(218 S. W.)

Prater & Ramey, of Salyersville, for ap

really assume any liability on account of theĮ
issual of these bonds. It merely obligates pellant.
itself to collect and apply to their payment
the special assessment tax.

Judges THOMAS, CLARKE, and QUIN heard this motion with me, and concur in this opinion, and also in the conclusion that the motion to grant the injunction is overruled.

LYNCHBURG SHOE CO. v. HENSLEY et al.

J. W. Howard, of Salyersville, for appellees.

CARROLL, C. J. In July, 1918, the Lynchburg Shoe Company brought this suit in equity against Clarence and Mary Hensley, averring in the petition:

That on October 7, 1916, the Hensleys executed and delivered to Sherman Lyon the following note:

"One year after date I promise to pay to the order of Sherman Lyon five hundred dollars for

(Court of Appeals of Kentucky. Feb. 3, 1920.) value received of him in land."

1. BILLS AND NOTES 28-NOTE A STATUTORY NEGOTIABLE INSTRUMENT.

A note reading, "One year after date I promise to pay to the order of S. L. five hundred dollars for value received of him in land," signed by two makers, had all the requirements of a negotiable instrument provided for in Ky. St. § 3720b1.

2. BILLS AND NOTES 338 EVIDENCE OF HOLDER IN DUE COURSE OF INSTRUMENT FREE

FROM DEFECTS AND DEFENSES.

Where a note was regular on its face, and came into possession of plaintiff before maturity, on the face of the instrument plaintiff was a holder in due course, as such, under Ky. St. § 3720b57, free from any defect of title of prior parties and defense available to prior parties among themselves, unless, when plaintiff took the paper, it had, as provided in subsection 56, actual knowledge of any infirmity or defect, or such knowledge that its action amounted to bad faith.

3. BILLS AND NOTES 497(2, 5)—BurDEN TO PROVE DEFECT IN NOTE SUED ON AND NOTICE

THEREOF TO HOLDER.

Under Ky. St. § 3720b59, in suit on a negotiable instrument by one other than the payee, when defendant maker sets up in his answer a defect in the title of plaintiff holder, who on the facts appearing in the petition is a holder in due course, it is incumbent on defendant maker to introduce evidence in support of his defense, though he need not establish that plaintiff holder took the note with notice of the infirmity or defect, and may rest when he has introduced evidence tending to show some infirmity or defect, as fraud or failure of consideration, when the burden shifts to plaintiff holder to show he did not have actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith as provided within subsection 56.

That on March 4, 1917, Lyon, for a valuable consideration, transferred and assigned to them the note, and they were the owners of the same.

They further averred that the note was executed for part of the purchase price of a tract of land conveyed by Lyon to the Hensleys, and they sought judgment against the Hensleys for the amount of the note, less a credit of $125, and asked that the lien on the land for which it was executed be enforced.

For answer to this suit, the Hensleys, after admitting the execution of the note, set up that it was procured by fraud and misrepresentation on the part of the assignor, Lyon, and was without consideration; that when they purchased the land from Lyon, paying therefor $800 in cash and executing the note sued on for the balance, Lyon represented to him that he had a good title to the land and conveyed it by deed with covenant of general warranty, although at the time he had no title to the mineral rights in the land, as he had theretofore conveyed the mineral rights to other parties; that, when Lyon sold and assigned the note, the Lynchburg Shoe Company knew that the title to the note was defective and had notice of the facts concerning the defect in the title to the land; that they were not purchasers of the note in due course without notice; that Lyon was insolvent, and a judgment against him on the warranty contained in his deed could not be collected.

For reply to this answer, the Lynchburg Shoe Company denied all the material averments thereof.

Thereafter, and on motion of the Lynchburg Shoe Company, the case was submitted on the petition, answer, and reply, and, having been heard by the court, the petition was Appeal from Circuit Court, Magoffin dismissed, and the Lynchburg Shoe ComCounty.

Suit by the Lynchburg Shoe Company against Clarence Hensley and another. From judgment dismissing the petition, plaintiff appeals. Reversed, with direction to proceed in conformity with the opinion.

pany asks that we grant them an appeal and reverse the judgment.

[1] It will be observed that the note was regular on its face and came into the possession of the Lynchburg Shoe Company before its maturity. It had all the require

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

ments of a negotiable instrument provided the execution of the paper, such as fraud or for in section 3720b1, Kentucky Statutes. failure of consideration. When he has done Wettlaufer v. Baxter, 137 Ky. 362, 125 S. W. this, the burden shifts to the plaintiff to 741, 26 L. R. A. (N. S.) 804. show that

(218 S.W.)

was incumbent upon plaintiff to show that he | Fourth National Bank, 137 Ky. 561 [126 S. W. acquired title as a holder in due course."

Further in the course of the opinion, the court said that there was no evidence that Taube had notice of fraud or any infirmity in the title to the paper, and therefore the court properly directed a verdict in his favor. In Muir v. Edelen, 156 Ky. 212, 160 S. W. 1048, Edelen, as the assignee of a negotiable note executed by Muir to the Clark Motor Car Company, brought suit on the paper against Muir. Muir in his answer admitted the execution of the note, but charged that it was obtained by fraud and false representation, and that Edelen had notice of the fraud and misrepresentation at the time he took the note. On the trial of the case, Muir assumed the burden of proof, and at the conclusion of his evidence the court directed the jury to find a verdict for Edelen.

In the course of the opinion, the court, in holding that the trial judge committed error in taking the case from the jury upon the conclusion of the evidence for Muir which tended to show fraud and misrepresentation in the procurement of the note, said:

"Section 3720b, Kentucky Statutes, subsection 59, applies here, and it is as follows: 'Every holder is deemed prima facie to be a holder in due course; (a) but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he, or some person under whom he claims, acquired the title as a holder in due course.'

"And subsection 55 states when title to a negotiable instrument is 'defective': 'The title of a person who negotiates an instrument is defective within the meaning of this act, when be obtained the instrument, or any signature thereto, by fraud, duress, etc.'

"So, when some proof of fraud, inducing the execution of the note sued on, was introduced by appellant, the burden shifted to appellee, Edelen, to show that he was a holder in due course."

In Barnard v. Napier, 167 Ky. 824, 181 S. W. 624, the court said:

114], and Muir v. Edelen, 156 Ky. 212 [160 S. W. 1048], that the burden was upon the holder to show that he was a holder in due course, when a defect was shown to be in the title of some one who has negotiated the instrument. Hence, the notes sued upon being upon their faces complete and regular, the appellant had a prima facie case, but when appellees offered proof of the frauds practiced by Bauhard of the notes, and thus showed a defect in the Brothers upon them in procuring the execution title of Bauhard Brothers, then the burden rested upon appellant to show, by evidence, that he was a holder of the notes in due course."

To the same effect is Commercial Security

Co. v. Archer, 179 Ky. 842, 201 S. W. 479.

It follows from what we have said that

the appeal must be granted and the judgment

reversed, with direction to the lower court to proceed in conformity with this opinion.

MATNEY et al. v. IRONTON LUMBER CO.
(Court of Appeals of Kentucky. Feb. 6, 1920.)
1. PARTNERSHIP 155-PARTNER ACQUIESC-

ING IN SALE OF FIRM PROPERTY AS PROPERTY
OF PARTNER HAS NO CLAIM AGAINST BUYER
WHO HAS PAID COPARTNER.

B., having made an individual contract for sale of lumber to defendant, and thereunder delivered not only his own lumber, but also lumber belonging to himself and M. as partners, being permitted by M. to treat it as his own, defendant was not accountable to the partnership for the partnership timber, though, treated separately, it was not fully paid for; B., who had become insolvent, having been paid enough to cover all the timber, treated as one account.

2. PARTNERSHIP 155-EVIDENCE SHOWS
ACQUIESCENCE OF PARTNER IN COPARTNER'S
SELLING PARTNERSHIP PROPERTY AS INDI-
VIDUAL PROPERTY.

Evidence held to show that M. acquiesced in, if he did not agree to, B. treating as his own individually lumber belonging to them as partners, in filling his individual contract for sale of lumber to defendant.

Appeal from Circuit Court, Pike County.

Action by J. H. Matney and another, as partners, against the Ironton Lumber Company. Judgment for defendant, and plaintiffs appeal. Affirmed.

Subsection 59 of section 3720b "provides under what circumstances and upon whom the burden of proof rests in a trial of a suit upon a negotiable instrument. Every holder of a negotiable instrument is prima facie deemed to be a holder in due course; but, when it is shown that there was a defect in the title of any one who has negotiated the note, the burden is upon the holder to prove that he, or some one under whom he claims, acquired the title to the instrument in due course. That is, he must prove that he became the owner of it before it was overdue, and without notice of any previous dishonor; that he took it in good faith and for value; and that at the time it J. J. Moore, of Pikeville, for appellee. was negotiated to him he had no knowledge of any infirmity in the instrument or defect in CLARKE, J. The judgment appealed from the title of the person negotiating it to him. It sustained appellee's plea of payment in fall was held also in the cases of Campbell v. of the claim of $3,447.50, which appellants,

Wheeler & Wheeler, of Ashland, for appel-
Stratton & Stephenson, of Pikeville, and

lants.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

J. H. Matney and J. N. Bevins, as partners, asserted against it for timber sold and delivered.

By written contract dated September 5, 1912, Bevins agreed to deliver to appellee at Catlettsburg, Ky., about 1,000 logs at stipulated prices for various kinds and grades; appellee agreeing to advance to Bevins on this timber "$300 and $200 in 30 days from date, and then about November 1st they are to advance whatever second parties [appellee] think sufficient, and about every 30 days from then on."

This contract covered timber owned by Bevins in three or four separate tracts adjacent to Big Sandy river "from Grapevine down to the forks and from the forks down to Chloe creek."

Shortly after Bevins made this contract he acquired a half interest in some timber on Harold's branch, the other half of which was owned by Matney, and admittedly this partnership timber was delivered by Bevins to appellee under the terms and conditions of his written contract above referred to.

The evidence shows conclusively that Bevins made the deliveries and received advancements on and settlements for this timber along with and in the same manner as he did his own timber; that appellee paid to Bevins all and more than was due for all timber delivered to it, including the partnership timber. But it also appears that, if the partnership timber be considered separately, Bevins received as payments on it approximately $1,400 less than under the contract was due therefor, but received more than that amount in excess of what was due for timber owned by him individually.

Since Bevins was, at the time this controversy arose, insolvent and largely indebted to Matney on partnership accounts, if appellee must separate its accounts and settle separately with Bevins and the partnership, Matney will recoup his advancements to the firm, and appellee will lose its overpayments to Bevins on timber owned by him individually.

[1] It is appellants' contention that these accounts should have been separated, and that the court erred in treating partnership timber as a part of the one transaction between appellee and Bevins; that this resulted in permitting appellee to credit on its claim for an overpayment to Bevins the partnership debt against it, in violation of the well-known rule that a creditor of a member of a partnership cannot offset such a claim against his indebtedness to the firm, but only against the debtor member's interest in the firm's assets.

under the one written contract from Bevins, who was permitted by his partner, Matney, to treat as his own and deliver the partnership timber to appellee under its written contract with him.

[2] It was upon this question of fact as to whether there was a separate contract between appellee and the partnership for the Harold creek timber that the decision of the chancellor was based. Proof was taken before the master, who found from the evidence that all of the timber, including this partnership timber, was sold and delivered by Bevins to appellee under the written contract between them and to which Matney and Bevins, as partners, were not parties. Upon exceptions by appellants the chancellor confirmed the master's finding. ful consideration of the evidence convinces us that the chancellor did not err in so doing. Only Bevins and Matney testified upon their side of this question, and Richey and Henry, officers and employés of the appellee, upon the other.

A care

Even the testimony of appellants is, on the whole, confirmatory of that of appellee's witnesses that it was agreed by all parties that this timber should be included and was delivered under the Bevins contract. All of the circumstances are corroborative of this fact. Appellee kept no account with the firm, but entered all deliveries and payments, regardless of from what tract the timber came, in the one account it kept with Bevins individually. All payments were made to Bevins by check. Bevins attended to all of the business as though it were his own. Matney was present on several occasions when deliveries were made, and never requested that separate accounts be kept or that payments be made to the partnership for its timber, and it was nearly a year after all the timber had been delivered that in this litigation, which arose about another mat-. ter, Matney, in the partnership name, first indicated a desire for a separate accounting for the partnership timber, or intimated that the partnership had any contract with or claim against appellee.

It seems quite clear that all parties understood and agreed that appellee was dealing with Bevins only and individually, and that Matney was looking to Bevins, and not to appellee, for his money during the time the business was being transacted. The estimates and payments were made to Bevins by appellee upon total deliveries quite irrespective of from what tracts they originated; and it would be extremely inequitable after this had been done and Bevins had been paid in full for all deliveries under the It is obvious, however, that Matney could contract made only with him, if his partner not invoke this rule of law in his behalf and in a part of the timber thus delivered and to the detriment of appellee, if, as claimed paid for, who had acquiesced, if he had not by appellee, it had no separate contract with in fact agreed, that the business should be the partnership, but bought all the timber so transacted, could come in and demand a

(218 S.W.)

separate accounting for that part of the tim-] she accepted his offer or contract to will her ber in which he had an interest. the house in return for care for life.

We are therefore convinced that not only the facts, but the equities as well, are entirely upon the side of appellee as against Matney, and that the judgment of the chancellor should be, and it is affirmed.

WALKER v. DILL'S ADM'R. (Court of Appeals of Kentucky. Jan. 27, 1920.)

1. WILLS 68-EXISTENCE OF CONTRACT TO DEVISE JURY QUESTION.

Appeal from Circuit Court, Todd County.

Action by Mrs. Jimmie Barbee Walker against J. N. Dill's Administrator. From judgment for defendant, plaintiff appeals. Reversed and remanded for new trial.

Trimble & Bell, of Hopkinsville, for appellant.

J. R. Malloy, of Elkton, for appellee.

SAMPSON, J. This action was commenced in the Todd circuit court by Mrs. Jimmie Barbee Walker against the administrator of J. N. Dill, to enforce an alleged contract made between Mrs. Walker and J. N. Dill in his lifetime, whereby J. N. Dill agreed, in consid

Evidence held to call for submission to the jury of the question of the existence of a contract between decedent and plaintiff, suing his administrator, that decedent would leave plain-eration of Mrs. Walker waiting upon him, tiff, a married woman, the house in which she and her husband lived with decedent if plaintiff would take care of decedent as long as he lived.

2. Work and labOR 6, 7(1)-CONTRACT TO

PAY FOR BOARD AND SERVICES PRESUMED
ONLY BETWEEN STRANGERS.

Where a relative lives with another or other relatives as a member of the family by mutual consent, there is no presumption that he is to pay, or the others to receive, compensation for board and services, but where a stranger so lives with others, there is such a presumption, and contract to pay for the services, board, etc., will be implied.

ORAL

boarding, lodging, and caring for him, to give by will to Mrs. Walker, at his death, a certain house and lot situated in the city of Elkton, Ky., of the value of $2,250. Dill died without executing any will or otherwise conveying the property to Mrs. Walker, and his administrator is resisting the claim of Mrs. Walker to the property or its equivalent. The suit does not seek to have a specific performance of the contract to convey or give the property to Mrs. Walker but only to recover its value, $2,250.

Issue being joined, a jury was impaneled to try the issues of fact, whereupon Mrs. 3. SPECIFIC PERFORMANCE 39, 45 Walker, plaintiff below, called a number of CONTRACT TO WILL REALTY, THOUGH PARTLY witnesses, who testified in her behalf concernCARRIED OUT, NOT SPECIFICALLY PERFORM-ing the services performed by her for Mr.

ABLE.

An action cannot be maintained for specific performance of an oral contract to will realty in return for services, as it is within the statute of frauds, prohibiting the sale or transfer of land by parol, while part performance, as the performance of services or the delivery of consideration, does not take the contract out of the statute.

4. FRAUDS, STATUTE OF

138(4)-RECOVERY of value of REALTY ORALLY AGREED TO BE

DEVISED FOR SUPPORT.

Dill during his last illness, and also relating fragments of conversations had with Mr. Dill, concerning a contract which it is alleged he had entered into with Mrs. Walker to care for, board, and lodge him during his lifetime, and for which he was to give by will to her the house and lot in question. At the conclusion of the evidence for the plaintiff the administrator entered a motion, which the court sustained, to peremptorily instruct the jury to find for the estate of Dill. This motion was objected to by the plaintiff, but the court instructed the jury to find and return a verdict for the administrator, which was done. Judgment being entered on the verdict, Mrs. Walker appeals.

Where plaintiff carried out her contract by supporting defendant administrator's decedent for life and decedent failed to perform his oral agreement, not specifically enforceable under the statute of frauds, to will plaintiff the house in which they had lived, plaintiff may recover The question presented is: Was the evifrom the administrator, not the specific proper-dence for the plaintiff upon the subject of ty, but its value or equivalent, where the value whether or not an express contract was enof the services rendered by plaintiff cannot be determined.

5. WILLS 58 (2)—EVIDENCE SUFFICIENT TO SHOW ACCEPTANCE OF CONTRACT TO DEVISE.

Showing that plaintiff had entered upon per

tered into between Mrs. Walker and the deceased, Dill, by which Mrs. Walker was to care for, board, and lodge Dill in consideration of Dill willing to her the house and lot

in question, sufficient to have warranted the trial court in submitting the case to the jury? To determine this we will examine briefly

formance of her claimed contract to care for
decedent for life in return for a devise of the
house in which they lived, and was carrying it
out, and performing in detail at the time of the evidence.

decedent's death, was sufficient to show that [1] The principal witness for Mrs Walker

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes