65 Iowa 692 | Iowa | 1885
The evidence given on the trial shows that R. C. Anderson was cashier of the plaintiff bank from its organization in 1877 to the 27th of January, 1883. lie was also a stockholder and the business manager of the Anderson Brothers Mining & Railway Company, a corporation which was engaged in developing a coal mine. He was also a member of the copartnership of Anderson Brothers, which consisted of himself and his brother, J. Q. Anderson. During the year 1881, he and the copartnership of Anderson Brothers became
About the first day of February, an agreement was entered into between Schenck, who was the president of the bank, and Anderson, that the bank would accept the promissory notes of any responsible parties which Anderson might obtain and turn over, to it, and would give credit for the amount thereof on the indebtedness of the corporation; and, in pursuance of this agreement, Anderson prepared the three notes for $2,500 each, and signed the name of the mining
There was evidence which would warrant the jury in finding that Anderson represented to defendant, for the purpose of inducing him to sign the note, that he had made an arrangement with Sehenck to borrow $2,500 from him, to be used in starting the business of his coal mine, and that he needed that amount for that purpose, and would appropriate it to that use. Also that he represented that his property was unincumbered, and that he was still a stockholder in the bank. The debt contracted by Anderson and the copartnership in 1881 was still unpaid, and defendant had no knowledge of its existence, or of the indebtedness of the mining corporation to the bank. Defendant knew when he signed it that the note was signed by the Anderson Brothers Mining & Railway Company, but the evidence would justify the jury in finding that he then believed that this was the name of the copartnership composed of Anderson and his brother, and that he supposed that Anderson was personally liable on the note, and that Anderson knew that defendant was acting in that belief when he signed the note, but made no disclosures to him as to the real facts of the case. But defendant made no direct inquiry of him with reference to the matter, nor did Anderson directly state to him that he was personally responsible on the note, or that it was signed by said copartnership. The articles of incorporation of said company provided that the stockholders should not be liable for the corporate debts. Both Anderson and the corporation were insolvent when the note was given. «
Plaintiff assigns as error the giving of this instruction. The correctness of the instruction as an abstract proposition is not denied; but the objection urged against it is that it is not based on any evidence given in the case. The instruction submits three questions to the jury for their determination, viz.: (1) Whether defendant was induced to sign the note by the false statements of Anderson; (2) whether Anderson perpetrated such fraud pursuant to a previous agreement therefor between himself and the officers or agents of the bank; and (3) whether the officers or agents of the bank knew of such fraud before they took the note from Schenck; and it tells them that if from the evidence they can answer the first question, and either of the others, in the affirmative, their verdict must be for defendant. As stated above, there was evidence which would warrant the jury in finding that defendant was induced to sign the note by the false and fraudulent representations of Anderson as to the purpose for which he desired to use the note, and as to the condition of his property and his own financial standing. But there is no evidence which tends in any degree to prove either that there was a previous agreement between Anderson and any officer or agent of the bank that these representations should be made, or that any person should be induced to sign the note by means of them, or that they knew when they accepted
“ But whether Anderson perpetrated a fraud in procuring the note or not, if you find from a preponderance of the testimony that he had been the plaintiff’s cashier, and while such cashier had fraudulently converted funds of the plaintiff to his own use, or that of the defendant corporation in which he was a stockholder, and for which he was general manager, and the officers or agents had knowledge thereof, if they had an opportunity so to do prior to accepting the note signed by the defendant Gifford in part payment or security for such deficit to the bank, it was their duty to notify him of such fraudulent conversion by Anderson, and if, upon having such opportunity, they failed in the performance of such duty, it vitiates the note. Tet, although Anderson or the defendant corporation had become largely indebted to the plaintiff, and both were insolvent on account of loss of investment in a coal mine, if such indebtedness was for loans or overdrafts in the usual course of business in plaintiff’s corporation, or by the consent of its officers or agents other than Anderson, not involving fraud or criminality on his part, the plaintiff was under no obligation to notify the defendant Gifford of such
We are of the opinion that there was no evidence in the case which justified the giving of this instruction. The doctrine of the instruction is that plaintiff was not bound to voluntarily notify defendant of the indebtedness and insolvency of Anderson and the mining corporation, unless the debt was created by the fraudulent or criminal appropriation by Anderson of the funds of the bank to his own use, or that of the corporation; bu,t that if the indebtedness did arise out of such appropriation, and the officers of the bank had an opportunity, before accepting defendant as surety for the debt, to inform him of that fact, and neglected to do so, such neglect would vitiate the contract. A portion of the debt created in 1881 was contracted without the knowledge of the directors of the bank, it is true. But there is not the slightest evidence that it was contracted with a fraudulent or criminal intent by Anderson. He was solvent at that time, and was able to and did secure that indebtedness, and $5,000 in addition to that, to the entire satisfaction of the directors. The debt for which defendants’ note was taken as security was the debt of the mining corporation, and was not contracted until December, 1882. There is no evidence showing the circumstances under which the credit was extended to the corporation. It is not shown that the advances were not made with the knowledge and consent of the directors of the bank. Nor is it shown that the circumstances of the. corporation were such at the time that it was even imprudent to loan it that amount of money. There is no showing as to the amount or value of the property owned by it at the time, or as to the amount of business done by it, or of its business prospect. To submit to the j ury, as the instruction does, the question whether the debt arose out of a fraudulent or criminal misappropriation by Anderson of the funds of the bank, was but to invite them to enter the field of speculation and conjecture.
Reversed.