#### SETZER v. DEAL.

(Filed May 17, 1904).

1. NEGOTIABLE INSTRUMENTS — Bills and Notes.

The knowledge by the bona fide assignee of a note of the crookedness in business matters of the assignor does not defeat the title of the assignee or make it his duty to enquire relative to the note.

2. NEGOTIABLE INSTRUMENTS.

That the maker of a note does business near the assignee is immaterial on the question as to whether the assignee was a bona fide holder.

ActioN by Setzer & Russell against A. A. Deal, beard by Judge T. J. Slum and a jury, at November Term, 1903, of tbe Superior Court of Catawba County. Erom a judgment for tbe defendant tbe plaintiffs appealed.

E. B. Gline and D. L. Ritssell, for tbe plaintiffs.

Self & Whitener and T. M. Ilufham, for the defendant.

Pee Cueiam.

All tbe evidence was to tbe effect that tbe defendant executed two notes to tbe Peering Harvester Company, one in tbe sum of $50 and the other in tbe sum of $55, for an “Ideal Binder,” sold by that company to him; that those notes were destroyed in tbe presence of tbe defendant by Yoder, and that thereupon tbe defendant executed tbe note sued upon in this action. Yoder claimed to be one of tbe firm of tbe Hickory Implement Company and testified that be endorsed tbe same to tbe plaintiffs for value. Tbe defendant attempted to prove that Yoder and tbe plaintiffs conspired to cheat tbe Peering Harvester Company by destroying tbe evidence of tbe indebtedness of the defendant to that company, and in taking tbe note of tbe defendant for *429the amount. There is abundant evidence in the case going to show that Yoder practiced a fraud upon the Deering Harvester Company in the transaction, but we can see from the evidence only one suspicious circumstance tending to prove the complicity of the plaintiffs in the matter, viz., that according to the defendant’s testimony, after the plaintiffs alleged they bought the note sued upon, the defendant called upon the plaintiffs and asked them if they had bought the note from Yoder, and, if so, what they paid for it, and they declined to answer the questions. That was, as we have said, after the alleged purchase of the note. The defendant, with the purpose to show that the plaintiffs were in possession of such facts as should have put them on inquiry as to the title of Yoder to the notes sued on, asked Setzer, one of the plaintiffs, if he did not know at the time of the transfer of the notes that there were charges against Yoder of crookedness in business transactions. And the witness was further asked, for the same purpose, if he tried to find out anything else about the note, and further, if he knew the Hickory Implement Company did business next door to the plaintiffs. The witness was compelled to answer that he had heard there were some charges against Yoder; that he did not make inquiry about the note or the plaintiffs’ title to it, and that he did know that the Hickory Implement Company conducted business next door to the plaintiffs. We are of the opinion that the evidence was incompetent. The defendant had executed the note. It was not due when it was transferred, and the plaintiffs had testified that they had given $100 for it and knew nothing nor had heard anything to its dishonor; and the defendant had introduced no evidence in contradiction. The purchase of the notes seems to have been made for value, in good faith and in due course of business. Any knowledge on the part of the purchaser of the assignor’s crookedness in business matters could not be allowed to defeat the rule of *430law which gave to a purchaser of a note for value, in good faith aiid in regular course of business, the title to the property. It would be almost impossible for the business of banking to be carried on if it was incumbent that bank officers, whenever negotiable paper was offered for discount or sale, to inquire into whether any of the parties to be charged were crooked in their business methods..

We cannot see what connection the fact that the Hickory Implement Company did business next door to the plaintiffs could have to do with the matter. Neither in fact nor in law did it have any connection with the matter. We see nothing in the evidence, as we have said, which put the plaintiffs upon notice to look into or find out anything about Yoder’s right to the note. “What circumstances will amount to actual or constructive notice of any defect or infirmity in the title to the note, so as to let it in as a bar or defense against a holder for value, has been a matter of much discussion and of no small diversity of judicial opinion. It is agreed on all sides that express notice is not indispensable, but it will be sufficient if the circumstances are of such a strong and pointed character as necessarily to cast a shade upon the transaction and to put the holder upon inquiry.” Story Prom. Notes, section 197. The same principle of law was held in Loftin v. Hill, 131 N. C., 105.

New Trial.