Pierce v. Harper 249 F. 867

PIERCE v. HARPER.

(Circuit Court of Appeals, Sixth Circuit.

March 5, 1918.)

No. 3090.

1. Bills and Notes ©=>476(1), 493(3) — Action on Note — Defenses—Want of Consideration.

An answer to an action on a promissory note, which merely avers that no consideration moved To the maker, is' not sufficient; but, to constitute a defense, it must also aver that the payee did not thereby suffer a loss or detriment, and the pleading must be sujiported by proof.

2. Bills and Notes ©=>518(1) — Validity—Consideration.

Defendant purchased an interest in a partnership, giving a note therefor, payable out of the profits of the business. The partner to whom the note was given died, and defendant executed and delivered to his executor two notes for the amount due on his prior note, containing no conditions, one of which was payable to plaintiff, who was a legatee. The executor sent the note to plaintiff by mail, and she accepted it as part of her legacy, having no knowledge of the conditions under which it was given until long after its maturity. The firm became insolvent, and defendant received nothing from its assets, held, that such facts did not sustain the defense that the note was without consideration.

©=^For other cases see samo topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

In Error to the District Court of the Uijited States for the Eastern Division of the Northern District of Ohio; John 1VL Killits, Judge.

Action at law by Cora H. Harper against E. C. Pierce. Judgment for plaintiff, and defendant brings error.

Affirmed.

Suit toy Cora H. Harper against If. C. Pierce upon a promissory note. Defendant Pierce purchased from E. L. Hart an interest in the firm, of Dart & Co., of Cleveland, Ohio, and agreed to pay for such interest the sum of §10,000 “ouc of the profits of the business of Hart & Co.” He gave his promissory note for §10,000, payable to E. E. Hart “out of the profits of Hart & Co.” The sum of §1,500 was paid upon the note, leaving a balance of principal owing thereon of §8,500. E. L. Hart died, leaving a last will and testament, in which plaintiff’s brother, P. W. Hart, was named as executor. The will directed that the estafo of the testator should be converted info cash and so distributed. Plaintiff, Cora A. Harper, was entitled to a distributive share of the estate. At the solicitation of the executor, Pierce executed two notes to take the place, of the original note belonging to the estate of E. 1j. Hart. One of the new notes was for $4,500, dated November 1, 1905, and payable to Cora A. Harper one year after its date. This note was in thei usual form, and did not recite that it was to be paid “out of the profits of Hart & Co.”; but the executor promised to inform' Mrs. Harper that it was to be so paid. The executor sent tho note to Mrs. Harper, without giving her such information, and without any previous agreement on her part that she would accept the same. However, she did accept it, and had no knowledge or information as to its origin, or of the agreement between Pierce and E. D. Hart for the payment of the original note out of firm profits. After the note was given to Mrs. Harper, the firm of Hart &,Co. became insolvent and was dissolved. None of the partners received anything from the sale ol the firm’s assets. Defendant paid interest to Mrs. Harper for two years, but paid nothing upon the principal of the note. The declaration in tills suit was the usual one upon a promissory note. -The answer admitted the *868execution of the note, set forth many of the facts above stated, alleged knowledge on the part of plaintiff at the time of the acceptance of the note of the agreement for its payment out of firm profits, and averred want of consideration. The reply denied such knowledge.

At the trial, the note was offered and received in evidence. Plaintiff testified that she was its owner, that she received it by mail from her brother, the executor, about the time of its execution, and that, until long after its maturity, she did not learn that the note, or any prior note of which it was a renewal, was payable out of the profits of Hart & Co. Defendant admitted “that he was unable to prove that plaintiff was not the original owner of said note, and had no proof of the allegation in defendant’s answer that plaintiff accepted and took the note with knowledge that defendant had an agreement with E. L. Hart, or with Prank W. Hart, as executor of the estate of E. L. Hart, that said note was payable only out of the profits of Hart i& Co.” He offered proof of the other allegations in his answer. The trial court held that the proofs so offered, if received, would not constitute a defense, and directed judgment to be entered in favor of plaintiff for the amount of the note, both principal and interest.

Smith, Taft, Arter & Smith, of Cleveland, Ohio, for plaintiff in error.

Holding, Masten, Duncan '& Reekie, of Cleveland, Ohio, for defendant in error.

Before KNAPPEN and DENISON, Circuit Judges, and SESSIONS, District Judge.