Story Case

Abner Duckworth, having retired from farming with a comfortable accumulation of wealth, was able to assist his more needy associates. He made a loan of $500 to Sam Hobbleford, to enable him to buy a farm, taking therefor, the note of Hobbleford, payable in ten years, with interest. After about six years, having had good fortune and prosperity, Hobbleford paid up his indebtedness, including the note held by Duckworth. The note was not conveniently located, so Hobbleford, having full confidence in Duckworth, was satisfied to take from him a receipt for the $500, instead of the surrender of the note. Three years later, Duckworth died. His son, John Duckworth, having taken charge of his affairs, as administrator, found the uncancelled note of Hobbleford. At the date of its maturity he presented it for payment. Hobbleford showed his receipt, but young Duckworth refused to recognize that as a discharge. He brought suit, insisting that, since he had acquired the note before its maturity, he was obliged, in behalf of the estate, to insist on its payment. Should the court grant him a recovery, or is the payment to the deceased Duckworth a defense to Hobbleford against this action?

Ruling Court Case. Wilcox Vs. Aultman, Volume 64 Georgia Reports, Page 544

Aultman purchased some farming materials from Layd & Sons. In payment therefor he gave to Layd & Sons a draft drawn by himself, payable to his own order, and indorsed to Layd & Sons. Some months later, and before the draft was due and payable, Aultman paid the amount stipulated in the draft to Layd & Sons. The latter said that the draft was not conveniently located at the time, but would be sent to Aultman in a few days. But instead of sending it, the draft was sold to Wilcox, who paid value for it and had no notice of the fact that Aultman had paid Layd & Sons. "Wilcox now sues.

Aultman contends that the draft was discharged by payment, even as against a bona fide purchaser of the draft.

Mr. Chief Justice Warner said: "When the maker of a negotiable draft or note pays it to one who had not the possession of the paper at the time of such payment, so as to enable him to take it up, but takes a receipt for the money so paid, instead of taking up his draft or note, such receipt will not protect him from payment of the draft or note when sued by the bona fide holder thereof before maturity." Judgment was given for Wilcox.

Ruling Law. Story Case Answer

Payment of a negotiable instrument is a personal defense only; that is, if an instrument is paid before maturity, and the one paying does not get possession of it, he may defend against the person to whom he made payment, or against any person who knew of the payment. But if the person to whom payment is made indorses the instrument to a third person, who payss value therefor, and has no knowledge of the circumstances, the instrument may again be enforced against the person paving it. It is always essential that the person making payment should demand a surrender of the instrument paid, lest the holder, after payment, again transfer it to a bona fide holder, and thus render the maker or acceptor liable to the payment of it a second time.

If the note of Hobbleford had been sold at any time before the expiration of the ten years, the purchaser would have been entitled to recover the amount and Hobbleford would have been obliged to pay again, in spite of his payment to Duckworth. But the administrator is not a purchaser. He takes as the representative of the deceased, with no greater rights. Any donee of the note would be bound by the payment. In the absence of the necessity for protecting commercial transactions in commercial paper, and for preserving the characteristics which make possible the business done in these instruments, there is nothing about a negotiable note which should require two payments of a single debt. Hobbleford is, therefore, entitled to judgment against Duckworth.