
    POST, MARTIN & COMPANY v. ABBEVILLE & WAYCROSS RAILROAD COMPANY.
    July 13, 1896. By two Justices.
    Complaint on notes. Before Judge Smith. Wilcox'superior court. September term, 1895.
    The notes sued on were dated March 9, 1891, and payable 'at the office of the American Car & Equipment Company in the city of New York, each being for $75 “for rental of rolling-sto'ck under contract of lease and conditional sale of even date herewith.” They were indorsed by tbe payee; and tbe plaintiffs alleged tbat tbey were bona fide holders for value before maturity of tbe notes. Defendant pleaded, not indebted; and tbat tbe consideration of tbe notes bad totally failed, in that they were given for certain railroad equipment described in tbe contract t&ferred to therein, but tbat after tbe execution of-the notes tbe payee became insolvent and wholly failed to furnish any of tbe equipment so purchased, and defendant never received 'any of the equipment nor .any consideration for the notes. Tbe court directed a verdict for defendant, and plaintiffs’ motion for a new trial was overruled.
   Lumpkin, J.

The action being upon negotiable promissory notes, and it having 'been shown by uncontradicted evidence that, before their maturity, the plaintiffs had become the ñoña fide holders of the same for value, it was error to direct a verdict for the defendant, although it may have been proved that the consideration of the notes had entirely failed. The mere fact that the consideration was expressed on the face of the notes, was not, of itself, notice that the consideration had failed.

Judgment remrsed.

At tbe trial there was testimony for tbe plaintiffs, that tbey got the notes sued on, with nine others, from tbe payee. Tbey were carrying a large loan secured by various kinds of collateral, part of which tbe payee was in tbe habit of withdrawing and substituting therefor other securities of equal value, and tbe notes sued on were substituted in this way. Tbe transaction was shortly after tbe date of tbe notes, and long before tbey were due. Plaintiffs bad no knowledge whatever of tbe failure of consideration, and never beard of any defense until they tried to collect tbe notes, but took them as ordinary business papers. Tbe payee failed shortly afterwards, and transferred to plaintiffs tbe notes absolutely, tbat is, released its equity in them. This was in April, 1891. Plaintiffs bad collected enough of tbe collateral to secure about ten per cent, of tbe loan, the 'balance being still due and unpaid.

There was testimony for tbe defendant supporting tbe allegation in the plea of failure of consideration. It further introduced tbe agreement referred to in tbe notes sued on, dated ten days after the date of tbe notes, and not recorded. Bv this agreement tbe payee company agrees to lease to defendant a baggage and passenger car for 36 months from April, 1891, of tbe value of $1,000, tbe rental being payable $250 cash and twelve quarterly payments of $75 each, evidenced by twelve notes, with tbe right in tbe lessor to retake tbe car at its option in event of failure to pay any of ■tbe notes, surplus of sale by lessor to go to lessee. Lessee to keep car in repair, to pay insurance and taxes, and to replace the car if destroyed. It is further agreed that if the lessee shall pay all sums due under the contract, the oar shall become its property absolutely.

Tom Eason■ and E. A. Smith, for plaintiffs.

D. S. Pope and E. H. Quits, for defendant.  