
    McLemore, Curran & Co. v. E. Cannon et al.
    ■Where an agent has fraudulently parted with the note of his principal, the original owner may require from the holder, proof that he is a holder for value.
    PEAL from the Fourth District Court of New Orleans, Reynolds, J.
    
      Wolfe & Singleton, for plaintiffs and appellants, cited:
    
      Copley v. MeFmdane', 9 E. 183; Harrison v. Poole, 4 R. 193 ; Morgans. Yarborough, 13 La. 76; Louisiana State Bcmh v. Orleans Navigation Company, 3 Ann. 294; Story on Notes, sec. 195.
    
      William N. Runt, for defendants, cited :
    
      Mathews, Finley & Co. v. Rutherford, 7 Ann.; 1 Greenleaf’s Ev. art. 451; 1 Starkee, 106; Rose v. Blalcemore, Ry. & M. 383; L. 23, Cod. deprdb et praesumt; C. 0. 1842.
   Slidell, C. J.

The plaintiffs allege that they placed for sale in the hands of 8. B. Conrey, a bill broker, two bills of exchange, one for $3000 and the other for $1119 70 ; that Conrey put them in the hands of the defendants as collateral security for a pretended debt to them, they well knowing, at the time, he was not the owner; that the bill for $3000 was subsequently sold, and the proceeds received by the defendants. They asked judgment for $3000, and that the bill for $1119 70 be restored to them. Cannon answered by a general denial, and 'also pleaded that he was the lawful owner of the bill for $1119 70, having- purchased it from Soloman. There was judgment for both defendants, and the plaintiffs have appealed.

We will consider, first,'the liability of Cannon.

It is proved that plaintiffs were holders of the bills, and put them into Con-rey’s hands for sale, who has failed to account to his principals. He sold the bill of $3000, and received the proceeds of sale through a broker employed by him to sell, and who testified that he had forgotten to whom he sold. This broker gave Conrey the proceeds in his checks on a banker, one for $1000 and one for $1790. Solomon got $1000 in bank notes, and the check for $1790 from Conrey’s clerk in his absence. It does not appear that the bank notes or check ever went into Cannon’s hands, nor that ho was privy to the transaction; and although the plaintiffs have proved that there was much intimacy between Solomon and Gannon; that they occupied the same office, and had some transactions on joint account — the evidence is insufficient to establish a partnership as alleged. There is no reason, therefore, to disturb the judgment in Cannon’s favor, so far as concerns the bill of $3000 or its proceeds.

As to the bill of $1119 70, we think the judgment in Cannon’s favor erroneous.

The plaintiffs have proved that they hold the bill; that Conrey was a bill broker ; and that they put it into his hands to get it discounted. It is proved that his duty to his principals has been violated. He is a defaulter to them, having neither returned the bill nor accounted for its proceeds, when called upon by plaintiff, and the bill is now found in the hands of Cannon. There is also testimony showing that Solomon had said the bill was put into his hands as collateral security for an indebtedness of Conrey to him, the amount of which is unexplained by the defendants. It is also proved that Conrey, Solomon and Cannon, were all in the brokerage business; that there was close intimacy and constant intercourse between Cannon and Solomon, and that Solomon seems to have taken advantage of Conrey’s absence, in getting the bank notes and check from Convoy's clerk, upon a representation that Convey had authorized it, which Convey, immediately upon being informed of the payment, denied. And here it is proper to observe, that the plaintiffs have been prevented from more fully disclosing the circumstances connecting Cannon and Solomon with the matter, by the refusal of Convey to testify upon the ground that his testimony might tend to subject him to a criminal proceeding; upon which ground, as also upon the objection of defendants on the score of interest, the Court below refused to permit or compel him to testify.

We think the above showing, on the part of the plaintiffs, was sufficient to throw upon Cannon the burden of proving that he, or Solomon, from whom he pleads ho bought the bill, was a holder for a valid consideration. This he has failed to do. He rests upon his naked possession, and Solomon, his co-defendant, is equally silent. There is no doubt that in the case of a lost or stolen bill, the original owner may require from the holder, proof that ho is a holder for value, and we do not see how, in principle, the case of one, who has been defrauded by his agent and makes out such a showing as is here made, can be distinguished. Were it otherwise, one who chose to collude with a bill broker, could do it with impunity. See Story on Bills, § 198, 193; and see Haynes v. Foster, 2 Crompton & Meeson, 239.

The most favorable aspect for the defendant, who has shown no valid consideration given by himself, is that the note was put into Solomonh hands as collateral security. But if that be true, Solomon could only hold, as against plaintiffs, to the amount of his claim against Cont'ey, which is not proved; and Cannon, who received the bill from Solomon, without any valuable consideration shown, stands on no bettor footing.

With respect to the liability of Solomon, we are of opinion that he cannot be held to the plaintiffs for the bank notes, the identity not being proved. But with respect to the check for $1790, the identity is clearly established, and it was obtained by Solomon from the possession of Convey, who held it as plaintiffs’ agent, without Convoy's consent, and against his orders, by representing to the clerk that Convey had consented.

It is therefore decreed, that the judgment of the District Court be reversed; and that the bill of $1119 70, in the petition described, be delivered to the plaintiffs by said Gannon; and that, as to the residue of the plaintiffs’ claim against said Cannon, there be judgment in said Cannon's favor.

It is further decreed, that the plaintiffs recover of the said Solomon, the sum of $1790, with interest from the 19th of March, 1852, until paid, and that the costs in both Courts be paid by the defendants in solido.

Buciianah, J.

As regards the draft for $1119 70, sequestered in this case, I desire to be understood as concurring in the opinion just read, exclusively on the ground that the defendants, by objecting to the evidence of Convey, the broker, when called to the stand by plaintiffs, in the District Court, have succeeded in excluding testimony which would have thrown all the necessary light upon the circumstances under which the draft in question came into the possession of the defendant, Cannon.

As a general rule, the mere fact of a bill broker not having accounted to his customer for the proceeds of a bill put into his hands by such customer, to be discounted, does not, under the commercial law, throw the burden of proof upon a pei’son holding the bill, to show the consideration paid by him. I deem it proper to make this observation, in order that the point decided in this case, may not be misunderstood.  