51 Ind. App. 34 | Ind. Ct. App. | 1911
— This suit was originally brought by the Palmer National Bank of Danville, Illinois, against appellant Huntington County Bank, of Huntington, Indiana, to recover on a certificate of deposit, which reads as follows:
“$4,250. HUNTINGTON COUNTY BANK.
Huntington, Indiana, March 14, 1907.
George L. Krieg has deposited in this Bank forty two hundred and fifty dollars payable to the order of himself in current funds on the return of this certificate properly endorsed. Eoy Gibler,
Not subject to check. Cashier.
No. 77,179.”
Said instrument was duly indorsed by the payee to James W. Price, who in turn indorsed the same to appellee. On application of the Huntington County Bank and on his own petition, appellant Krieg was made a party defendant. The Huntington bank thereafter filed answer, showing that by authority of the court it paid to the clerk, for the use and benefit of the party lawfully entitled thereto, the sum of $4,381, the amount of the certificate and interest to the date of such payment. The venue was changed from the Huntington Circuit Court to the Wabash Circuit Court, where, after the issues were formed, the case was tried and judgment rendered against appellant Krieg and The Huntington County Bank for $4,560.50, from which judgment this appeal is taken.
Appellant Krieg has separately assigned as error (1) sustaining the demurrer of appellee to the amended second paragraph of his answer to the complaint; (2) overruling his
Appellant Huntington County Bank, by separate assignment of errors, presents the same questions, and there is also a joint assignment of the same errors.
The amended second paragraph of the answer of appellant Krieg avers, in substance, that the certificate of deposit sued on was obtained by his assignee, Price, by fraud; that said Price claimed to be the patentee of a “Farm Derrick”, and he and his associates made certain false statements and fraudulent representations to appellant in regard to the utility and value of said patent (the details of which appear in the answer), and also made bogus sales of territory and rights in his presence, all of which he believed to be true and genuine; that relying thereon, and wholly by reason thereof, he purchased an interest in said patent, and executed his note therefor to said Price in the sum of $4,300; that said Price had not complied with the law by filing with the clerk of the Huntington Circuit Court a copy of said letters patent ; that said sale was made and said note executed in Huntington county, Indiana; that said Price did not show, on said note over appellant Krieg’s signature, that it was given for a patent right; that thereafter and on the same day the note was executed, at the solicitation of said Price, and while still in ignorance of the fraud that had been practiced on him, and believing the false representations made to him to be true and said bogus sales to be genuine, he indorsed to said Price said certificate of deposit for $4,250 in exchange for his said note; that said patented device had no value whatever and no element of utility, and appellant Krieg received no consideration whatever for said certificate of de
The third paragraph of appellant’s answer to the complaint avers that there was no consideration for the successive transfers of said certificate, and appellee accepted the same with knowledge thereof.
The fourth paragraph of his answer charges that appellant Krieg was induced to purchase an interest in said letters patent by the fraud of Price and his associates, and gave his note therefor in the sum of $4,300, and before discovering the fraud, took up said note by giving to said Price the certificate in suit; that appellee took said certificate with knowledge of said fraud; that after ascertaining said fraud appellant tendered a return of the instrument conveying to him an interest in said letters patent, and demanded from said Price said certificate of deposit, but Price refused to accept the same or to return to him said certificate of deposit.
The substance of the third paragraph of the reply of appellee to the third and fourth paragraphs of answer of appellant Krieg, is that appellee is a corporation, organized as a national bank, and doing business under the laws of Illinois; that it trades in and buys notes and commercial paper as any national bank; that it purchased the certificate in question before maturity from James W. Price, in the due course of business, for $4,250 in money, without any notice or knowledge that the consideration thereof had failed or that it was procured by fraud. Appellant Krieg’s cross-
The fourth paragraph of appellee’s answer to the cross-complaint of said appellant alleged substantially the same facts that are averred in its third paragraph of reply to the third and fourth paragraphs of said appellant’s answer.
The second paragraph of said appellant’s reply to the fourth paragraph of appellee’s answer to the cross-complaint of Krieg, alleges- in substance, that the certificate sued upon was executed in Indiana, is payable in said State, and its negotiability is governed by the laws of Indiana; that the indorsement of Price and the delivery by him of said certificate to appellee was in the state of Illinois; that by the laws of that state appellee obtained only an equitable title to said certificate, subject to the rights and equities of all prior holders thereof.
The further question arises, whether the certificate of deposit is negotiable under the law merchant or only negotiable by virtue of our statute. On this question, outside our own State, there is a great diversity of opinion; but we think it is settled in Indiana that a certificate of deposit payable “in current funds” is not negotiable under the law mer
In 1 Daniel, Neg. Inst. (5th ed.) §§55, 56, numerous decisions are cited on both sides of the question, and the author concludes by saying: “In business paper it is best to adhere to strict rules; and as certainty is of the first moment in commercial dealings, and paper payable in fluctuating values is uncertain and delusive, we think sound judgment approves the doctrine of the text. Money alone is legal tender, and only the note which represents money should be held negotiable. It should be expressed simply as payable in dollars, which have a definite signification fixed by law.” See, also, 2 Daniel, Neg. Inst. §1706; 1 Randolph, Com. Paper §§89, 90; Tiedeman, Com. Paper §§485, 487.
However, two comparatively recent cases by the Supreme Court of the United States depart from the doctrine declared in Indiana, and many of the states, and hold that the phrase “in current funds”, under our present monetary system and business usage, has come to be used to designate any of the forms of legal tender money of our government, and that its use in a cheek or other instrument does not destroy its negotiability, for it was intended to cover whatever was receivable and current by law as money, whether in the form of notes or coin, all being current and declared, by positive enactment, to be legal tender. Bull v. Bank of Kasson (1887), 123 U. S. 105, 112, 8 Sup. Ct. 62, 31 L. Ed. 97; Woodruff v. Mississippi (1896), 162 U. S. 291, 302, 16 Sup. Ct. 820, 40 L. Ed. 973.
Section 9074, supra, reads as follows: “Any such assignee, having used due diligence in the premises, shall have his action against his immediate or any remote indorser; and in suit against a remote indorser, he shall have any defense which he might have had in a suit brought by his immediate assignee.”
The Huntington County Bank issued the certificate in Indiana, it is by its terms payable in Indiana; Krieg indorsed it to Price in Indiana, and the suit was brought in this State, so that appellee’s rights against appellants must be determined by the laws of Indiana. 1 Daniel, Neg. Inst. §§879, 882, 895.
In Moore v. Moore (1887), 112 Ind. 149, 13 N. E. 673, 2 Am. St. 170, Judge Mitchell, in speaking of the rights and equities between indorsers and indorsees of instruments, under our statute, said: “The effect of these provisions is to vest in the indorsees of the instruments named therein, whether such instruments be technically negotiable by the law merchant or not, a complete legal title, as well as a right of recovery by indorsees in their own names, respectively. Whatever right remains in the assignor of an instrument thus assignable, after the holder has transferred it by an unrestricted indorsement, must of necessity be of a purely equitable character. It is not perceived, therefore, why an innocent purchaser, who takes such an instrument by indorsement for value, and without notice of the latent equities
The judgment, is therefore reversed, wth instructions to the lower court to sustain the motion for a new trial, to change the rulings on the several demurrers to conform to this opinion, and to permit the parties to amend their pleadings, if they desire so to do, and for further proceedings in accordance with this opinion.
Note. — Reported in 95 N. E. 613. See, also, under (1) 7 Cyc. 535; (2) 11 Cyc. 747; (3) 7 Cyc. 603; (4) 7 Cyc. 641; (5) 7 Cyc. 830; (6) 2 Cyc. 982; (7) 16 Cyc. 800. As to the nature and negotiability of certificates of deposit, see 75 Am. St. 46.