226 F. 611 | 6th Cir. | 1915
This is an action at law brought by the. Pensacola State Bank, formerly styled the Pensacola Bank & Trust Company, a Florida corporation, the plaintiff in error, against J. E. Thornberry and others, the defendants in error, citizens and residents of Kentucky, upon a promissory note for $5,000. The trial resulted in a verdict and judgment in favor of the defendants; and the plaintiff has brought this writ of error.
The essential facts, shown by the undisputed evidence, arc these:
On April 23, 1906, the defendants, at Sebree, Kentucky, executed and delivered to one C. J. Scudamore, who was then cashier of the Pensacola Bank, a promissory note for $5,000, negotiable and payable at the First National Bank of Sebree, on or before May 15, 1907. This note, together with a similar note for $5,467.50, was executed and delivered by the defendants to Scudamore for the sole purpose of being discounted at a bank in Nashville, Tennessee, and realizing for the defendants money with which to buy a tract of land in Florida, which he had called to their attention, and was not to be used by him for any other purpose. It was executed and delivered to him. with the
On April 26, 1906, Scudamore borrowed $10,000 for his own individual use from the American National Bank of Nashville, and, having filled in his own name as payee of this note, endorsed and delivered it to the American Bank as collateral security for his individual loan, without the knowledge or consent of the defendants. A few days later he notified the defendants that he had been unable to discount the note and had destroyed it; and they had no notice that he had pledged it to the American Bank until in 1908, long after its maturity, and never ratified or approved' the pledge in any manner. He did not use any part of the money borrowed from the American Bank for the purchase of'the Florida lánd; and tire defendants received no consideration whatever for the note. At some time, not shown by the proof, but claimed by the plaintiff to have been before the pledge to the American Bank, he also. affixed the name of one C. H. Ramsey as a maker of the note, without thedarowledge or consent of said Ramsey or of the defendants.
On May 6, 1907, shortly before the maturity of the note, Scudamore paid the American Bank $5,000 on his loan and renewed the remainder; this payment being made by drawing his own check for $5,000 on the Pensacola Bank, in which he then had only a small deposit insufficient to. meet the check. The American Bank accepted this check in part payment of his loan, and in consideration thereof released and delivered to him the note of the defendants which it held as collateral. It entered this check on its books as a charge against the Pensacola Bank, which then had a balance with it of less tiran $5,000, and on the same day wrote the Pensacola Bank, notifying it of this charge and inclosing Scudamore’s check. This ietter was, however, received by Scuda-more, as cashier of the Pensacola Bank, and concealed by him, although he acknowledged its receipt to tire American Bank. He destroyed his own check and did not charge it against himself on the books of the Pensacola Bank, and subsequently, on receiving a reconcilement from the American Bank showing an overdraft' against the Pensacola Bank, concealed the real situation by false entries on the books of the Pensacola Bank; the other officers of the Pensacola Bank knowing nothing of these transactions until some time in 1908, when Scuda-more’s fraudulent conduct was discovered. It is not shown, however, that the Pensacola Bank at any time thereafter questioned the correctness of the charge made against it by the American Bank by reason of Scudamore’s check, or ever denied its liability therefor as between it and the American Bank.
After re-obtaining possession of the note from the American Bank, Scudamore, at a time not precisely shown, changed its due date from May 15, 1907, to May 15, 1908, without the. knowledge or consent of the defendants, who believed that it had been destroyed; and thereafter, on November 2, 1907, after its maturity and after the change in the due date and the addition of the name of E. H. Ramsey, pledged it to the Pensacola Bank as security for a loan of $6,000 made to him at the time.
In January, 1911, the Pensacola Bank filed a bill in the United States Circuit Court for the Eastern District of Illinois, against Scudamore, who was then confined in the Hospital for the Insane within said district, and the defendants herein, setting forth the use of its funds by Scudamore on May 6, 1907, in the payment to the American Bank, and the consequent surrender of the $5,000 note to him, and praying that it he substituted and subrogated, as of that date, to the title and ownership of the note under the pledge to the American Bank, and decreed to have an equitable lien thereto as security for the amount paid the American Bank with its funds. The note, however, was not exhibited with the bill, and was not then in the Illinois district, having previously been delivered by Scudamore to the Pensacola Bank and filed by it in the suit in Kentucky in the court below, where it then was. Service of process tinder this bill was made upon Scudamore, who appeared and answered by guardian ad litem; and an order was entered requiring the absent defendants to appear and make defense by a day stated, which was served on them in Kentucky. The defendant Pike thereupon entered a special appearance and moved the court to set aside this order for substituted service and to quash its service; which motion was, on motion of the complainant, stricken from the files. Thereupon he filed a demurrer to the bill, which was overruled; after which he filed an answer. The other defendants not having appeared .and-made defense, a decree pro confesso was entered against them. And at a subsequent hearing on the pleadings and proof, the court entered a final decree adjudging the Pensacola Bank to be the owner and holder of the note, iti due course, as of May 6, 1907, as security for the payment of $5,000, with interest from, said date; quieting its title and ownership thereto as against the defendants; and enjoining them from asserting any right, title or interest therein, but not otherwise precluding them from making any legal defense against their liability as makers thereof in the event they should thereafter be sued thereon. No appeal was taken from this decree.
It inferentially appears from the record that the plaintiff rested its case in the court below, primarily, at least, if not entirely, upon the supposed conclusive effect of the Illinois decree as an adjudication that the plaintiff was a holder of the note in due course as of May 6, 1907. The learned trial Judge, however, charged the jury that the title to the note passed to the plaintiff for the purposes of the suit by the transfer and delivery to it by Scudamore on November 2, 1907; that the Illinois decree at most confirmed the plaintiff’s title thereto as to any claim Scudamore might have had, but was otherwise void against the defendants and of no- effect so far as their defenses were concerned; and that if they found, either that the change in the due date of the note was made after its maturity, May 15, 1907, or that the note was made without consideration, their verdict should be for the defendants. The plaintiff excepted to these portions of the charge; but neither requested the court to submit the case to the jury on the theory that it liad, independently of the Illinois decree, acquired title to the note by virtue of the transaction of May 6, 1907, nor moved for a directed verdict in its own favor. There was no reference in the charge' to the defense of the statute of limitations; nor any request submitted by the defendants in reference thereto.
The jury returned a verdict that, after deciding that the note was changed after May 15, 1907, they found for the defendants.
The plaintiff’s assignments of error relate solely to the charge of the court and the admission of evidence.
The plaintiff now concedes that if its title to the note depends upon the pledge of November 2, 1907, made after its maturity, the verdict and judgment below were correct, by reason of the want of consideration for the note; but earnestly insists that it should have been allowed to rely upon its' title to the note derived as of May 6, 1907 ; that it is conclusively adjudged by the Illinois decree to be the holder of the note, in due course, as of that date, before maturity; that this further appears, independently of this Illinois decree, from the undisputed evidence in the case; that being the holder in due course before
We assume, for present purposes, that the plaintiffs exceptions to the charge and its assignments of error sufficiently raise, by implication at least, the questions upon which it now relies, so as to authorize the granting of a new trial if it should appear that the plaintiff was either entitled to a verdict and judgment below on the undisputed evidence, or to a submission of the case to the jury with reference to the effect of the transaction o f May 7, 1907; and, on the other hand, we think it clear, that if, on the undisputed evidence, the defendants were entitled to a verdict and judgment in their favor, so that no prejudicial error resulted to the plaintiff from the course taken in the trial below atid a new trial would be a merely futile proceeding, the judgment below should be affirmed.
Our conclusions are:
It results, therefore, that even if the plaintiff could be held a holder of the note in due course before maturity, its suit upon the note thus in its hands, would be barred by the statute of limitations, not having' been commenced within five years after its maturity.
5. We therefore conclude that, upon the undisputed facts, the plaintiff was not entitled to a verdict or judgment against any of the defendants, such facts showing a complete defense in favor of all the defendants except Pike, both upon the merits of the controversy and
7. Finding, therefore, that, upon the undisputed facts, the plaintiff was not entitled to a verdict or judgment against any of the defendants, and that, on the contrary, upon such facts they were entitled to a verdict and judgment in their favor, and that the record hence discloses no prejudicial error as against the plaintiff, the judgment below will be affirmed, with costs.