Evans

Robert Marsh and Company, a corporation, gave its note, the subject of this action, to United Finance Company for $6,496.86 indorsed by Robert Marsh. This note was transferred before maturity to J. H. Scales, the president of the United Finance Company. Scales, individually, borrowed the sum of $3,500 from the Pacific National Bank giving his promissory note therefor and the $6,496.86' Marsh Company note as collateral security. The Scales’ note was renewed. A payment of $750 was made thereon, leaving a balance of $2,750 due from Scales to the Pacific National Bank. No further payment being made by Scales, the bank, after maturity of the Marsh Company note, caused the $6,496.86 note held as collateral to be sold at public auction for the sum of $525 to an employee, E. Evans, the plaintiff in this action. As against Scales and the Pacific Finance Company there were equitable. defenses in' favor of the defendants. The bank and the plaintiff were innocent holders, not having knowledge of the facts constituting the defenses. Judgment was rendered in favor of plaintiff against Robert Marsh and Company, Incorporated, and Robert Marsh in the sum of $2,750, interest, etc. The court held…