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action in taking the paper amounts to bad faith. It is equally true that, if the facts shown have any fair tendency to show bad faith, the question remains one of fact, and not of law. It is especially the case where the evidence of fraud is sufficient to put the burden of showing good faith on the holder. Where the taint of fraud once attaches to a written contract, negotiable or otherwise, the law is careful to require every person who seeks to profit by it to show that he comes into court with 399 clean hands. Speaking to this point, the supreme court of Indiana says: “It would be a departure from principle to hold that the maker must prove that the holder had notice of the fraud. Whether he had notice or not is a matter peculiarly within his own knowledge. It needs no more than a bare statement of the proposition that the plaintiff's possession or nonpossession of notice is a matter peculiarly within his own knowledge to establish it to the satisfaction of a candid mind; and, if this proposition be established, then it must follow that proof should come from him, for few rules of law are better settled than that a party whose cause of action or defense rests upon facts peculiarly within his own knowledge must prove those facts”: Giberson v. Jolley, 120 Ind. 301, 22 N. E. 306. While it is not to be presumed that a witness will testify falsely, yet it may be presumed that the testimony of a party will be more or less colored by his interest or bias, and, generally speaking, where such testimony is offered to overcome an unfavorable presumption of law or evidence, or to satisfy the burden of proof which the laws casts upon him, the question as to his credibility and of the weight and effect of his testimony is for the jury.
The record in this case discloses evidence tending to show that the bank received the note about June 20, 1902, and continued to hold the same until about March 1, 1903. On the latter date, the bank held notes which had been indorsed to it by Bigler & Sons, including the one in suit, amounting to seventeen thousand six hundred and forty-five dollars and sixty-three cents. The plaintiff herein was at that time a resident of Iowa City. He was employed as an assistant manager of a manufacturing company, and was not engaged in the business of buying and selling notes. He had no acquaintance with Bigler & Sons, but had heard of them, and knew that they were then involved in bankruptcy proceedings. It does not appear that he had any acquaintance with the defendant Parsons, or any personal knowledge as to his financial ability. Some time in February, 400 1903, the bank, for the conceded purpose of avoiding any defense or setoff against these notes, consulted their attorney, and was advised to transfer or negotiate them. Thereupon they placed the matter in the hands of the attorney for that purpose, and he arranged the transaction with the plaintiff. By the plaintiff and his witnesses the deal is variously designated as a "sale" of the notes, as a "loan” to the plaintiff, and as an “exchange of notes.” The notes which were the subject of the deal amounted, as we have already said, to seventeen thousand six hundred and forty-five dollars and sixty-three cents. Plaintiff gave his note for that sum to “A. M. Henderson, Trustee.” Henderson was then cashier of the Marengo Savings Bank, of which the attorney was a director, and the deal was entered on the books as a bank transaction. The plaintiff deposited or undertook to deposit as collateral to this note all of the notes which he was professedly purchasing from the Victor Bank. The Marengo Bank did not have the money with which to make such a loan, and the sum was beyond the limit of its legal power to loan, but the attorney undertook to have the necessary money furnished by the Victor Bank, and, upon this understanding, the Marengo Bank then credited the plaintiff with the sum on its books. This credit was at once canceled by plaintiff's check to the Victor Bank for the full amount, which check was then returned to the Marengo Bank in exchange for the note given by plaintiff, indorsed by “Henderson, Trustee,” without recourse. The plaintiff himself did not appear at either bank with reference to this transaction until all the terms of the deal had been arranged by the attorney, when he went to the bank at Marengo, and executed the note prepared for his signature. Indeed, we find no testimony showing in express terms or by necessary inference that plaintiff ever saw or had in his possession the note in suit or any of the notes which were the subject of the alleged transfer. No money changed hands in the alleged purchase. Plaintiff's note was for the full amount of the notes he professedly purchased with no 401 margin of profit therein for himself, except the difference of one per cent in the rate of interest. In his testimony as a witness he makes no attempt to assert the good faith of his purchase of the notes or to negative the fact that he had notice of any defense thereto. Even had he expressly denied notice or knowledge, yet, taken as a whole, the transaction was of such an extraordinary character and of such elaborate workmanship it is exceedingly difficult to avoid the con
clusion that plaintiff occupies no better position than that of a mere agent, or person consenting to act as a voluntary medium through whom the Victor Bank could make merely colorable transfer of the title to the notes, and thereby be able to avoid a defense which it had reason to believe the maker of the note could rightfully assert in an action brought by itself. To say the very least, the showing is such that a finding by the jury that plaintiff is not a good faith holder of the note in suit could not be properly set aside as having no support in the evidence.
For the reasons stated, a new trial must be ordered, and the judgment of the district court is therefore reversed.
A Collateral Agreement that a Note shall not bo Paid if an Erecha tory Contract forming the consideration thereof is not performed, does not affect the rights of an indorsee with notice of the agreement, unless a breach of the agreement has occurred to his knowledge at the time of his purchase: Jennings v. Todd, 118 Mo. 296, 40 Am. St. Rep. 373; Miller v. Ottaway, 81 Mich. 196, 21 Am. St. Rep. 513; Parker v. Sutton, 103 N. C. 191, 14 Am. St. Rep. 795. As to the effect of such an agreement as between the original parties, see Gandy v. Weckerly, 220 Pa. 285, 123 Am. St. Rep. 691.
Possession of a Negotiable Note Properly Indorsed is Prima Facie evidence that the holder is a bona fide purchaser: Clark v. Skeen, 61 Kan. 526, 78 Am. St. Rep. 337, 60 Pac. 327; Manhattan Sav. Inst. v. New York Nat. Ex. Bank, 170 N. Y. 58, 88 Am. St. Rep. 640, 62 N. E. 1079. And if the defendant admits the execution of a note in suit, but denies that the holder is the owner thereof by purchase, before maturity, and alleges want of consideration, the burden of proving such allegations is on the defendant: Yates v. Spofford, 7 Idaho, 737, 97 Am. St. Rep. 267.
Parol Evidence is Admissible to show that a Note was not Delivered; McFarland v. Sikes, 54 Conn. 250, 1 Am. St. Rep. 111; and to show the nonperformance of a condition upon which the note was given: McCormick Harvesting Machine Co. v. Faulkner, 7 S. D. 363, 58 Am. St. Rep. 839. Parol evidence is also admissible to prove an agreement collateral to a promissory note: Carroll v. Nodine, 41 Or. 412, 93 Am. St. Rep. 743; Citizens' Bank v. Millet, 103 Ky. 1, 82 Am. St. Rep. 546; Sloan v. Gibbes, 56 8. C. 480, 76 Am. St. Rep. 559.
DONALDSON v. EATON & ESTES.
[136 Iowa, 650, 114 N. W. 19.] CHAMPERTY-Contract Between Attorney and Client-D1vorce.A contract between a married man and his attorney with reference to the procurement of the annulment of his marriage and the settlement of the wife's alimony, involving a lump sum agreed by the husband to be paid to his client in consideration of such anpulment being granted and the alimony being settled, is champertous and void as against public policy. (p. 278.)
DIVORCE_Contract to Procure-Public Policy.-A contract with reference to procuring a divorce or to facilitate its procurement is void as against public policy. (p. 279.)
ATTORNEY AND CLIENT=Void Contract.-A contract between client and attorney is void if made without a fair and full dicelosure by the attorney of the facts on which it is predicated. (p.
ATTORNEY AND CLIENT—Contracts Between. As between attorney and client a settlement, though voluntarily made, will be inquired into by the courts, and 'money or property procured by the attorney will be restored to the client if he has been imposed upon.
ATTORNEY AND CLIENT—Evidence Burden of Proof.-The with his client or dealing with his client's property he has acted in fairness and good faith, with a disclosure of all the facts. (P. 280.)
ATTORNEY AND CLIENT—Contracts Between.-An attorney who acts in bad faith and seeks to secure his personal advantage to the prejudice
of his client may be denied any compensation for his
(pp. 279, 280.)
Action to require defendants, as attorneys, to refund to plaintiff
, their client, $2,000 for extortionate fees exacted from him by them in excess of a reasonable compensation as bis attorneys in an action instituted by them in his behalf. Judgment dismissing plaintiff's action, and he appealed. W. P. Ferguson, for the appellant. W. E. Mitchell, for the appellees. 861 MCCLAIN, J. The evidence, without substantial con
flict save as to one
point to be hereafter noticed, shows that in November, 1904, the plaintiff, who was seventy years of age, a farmer and a resident of Freemont county, consulted defendants, as attorneys practicing in that county, with ref. erence to difficulties and disagreements with his wife, to whom he had been married about eight months, and expressed to them the desire for a divorce from his wife in order that she might not have her statutory share of his property should she survive him. The defendants were not able to discover in plaintiff's statement any ground for divorce, and the sub
ject, for the time being, was dismissed. About December 1st following, plaintiff consulted defendants again with reference to a threatened proceeding for an annulment of marriage on the part of the wife, in which he understood she would ask $10,000 as alimony, and the homestead consisting of a house and lot in town of the value of about $1,000. The member of defendant firm thus consulted expressed the belief that no more than $2,000 would probably be allowed to the wife. In this conversation plaintiff disclosed to defendants that his wife had a cause for the annulment of marriage on the ground of his impotency, and expressed desire that she procure such annulment, saying that he was worth about $38,000, and that another person of larger means had settled with his wife for $5,000, and expressed a willingness to settle for that amount. On December 3d plaintiff, with one of the defendants, went to the town of plaintiff's residence, where his wife was occupying the homestead, and the attorney had a conversation with the wife, not in the presence of the plaintiff, with reference to the threatened legal proceedings. The attorney reported to the plaintiff that the wife was 652 claiming $10,000 and the homestead, and that she would not settle for less without consulting her attorney, who had already been sent for. The attorney arrived in the afternoon by train, a conference was held between the wife and her attorney on the one side and the attorney for the plaintiff on the other, plaintiff not being present, and an arrangement was made by which the wife was to bring the action, which was not to be resisted, and was to be allowed $1,200 and the homestead, by way of alimony, and the plaintiff in this action was to pay all costs and expenses, including the fees of the wife's attorney. These terms of settlement were embodied in a written stipulation entitled as in an action and in form an application to the court with reference to the disposition of the property rights and alimony of the plaintiff in case a decree should be granted, and was signed by the respective attorneys for their clients. The conference closed before 7 o'clock in the evening, and the wife's attorney departed on the train. According to the testimony of the member of defendant firm who carried on these negotiations for plaintiff, a written contract between the plaintiff and defendant had been drawn up by him and signed by plaintiff between these two interviews, stipulating as to the compensation to be paid defendants in the event of the successful termination of the proceedings for annulment of marriage, which was in the following terms: