Farmers & Merchants State Bank v. H. E. Behrens Manufacturing Co.

198 N.W. 467 | N.D. | 1924

Statement.

Bronson, Oh. J.

The cause of action is upon a promissory note. The facts are: Plaintiff is a banking corporation located at Steele, N. D. Defendant is a corporation engaged in mill work at Rargo, North Dakota. Defendant had a contract with Cowan & Company, a corporation, to sell some of its stock. This Cowan & Company had sold .for defendant some of its stock in 1917. Then defendant had furnished to it some blank note forms with defendant’s name therein as payee and had argued to accept notes in payment of stock sold. In 1920 defendant made another agreement with this Cowan & Company to sell an issue of stock by defendant for the amount of $10,000. On this issue of stock the specific instructions to this Cowan & Company were that defendant would accept cash, liberty bonds, or certificates of deposit in exchange for stock but would not accept notes. Accordingly, in 1920, one Cowan of this Cowan & Company sold five shares of defendant’s stock to one Swett at $115 per share. Swett gave to Cowan a note made on defendant’s form of note, dated September 13th, 1920, for $575, due four months after date, payable to the order of defendant with interest at 8 per cent. The note on its face bore this printed statement, — “The drawer waives presentment for payment, protest, notice of protest, and non-payment of this note.” Cowan negotiated this note to plaintiff. ITe endorsed the note, “IT. E. Behrens Mfg. Co. by William II. Cowan, Agent.” Therefore, plaintiff issued its certificate of deposit dated September ,17th, 1920, payable to defendant on January 17th, 1921, for $563.50 with interest at 6 per cent from date. The bank delivered the certificate of deposit to Cowan in exchange for such note. Defendant received this certificate of deposit about September 18th, or 19th, 1920. When it received such certificate it knew that Cowan had sold stock to Swett. Defendant sent this certificate of deposit to the Security National Bank of Fargo, which bank, on September 20th, 1920, bought this certificate and gave defendant credit for tlie same. About October 1st, 1920, defendant issued its stock, five shares, to Swett. For this stock, defendant received out of the proceeds of the certificate of deposit $475; the balance, representing commission, was paid to Cowan. The note of Swett fell due on January 13th, 1921.. On January 8th, 1921, in response to a letter from plaintiff to defendant (not appearing in the record) it, by letter, advised plaintiff that the certificate of deposit for the Swett note had been sold to the Security National Bank at Fargo; that it had taken the matter up with such bank and suggested that plaintiff communicate with such bank direct. Plaintiff’s president testified that he made demand upon Swett for payment of the note and gave notice of dishonor to defendant. No-other proof was afforded of the fact of such notice of dishonor. On January 19th, 1921, the Security National Bank of Fargo sent the-certificate of deposit through banking channels and collected the same from plaintiff. Defendant’s treasurer testified that when defendant received the letter from plaintiff concerning the Swett note the money for the certificate of deposit sold was in its general fund in the bank to which such certificate was sold; that such money may or may not have been used in tbe general fund. Otherwise, be testified that after learning about this transaction in regard to the notes sold to plaintiff, defendant did not offer to return the proceeds of the certificate and still had such proceeds. Plaintiff’s president also testified that after the note became due in February, 1921, defendant, through its treasurer, agreed and promised to give for this Swett note a new noto signed by defendant, as maker, payable the following fall; that he-sent such a note to the Security National Bank at Fargo for defendant’s execution but it was not signed. In this regard, defendant’s treasurer testified tlxat he agreed to endorse a new note, if signed by the maker, simply as an accommodation to the bank. He also testified that defendant had paid to Swett $75 dividends on the stock issued. On January 7th, 1922, Swett paid $75 on the note. On Jan. 19th, 1922, this action was instituted on the note against defendant as endorser. Upon the first trial, in December, 1922, a verdict was returned in plaintiffs favor and judgment thereafter entered thereupon. Subsequently, the trial court, upon motion made, granted a new trial. Upon the second trial, the trial court at the conclusion of the evidence, granted defendant’s motion for dismissal upon the ground that there was not sufficient evidence to show either actual or ostensible authority by the agent Oowan to endorse the note; or, to show ratification by defendant of Cowan’s unauthorized act. From the judgment of dismissál entered upon this motion plaintiff has appealed.

Opinion.

It is conceded that defendant’s agent possessed no authority to transfer the note by indorsement to the bank. The contention, however, is made that the trial court erred in not submitting to the jury the issues of ratification and wáiver of notice of dishonor. The note was payable to defendant. If any ownership thereof vested, it vested in the defendant. The unauthorized transfer of the note to the bank gave to it no title. Whenever defendant acquired knowledge of the facts, it was then within its power to reclaim or to repudiate the note. Defendant, as it claims, received- the proceeds of the note through the certificate of deposit without knowledge of the facts concerning the transfer of the note: But, before the note became due and before the certificate of deposit matured and while defendant had the proceeds of such note under its control, it did acquire knowledge concerning this note and its transfer. It then sought neither to claim nor to repudiate the note. It continued to retain the proceeds of the note; it recognized plaintiff’s right to the note and to its collection by offering to make or to send a new note in licit thereof. The fact that stock had been issued to the maker of the note and that defendant’s agent had received some commission for the sale of this stock did not, as a matter of law, prohibit a finding of ratification. Defendant’s acts after knowledge, neither recognized nor proclaimed any prejudice resulting through the unauthorized transfer. The note made by Swett was not a payment for the stock issued. Comp. Laws, 1913, § 4529. See also Lavell v. Bullock, 43 N. D. 135, 174 N. W. 764. Defendant as owner of the note might have cancelled the stock issued. We are of the opinion that the record presents sufficient facts for the' consideration of a jury upon the question of ratification by defendant. See Fleming v. Sherwood, 24 N. D. 144, 151, 43 L.R.A.(N.S.) 945, 139 N. W. 101; Martinson v. Kershner, 32 N. D. 46, 56, 155 N. W. 37; 2 C. J. 476, 489.

We are of the opinion that the printed waiver in the body of the note did not extend to the defendant as indorser. As an express waiver it applied only to the drawer who, manifestly, could be none other than the maker. 8 C. J. 701. See § 110, Uniform Neg. Inst. Act. Concerning the question of an implied waiver of notice of dishonor, we are of the opinion that the facts in the record were sufficient for the consideration of the jury. Upon the record the testimony to the effect that defendant, at the maturity of the note, recognized the same as a liability by agreeing to make a new note in place thereof or even to endorse another note in place thereof, was sufficient to support a finding of the jury of an implied waiver of notice of dishonor. See § 109, Uniform Neg. Inst. Act; 5 Thompson, Uniform Laws Anno. pp. 391, 395, and cases cited; Bank of Gilby v. Farnsworth, 7 N. D. 6, 38 L.R.A. 843, 72 N. W. 901.

The judgment is reversed and a new trial granted.

Johnson, Christianson, and Nübssle, JJ., concur.. Birdzell, J., not participating.