204 N.W. 683 | N.D. | 1925
Lead Opinion
This suit was brought to recover on a promissory note. The defendants other than Sutherland are endorsers thereon.
The complaint sets out the making, execution and delivery of the note by Sutherland, the endorsement thereof by the other defendants for accommodation of the maker, and the nonpayment of the note.
The answering defendants, for their amended answer, deny generally the allegations in the complaint; and further answering, allege that they conditionally endorsed a note similar to that set out in the complaint; that the condition was not complied with; that no demand was ever made for the payment of the note; that the same was never presented to the defendants; that no notice of dishonor or notice of protest was ever given to the defendants, and that such notices were not waived.
It appears that the defendant Sutherland lived in or near the little village of Bordulac, Foster county, North Dakota. He conceived the idea that Bordulac could be made a great and prosperous city. He sold this idea to a number of business men and farmers of that vicinity. In order to bring this transformation to pass, he purposed erecting *623 various buildings and establishing various industries in the village. He needed capital to do this, and persuaded the other defendants herein to assist him in financing his scheme. To that end he procured them to sign the following document denominated a letter of credit:
"Bordulac, N.D. April 1st 1919.
Whereas, W.H. Sutherland a resident of Bordulac, N.D. for the purpose of establishing a larger credit in the amt of $6500.00 (Six Thousand Five Hundred dollars), same to pay for an electric lighting plant at Bordulac, N.D. to light the city of Bordulac, N.D. and building or buildings to house the same.
The proposed buildings to consist of one one story building 32 x 64 feet with 8 foot post also containing a concrete floor.
One two story frame building 30 x 60 feet with a full basement.
The firms' names occupying said buildings to be The Lucky Strike Utilities Co. A corporation incorporated under the state laws of N.D. for the purpose of operating an electric light plant a Garage and to handle the Kewanee Private Utilities line of water system also heating plants.
The Lucky Strike Live Stock Co., a partnership firm for the purpose of operating a meat market and general live stock business also a restaurant and temporary hotel.
We the undersigned will not be liable for such establishment of said credit until 10 (Ten) Men of a business rating of no less a rating than $10,000.00 (Ten Thousand Dollars).
The money obtained by such credit shall be handled by the Bordulac State Bank and such buildings as are erected and property acquired by said W.H. Sutherland shall be held by said Bordulac State Bank as collateral to said credit for the term of one year from date of the establishment of such credit." Sutherland took the letter of credit to the bank at Bordulac and sought to borrow $6500.00 on his note by means of it.
The plaintiff, Douglas County State Bank, is a banking corporation located at Alexandria, Minnesota. For some years it had been placing some money in Foster county, North Dakota. Landeene, the president of the Douglas County Bank, was a stockholder in the Bordulac bank. When the Bordulac bank received Sutherland's note and letter of credit it sent them forward to the plaintiff bank with an inquiry as to whether *624 that bank could and would make such a loan. The plaintiff bank wrote back indicating its willingness to make the loan to Sutherland, but took exception to the letter of credit and said it would require Sutherland's note to be endorsed by the signers thereon. It enclosed a form of note meeting with its requirements and asked the Bordulac bank to procure the signature and endorsement thereof. The Bordulac bank advised Sutherland as to the requirements of the Alexandria bank and handed him the note. Sutherland executed this note and procured nine endorsers, including the defendants. This note, known in the record as Exhibit 3, is with endorsements as follows:
Alexandria, Minn. May 3, 1919. No. 25136
One year 191 — after date, without grace, for value received I promise to pay to the order of Douglas County State Bank at its office Sixty Five Hundred no/100 Dollars, $6500.00; with interest thereon at the rate of 8 per cent per annum from date until paid; interest payable annually.
Extended to
Extended to
W.H. Sutherland.
P.O. Bordulac, N.D. (Endorsements)
For value received we hereby waive presentment, demand, protest and notice of protest on the within note.
Angus Ferguson E.A. Roach W.A. Wentland I.T. Harbottle Theodore Bergland Erick Erickson Chas Zink Franz E. Zink F.C. Multz
Paid 6500
Sept. 4-19 1872.61 4627.39 Sutherland delivered this note to the Bordulac bank which in turn *625 sent it forward to the Alexandria bank, and the consideration of $6500.00 was transmitted to the Bordulac bank to the credit of Sutherland. All of the funds so placed to his credit were used by Sutherland in carrying out his project, excepting $1872.61, which was thereafter paid to the plaintiff and endorsed upon the note.
Sutherland's project was not successful. The note was not paid at maturity. The plaintiff sought to make collection, but was unable to do so. In May, 1920 there was an attempt to renew the obligation but this was not successful. Finally in the fall of 1921 the plaintiff put the note in the hands of its collectors, and on October first, 1921 the note on which this action is brought was executed, endorsed and turned over to the plaintiff. This note with endorsements was as follows:
Alexandria, Minn., October 1st, 1921. No. 27753.
November 1st, 1922 after date, without grace, for value received I promise to pay to the order of Douglas County State Bank at its office Fifty Five Hundred Forty and 63/100 Dollars, $5540.63, with interest thereon at the rate of 8 per cent annum from date until paid; interest payable annually
Extended to
Extended to
W.H. Sutherland.
P.O. Bordulac, N. Dak. (Endorsements.)
For value received we hereby guarantee the payment of the within note at maturity, or at any time thereafter with interest at the rate of 8 percent, per annum until paid, waiving demand, notice of nonpayment and protest.
Angus Ferguson E.A. Roach Erick Erickson Frank C. Multz M.A. Wentland F.E. Zink Theodore Berglund
9/22/22 Pd by rent money, $192.78. *626
It was not paid and this action resulted. The cause was tried to a jury which returned a verdict in favor of the plaintiff.
After plaintiff had rested, and while the defendants were offering evidence in support of their defenses as pleaded, plaintiff produced the original note, Exhibit 3. Exhibit 3 was not returned to the makers at the time Exhibit 1, the note in suit, was executed and delivered to it. There was no endorsement across the face of Exhibit 3 to in any way indicate that the obligation had been renewed. At the close of the whole case the defendants moved for a dismissal on the ground that the record then disclosed that the note in suit was a renewal of Exhibit 3, and that Exhibit 3 was not endorsed as renewed, as required by the provisions of Chapter 91, laws of 1921. This motion was denied. The defendants thereupon asked for leave to amend their answer to conform to the proofs as made in the record and by said amendment to set out the facts with reference to the failure to so mark the note Exhibit 3. This motion also was denied.
The jury returned a verdict for the plaintiff. Judgment was entered thereon. Thereafter the defendants moved for a new trial, specifying various grounds therefor, including the rulings above pointed out. This motion was denied. The defendants thereupon perfected this appeal from the judgment and from the order denying their motion for a new trial.
The record is voluminous. Numerous errors are specified and assigned. We think that it will be unnecessary to refer to all of them in this opinion for the reason that we are agreed that there must be a reversal on account of the rulings of the court with reference to the point made on the motion for dismissal at the close of the case and the application for leave to amend the answer. On the facts as disclosed by the record, the case, in our judgment, depends upon the construction and application of chapter 91, Sess. Laws 1921. This Chapter reads as follows:
"Section 1. That it shall be illegal, hereafter, for any person, or corporation, State or National Bank, doing business in the State of North Dakota, to take from any debtor or other person obligated upon a promissory note, any renewal note therefor without returning the promissory note renewed, unless there be written or printed across the renewed note the words "Renewed note." *627
"Section 2. Any promissory note given in renewal of a previous promissory note shall be of no force or effect unless given in conformity with Section 1 hereof.
"Section 3. All acts and provisions of law conflicting with this enactment are repealed.
"Section 4. Emergency. Whereas, there are many banks, corporations and persons who and which have taken promissory notes for renewal purposes, and which notes have fallen into the hands of innocent persons and become collectible twice, an emergency exists and this Act shall take effect and be in full force and effect from and after its passage and approval."
The plaintiff insists that this statute is immaterial to the case for the reason, first, that the note sued upon is a Minnesota contract; second, that the plaintiff is a foreign corporation and was not doing business in the State of North Dakota within the meaning of the term as used in the statute; third, that the note sued upon was not a renewal note but a new independent contract and obligation, and that it had been constructively returned; and fourth, in any event the defendants, in order to raise a defense under the Statute, were required to plead it, and having failed to do so, such defense was waived.
1. The question of the validity (that is, as to whether there is in fact a contract) of a contract is to be determined by the law of the place where it is made. See Scudder v. Union Nat. Bank,
The plaintiff is a Minnesota corporation. The contract in question was dated in Minnesota. It was to be performed, that is, the note was to be paid, in Minnesota. It appears that the original note was in fact signed by the makers and by the endorsers in North Dakota. The note as thus signed was drawn by the plaintiff and sent to the Bordulac bank to be executed. When the instrument was delivered it became binding and effective as against the makers and endorsers. See § 5891, Comp. Laws, 1913. Whether the Bordulac bank was the agent of the plaintiff at the time of the execution of the original instrument to receive that instrument for it is immaterial, for it is undisputed that it was mailed to the plaintiff from North Dakota. It was so mailed at the direction of the plaintiff. Nothing more remained to be done by either party. After the defendants thus parted with possession of the instrument they were bound thereby. The mailing completed the contract. See Burr v. Beckler,
2. Plaintiff further contends that it is a foreign corporation; that it had no place of business in North Dakota and was notdoing business in the state within the meaning of that term as used in the statute, and, therefore, in any event, the statute did not apply to it. Plaintiff relies upon the case of State use of Hart-Parr Co. v. Robb-Lawrence Co.
3. Plaintiff also insists that the statute does not apply for the reason that the note in suit is a new and independent obligation and not a renewal of the original note. The plaintiff itself did not so regard the transaction at the time the note in the instant case was taken. It had written the defendants demanding that the obligation be "renewed." All through the trial of the case, at least up to the time where the question was first raised as to the validity of the instrument in suit, the transaction was spoken of both by the witnesses for the plaintiff as well as those for the defendant as a renewal transaction. But, in any event, it seems to us that every renewal is a new and independent obligation insofar as concerns the original of which it is a renewal, and that the transaction here in question was exactly such a transaction as was within the purview of the legislature in enacting this statute. We do not believe that further consideration of this contention is necessary.
Plaintiff further insists that the statute was complied with and that there was a constructive return of the original obligation. This contention *631 is contrary to the evidence on behalf of the defendants. There is at least a question of fact as to whether such was the case. In considering the questions here raised under the record as made, we must assume that such was not the case.
4. There remains the contention that in order to invoke a defense under the statute the defendants were required to plead it, and having failed to do so thereby the defense was waved. Generally, we think, the rule is that where the illegality of the contract upon which suit is brought does not appear upon the face of the complaint, it must be pleaded in order that a defendant may take advantage of that defense. See Frankel v. Hillier,
On the whole record the evidence clearly tended to support the defendants' contention that the instrument in suit was executed and delivered in North Dakota, and that it was of no force and effect by reason of plaintiff's failure to comply with chapter 91, Sess. Laws, 1921. At least the defendants were entitled to have the facts with reference to *632 the transaction determined by the jury, and the application for leave to amend to conform to the proofs as made should have been allowed. The refusal of the trial court to permit such amendment was prejudicial error.
The judgment must be reversed and in a new trial ordered.
BIRDZELL and BURKE, JJ., concur.
Dissenting Opinion
I agree with my associates that the place of contract governs in determining the validity of the note in suit; but I differ from them as to the place of the contract. In my opinion the place of contract of the note in suit was Minnesota and not North Dakota.
The plaintiff is a Minnesota corporation. Its sole place of business is in Minnesota. The note in suit was executed and delivered in renewal of a former note for which, according to the undisputed evidence, the plaintiff paid full value. The maker of the notes resided in North Dakota. He signed both the notes in this state and caused them to be transmitted to the plaintiff by mail. But both the former note and the note in suit, according to their terms, are Minnesota contracts. Both are dated at Alexandria, Minnesota, and made payable at plaintiff's place of business in that city. There was no appearance on the part of the defendant Sutherland, the maker of the note; but he made default. The only appearance made was by the defendant's guarantors, who, according to their contract "for value received" guaranteed the payment of the note at maturity "or at any time thereafter at interest at the rate of 8% per annum until paid, waiving demand of notice of nonpayment and protest."
Where the parties to a contract reside in different states, unless they take the trouble and incur the expense to go to the same place, one of them must manifest his assent in one state, and the other in another. And while there is a conflict in the authorities I believe that the better rule is that the place of performance, rather than the place where the last assent was given, should be deemed the place of contract. And that where a bill or note is executed in one state and made payable in another "It is governed as to its nature, validity, interpretation and effect by the law of the state or country in which it is payable, without *633
regard to the place where it was written, signed or dated, it being presumed that the parties contracted with reference to the law of that place, unless it clearly appears that the parties intended the contract should be governed by the law of the place where it was made or the law of some other place, or unless the parties elect or stipulate that the law of another state or country shall govern." 8 C.J. pp. 92, 93. See also 6 R.C.L. pp. 964, 965; 3 Enc. U.S. Sup. Ct. Rep. pp. 1051, 1052; 2 Whart. Confl. L. 3d ed. §§ 450, 451; Poole v. Perkins,
In this case there is no evidence and no contention that there was any intention to evade the provisions of chapter 91, Laws 1921, and that the parties resorted to the subterfuge of making an actual North Dakota contract a Minnesota contract in form so as to evade the operation of the laws of this state. I am of the opinion that under the undisputed evidence in this case the appellants by their contract of guaranty guaranteed the payment of a valid Minnesota note and that chapter 91, Laws 1921, has no application.
JOHNSON, J., concurs.
