although there are numerous argumentative assignments of error, the contention is made in this court that the court erred in directing a verdict for the plaintiff below — First, because the evidence involved the right of the holders of notes which had been procured from the makers by fraud to recover against the makers, ( liere being a conflict in the testimony as to the bona tides of the plaintiff’s title, and this question should have been submitted to the jury; second, because there was proof not rebutted by the plaintiff that the notes were procured from the defendants by fraud, and there was strong proof that the plaintiff received them after dishonor.

The evidence was uncontradicted to the effect that the First National Bank of Brandon acquired an interest as pledgee in the notes in controversy from the holder, Charles B. Lloyd, who represented himself as the owner, before maturity, for a valuable consideration, and without notice, except such notice as was given by the fact that the notes presented bore an indorsement in blank by the Brunswick State Bank, coupled with the knowledge that Lloyd, who presented the notes of which he claimed to be the owner, was the president of the Brunswick State Bank.

Counsel admits the law to be that nothing short of willful ignorance, tantamount to fraud in procurement, will defeat the rights of a bona fide holder of negotiable instruments taken before dishonor, and without notice of the defect of title in the party pledging, but contends in this case that because the paper had been indorsed by the Brunswick State Bank, and was originally offered to the Sprague National Bank for the purpose of increasing its balance there, it was willful ignorance on the part of the president of the First National Bank of Brandon not to know that the notes did not belong to Charles B.

Lloyd individually, but to the Brunswick State Bank. ¡ In Bank of Edgefield v. Farmers’ Co-operative Manuf’g Co., 2 U. S. App. 282, 295, 2 C. C. A. 637, 646, and 52 Fed. 98, 103, it was held by this court: “It has been settled in the courts of the United States since the leading case of Goodman v.

Simonds, 20 How. 343, that one who acquires mercantile paper before maturity from another, who is apparently the owner, giving a consideration for it, obtains a good title, though he may know facts and circumstances that would cause him to suspect, or would cause one of ordinary prudence to suspect, that the person from whom he obtained it had no interest in or authority to use it for his own benefit, and though, by ordinary diligence, he could have ascertained those facts. Swift v. Smith, 102 U. S. 442; King v. Doane, 139 U. S. 166, 173, 11 Sup.

Ct. 465.” Taking the law to be as thus declared and admitted by plaintiffs in error, it is clear that the evidence, given its fullest force, does not show a case where the First National Bank of Brandon was charged with any such notice of outstanding rights and equities as put it upon further inquiry, under penalty of being charged with willful ignorance of such outstanding rights arid equities. The plaintiffs in error further contend that there was strong proof that the plaintiff, the First National Bank of Brandon, received the notes after dishonor.

The evidence in this respect is that after the notes were delivered to the Sprague National Bank, which bank was the redeeming agent of.the First National Bank of Brandon, they remained in- the physical custody of the Sprague Bank until near maturity, when they were forwarded to other agents for collection. After the notes were protested, they were turned over to the First National Bank of Brandon.

The case shows that the First National Bank of Brandon acquired conjointly with the Sprague National Bank the right and title to these notes as collateral, and that, in the pledge resulting, the Sprague National Bank was the depository. The mere fact that the physical possession of the notes remained in the hands of the Sprague National Bank until after the indebtedness of the Brunswick State Bank and the Sprague Bank was settled, and even after, would raise no presumption inimical to the rights of the First National Bank of Brandon as pledgee, if its original title as such pledgee was good.

As we understand the undisputed evidence in the case, while it may not be denied that there were some circumstances attending the pledge of the notes in suit, which, if more fully explained, would have re: lieved the ease of all doubt, yet we are of opinion that the case as made permitted only one verdict responsive to and in accordance with the evidence as submitted, and that verdict was the one directed by the court, in favor of the First National Bank of Brandon. Necessarily, the. judgment of the circuit court is affirmed.