YOUNG v. HEMBREE1937 OK 654November 9, 1937Holder in !e "o!r#e$%"&'(The case involves a suit on a check. Hembree orally agreed to loan Horn and Faulknermoney to help them in some oil drilling. They agreed to issue him "some trust stock that wouldguaranteetherepayment."HembreeissuedacheckanddesignatedHornandFaulkner OilTrust payee as per the instruction of the borrowers. Hembree stopped payment on the checkbefore it was presented the following day. The delivery of the stock and drilling operations didnot push through other than the cement foundation. The check was indorsed HornFaulkner! by ".H. Horn and delivered to #oung topartly pay for the labor and materials furnished to HornFaulker Oil Trust. #oung did not makeany in$uiry as to the validity of the check for when he received it! there was nothing in its face toindicate payment had been stopped. #oung tried to encash it two times and then filed this suit.%udgment was rendered in favor of #oung and Hembree brings this appeal.)''UE(&hether #oung is a holder in due course HE*( No.'n order to be a holder in due course! where the instrument is payable "to order!" #oungmust plead and prove that the check was indorsed by the payee. &here the indorsement is notproved to be that of the payee! or where there is no indorsement at all! plaintiff takes! not as aninnocent purchaser! but sub(ect to the defenses that might have been interposed against the payee.#oung does not $uestion the correctness of this rule! but claims that there is no absolute rule as towhat form the indorsement must take and that the signature "HornFaulkner! by ".H. Horn" isa sufficient indorsement of "HornFaulkner Oil Trust." )ut on its face! the indorsement is notthat of the payee! and there is no evidence in the record to show that they are one and the samefirm or legal entity. #oung further claims that "HornFaulkner Oil Trust" was a fictitious name! which factwasknowntodefendant! andthereforethecheckwill beconsideredpayabletobearer andre$uires no indorsement to constitute the transferee a holder in due course. )ut a fictitious payeeis where none in fact e*ists. There is no evidence that the Oil Trust was in fact fictitious. )othHorn and Faulkner were actual persons known to the defendant. Theactionhereisonthecheck! uponwhichpayment hadbeenstopped.+ checkismerelyanorder to pay money! and the maker hastheright tostop payment.Thebankmustrespect the order stopping payment! but that does not destroy the contractual liability that maye*ist between the maker and the payee. The only contract in this case! pursuant to which thecheck wasoriginally given! was anagreement by thedefendantto loanmoney tothe payee.Thereisnocontractual liabilityondefendant toloanmoneytoplaintiff! theindorsee! andplaintiff does not claim any by reason of the transfer of the check to him. He does not seek a loanofmoney!ordamagesforthebreachofacontract toloanmoney.,incedefendant stoppedpayment! he is not liable on the instrument itself. %udgment is reversed in favor of the defendant. -repared by. /atrina ,. 0iploma 1-repared by. /atrina ,. 0iploma 2