The fraud perpetrated by J. Dewey Rice on both plaintiff and defendant in this action, as shown by all the evidence at the trial, was not in procuring the execution by the defendant of the second note and contract, now held by the plaintiff, but in retaining the proceeds of the first note paid to him by the Atlantic Discount Corporation, after he had received from the plaintiff the proceeds of the second note which was sold to the Commercial Credit Company, with the endorsement of the plaintiff, who was the nominal payee of said note. At the date of the execution of the second note by the defendant, defendant knew that the first note was then in the possession of the Atlantic Discount Corporation, awaiting its decision as to whether or not said corporation would purchase said note and pay the proceeds thereof to J. Dewey Rice. With this knowledge, defendant executed and delivered to J. Dewey Rice the second note and contract, thereby enabling the said J. Dewey Rice to perpetrate a fraud not only on the defendant, but also on the plaintiff. The principle on which defendant is liable to plaintiff on all the facts shown by the evidence is well settled in the law, and has been frequently applied by this Court. The principle was thus stated by Ashe, J., in R. R. v. Kitchin, 91 N. C., 40: “Where one of two persons must suffer loss by the fraud or misconduct of a third person, he who first reposes the confidence or by his negligent conduct made it possible for the loss to occur, must bear the loss.” See Bank v. Liles, 197 N. C., 413, 149 S. E., 377, and numerous cases cited therein.
*402Assignments of error based on defendant’s exceptions to the refusal of the trial- court to allow his motion for judgment as of nonsuit, and to instruct the jury as requested by the defendant cannot he sustained.
Upon the facts shown by all the evidence at the trial, it is immaterial whether the plaintiff was the holder in due course, or the payee of the note sued on in this action. There was, therefore, no error in the refusal of the court to submit to the jury the issues tendered by the defendant. The right of plaintiff to recover in this action is not determined by his relation to the note, whether payee, as appears upon its face, or holder in due course, as there was evidence tending to show.
There was evidence tending to show that the note for $1,500 was delivered to the plaintiff by J. Dewey Rice in full satisfaction of the loss sustained by plaintiff. There was also evidence tending to show that it was agreed by and between plaintiff and J. Dewey Rice that the proceeds of this note should be prorated among the debts of J. Dewey Rice to plaintiff, resulting in a credit on the note sued on of $375.00. Conflicting evidence in support of the respective contentions of the parties as to the answer to the third issue, was submitted to the jury under instructions which are free from error. The exceptions to the refusal of the court to instruct the jury to answer the third issue “nothing,” as requested by the defendant, cannot be sustained.
There was no error in the trial of this action. The judgment is affirmed.
No error.