82 Ind. 370 | Ind. | 1882
Lead Opinion
This suit was brought by the appellee against the appellant upon the following note:
*371 “$1,000. Goshen, Ind., Jan. 31st, 1880.
“Sixty days after date I promise to pay to the order .of Henderson Cole one thousand dollars, payable at the St. Joseph Valley Bank, Elkhart, Indiana, for value received, without any relief whatever from valuation or appraisement laws, with ten per cent, interest from after due, and attorney fees.
“¥m. Proctor.”
The complaint states that the payee sold and transferred the note, by endorsement, to one Myron E. Cole, before due, and that said Myron E. Cole, for value, endorsed the same, before maturity, to the appellee; that the note is due and unpaid. Copies of the note and endorsements are filed with the complaint.
The appellant answered the complaint in two paragraphs. The first states that the payee of the note had deposited the same with the First [National Bank of Elkhart, Indiana, as collateral security for a loan of $50, and that he afterwards, on the 23d of February, 1880, sold the note to one Myron E. Cole, who was at the time a clerk in said bank; that said Henderson Cole at the time specially endorsed said note to the. said M. E. Cole, who agreed to pay the $50 for which the bank held it as security, though it was not then due; that this was done clandestinely, without the knowledge or consent of the bank; that after the note had been endorsed M. E. Cole returned it to its proper place in the vaults of the bank, where it remained. It is further stated that on the 25th day of February, 1880, the appellant purchased a note executed by the said Henderson Cole, not knowing at the time that he had transferred the note sued on; that said Henderson was then, and for ten years last past had been, and is still, hopelessly insolvent and worthless; that the appellant at once commenced a suit in the Elkhart Circuit Court against the.said Henderson Cole on the note so purchased by him, and in said suit procured a temporary injunction prohibiting him from disposing of the note sued on until the further order of the court; that said M. E. Cole, after he and said bank
The second paragraph states that Henderson Cole is indebted to the appellant in a sum exceeding the- amount due on the note in suit, and offering to set off the same.
A demurrer was filed by the appellee to each paragraph of the answer, and sustained by the court. The appellant elected to stand by his answer, and final judgment was rendered for the appellee.
The ruling of the court upon the demurrers is assigned as error.
The first question presented for decision upon the demurrer to the first paragraph of the answer is, what title, if any, did Myron E. Cole acquire to the note sued on by the sale and
The note is payable to the order of Henderson Cole, at a bank within this State. The delivery of it to the First National Bank of Elkhart, without endorsement, as collateral security for $50 loaned by the bank to Henderson Cole, did not pass to the bank the legal title to the note. The title remained in Henderson Cole. Farwell v. Tyler, 5 Iowa, 535; Allen v. Newberry, 8 Iowa, 65; 2 Parsons Notes and Bills, p. 438. Though the bank had possession of, and was entitled to hold, the note as security for the payment of the $50, yet Henderson Cole was still the legal owner of the note, and could, subject to the rights of the bank, transfer, by endorsement, the legal title'and his interest in the note to M. E. Cole or any one else. In doing this, he would do no wrong to the bank. Nor would the fact that M. E. Cole was the clerk of the bank incapacitate him from accepting by endorsement the title and interest of Henderson Cole in and to the note. The transfer of the note by Henderson Cole to M. E. Cole, coupled with the agreement on the part of the latter to pay the bank, amounted to a transfer of the note subject to the rights of the bank. There was nothing wrong or unusual in this. Henderson Cole had the right so to sell and transfer, and M. E. Cole had the right so to purchase the note; and the possession of the note for this purpose was not in violation of, but altogether consistent with, the rights of the bank.
It is alleged in the answer, that the note was taken from the bank, and that the assignment was made to M. E. Cole, without the knowledge or consent of the bank, but it is also averred that, as soon as made, the note, with the endorsement upon it., was returned to the vaults of the bank. This latter statement, in connection with the agreement of M. E. Cole to pay the $50 to the bank, frees the transaction from even a suspicion of fraud or unfairness. The note being thus in the vaults of the bank, with the endorsement to M. E. Cole upon it,
The question was, under the circumstances, one between the bank and Myron E. Cole, in which Henderson Cole had,
We conclude that M. E. Cole became the holder of the note in suit in good faith, free from any right of set-off existing in favor of the appellant against Henderson Cole, and discharged from any equities existing between the original parties to the note.
It is averred in the answer, that, at the time the appellee purchased the note sued on, he had no actual notice of the injunction issued against Henderson Cole at the suit of the appellant, nor that said note had been pledged to the bank; that he paid for said note $600 in cash, and agreed to cancel notes which he held against M. E. Cole for $400; but that he did not at the time actually cancel said notes, or surrender them to said Cole; that on the same day the appellee Was notified of the claim of the appellant; that afterwards the appellant tendered to the appellee $603.50, the amount paid in money for the note and the interest accrued thereon; that the appellee was, at the time he purchased the note, a director of the First National Bank of. Elkhart.
We think, in view of the averment that the appellee was ignorant of the rights of the bank, the fact that he was one of its directors does not in any way affect the questions involved. The presumption that might otherwise result from his official relations to the bank, as to his knowledge of its securities and means, is not a conclusive presumption, and is entirely removed by the averment of his actual want of knowledge.
It is also insisted by the appellant, that as the appellee did not in fact cancel the debt due him from M. E. Cole, which he agreed to cancel, he can not be regarded as an innocent holder of the note, or that, in any event, he can not recover more than the appellant had tendered him.
The note was endorsed to the appellee in consideration of $600 paid, and an agreement by the appellee to cancel a debt of $400 due him from the endorser. The debt was not can-
In Babcock v. Hawkins, 23 Vt. 561, the court says: “The-accord is sufficiently executed, when all is done, which the party agrees to accept in satisfaction of the pre-existing obligation. * * All that is requisite is, that - the debtor should have executed the new contract to that point whence it was. to operate as satisfaction of the pre-existing liability, in the present tense.”
We are inclined to think that the endorsement and delivery of the note, pursuant to the agreement, operated as a present discharge and satisfaction of the debt agreed to be cancelled, and that the appellee is, for this reason, entitled to protection as an innocent holder of it. But, as we have concluded that his endorser, M. E. Cole, was a bona fide holder of the note, it is not necessary to decide this question, for the appellee must be deemed to hold the note free from all equities from which it was discharged in the hands of his endorser. Thomas v. Ruddell, 66 Ind. 326; Hereth v. Merchants’ Nat’l Bank, 34 Ind. 380; Smith v. Hiscock, 14 Maine, 449.
We have assumed so far that the note sued on is commercial paper. If it is to be so regarded, the appellant admits, that the second paragraph of the answer is bad. But he insists that the agreement contained in the note to pay attorney
We think there was no error in sustaining the demurrers to the answer.
Per Curiam. — It is ordered, on the foregoing opinion, that the judgment below be affirmed, at the costs of the appellant.
Woods, J., was absent.
Rehearing
On Petition for a Rehearing.
The appellant asks a rehearing in this case, for the reasons that, as he contends, neither M. E. Cole nor the appellee was an innocent holder of the note sued on, and because the instrument sued on is not a note.
We are disposed to adhere to the views expressed in the opinion, that Cole and the appellee were both innocent holders of the note; that it must be presumed, upon the facts stated in the answer, that Cole paid the bank, as he had agreed, the amount due it before he transferred the note to the appellee; and that the bank, through its officers, knew that the note had been transferred to him, and acquiesced in his title to it.
The appellant contends, with much earnestness, that the court erred in holding the paper sued on to be a note. It is as follows:
“$1,000. Goshen, Ind., Jan. 31st, 1880.
“ Sixty days after date I promise to pay to the order of Henderson Cole one thousand dollars, payable at the St. Joseph Valley Bank, Elkhart, Indiana, for value received, without any relief whatever from valuation or appraisement laws, with ten per cent, interest from after due, and attorney fees. . Wm. Proctor.”
The argument of counsel, to say the least of it, is plausible. We think, however, that while the precise condition expressed in the note in the case of Stoneman v. Pyle, is not implied in the note sued upon, the condition is implied that only such services as may be rendered after maturity shall be charged in the case before us; that the clear intention and understanding of the parties to the note were that the maker would pay such attorney fees as might be incurred by the holder of the note in its collection after it matured; that any attorney fees that might be contracted by the holder of the note, in securing it before due, were not within the contemplation of the parties at the time the note was executed, and, therefore, not within the promise. Smock v. Ripley, 62 Ind. 81; Tuley v. McClung, 67 Ind. 10.
In the case of Stoneman v. Pyle, 35 Ind. 103, it was held that a conditional stipulation to pay attorney fees, contained in a promissory note, did not destroy or affect its negotiability.
Among others, counsel call our attention especially to the case of Morgan v. Edwards, 53 Wis. 599 (40 Am. R. 781). In this case, the court say“A large number of cases have been cited which hold that if the amount payable at the maturity of the paper is fixed and certain — the instrument containing the other essentials of a note, — it is still a note, although it contains a further promise to pay an uncertain sum for expenses or costs of collection if not paid at maturity, or if suit be brought upon it.”
True, the court holds that, where the promise is not made expressly conditional in the note, it is not to be held or construed as containing, by implication, such condition, but the promise is to be construed as absolute, binding the promisor to pay airy fees or expense accruing in securing and collecting the note, whether incurred before, at or after the maturity of the note. We think that the construction of such a clause in a note, adopted by this court, is correct and in accordance with the intention of the parties to the instrument.
The petition for a.rehearing is overruled. •