236 N.W. 281 | S.D. | 1931
Defendants, together with one Young, were associated in owning and operating a threshing machine, using for convenience in the conduct of such business the name “Fairland Threshing Company.” They were indebted to Brule State Bank,
Defendants refused to pay plaintiff’s note when it came due, and he- instituted the present action thereon. At the close of all the testimony a verdict was directed in favor of pláintiff and against the defendants, and, from a judgment thereon and a denial of their application for. a new trial defendants have appealed.
As defenses to liability upon the note appellants urge three propositions: First, that there was a conditional delivery of the note; second, that the note -was delivered under mutual mistake of fact; and, third, that they received no consideration for the note.
With reference to the defense of delivery upon condition, the testimony most favorable to- appellants is that of appellant Powers. Powers testified that, when discussing the proposed loan with respondent, he (Powers) said: “I told him that all of us would have to sign the note and he said that he didn’t care whether Young signed it or not, but I says, ‘I do-. If all five don’t sign it, I will not sign the note.’ ” Powers further testified that in the Reliance Savings Bank on November 13, after the note was prepared for signature, he stated: “Well, I am ready to sign it providing Mr. Riggen will agree to- get Young’s signature on the note. If he won’t agree to get Young’s signature on the note, I won’t sign it.” And that thereupon respondent said, “I will get him.” Powers further testified that, before he signed the note, respondent stated in the presence of all the appellants that he would get Young to sign the note, and further that, if respondent had not stated that he would get Young’s signature on the note, he (Powers) would not have signed the note. The testimony of the other appellants is similar in substance. We are of the opinion that this evidence is insufficient to establish delivery of the note upon condition. 'Appellants do not claim any condition by express words, and w-e do not think any condition can be inferred from the circumstances. There was an immediate and unconditional delivery of the consideration for the note to the appellants, with
O'n the question of mutual mistake of fact, appellants do not claim any fraud, misrepresentation, or deceit on the part of respondent, and they admit that respondent did not know the actual condition of the bank to be as bad as it in fact was any more than did the appellants. It appears in this -case that neither appellants nor respondent had knowledge of the actual condition of the bank. The bank was open and conducting business apparently as usual, and the mental attitude of all the parties seems to be fairly disclosed by the testimony of respondent, who testifies that he did not say anything to the banker as to whether there were funds on hand to- pay any check which he might give, and that he “just assumed that everything was regular and that they would have the money — didn’t think anything to- the contrary.” That likewise appears to have been the frame of mind of appellants when, upon receiving respondent’s check, they made no effort to cash the same and made no inquiry as to whether they could cash it, but simply indorsed .and deposited it to the credit of their own account. All of the parties had an equal opportunity to discover the facts, and none of them made any inquiry. None of them were in fact actually advised as to the condition of the bank, but all of them were equally conscious of their lack of knowledge. Concededly, if all parties had' known the facts, they would not have conducted the transaction 'between themselves in the fashion which they did. Nevertheless there is not in this case any such mistake of fact as ■can form the basis for any of the parties to be relieved from the transaction.
The rule is stated in Pomeroy’s Equity Jurisprudence (4th
The consideration of this claim of mutual mistake of fact brings us also to the third claim of the appellants, that they should be relieved from payment of the note in question because they received no consideration therefor, and in fact these two- lines of argument run into one another.
All parties to- this transaction know that the purpose of signing the note sued upon was to enable appellants to acquire from respondent money or moneys worth wherewith to discharge the debt of appellants to Brule 'State Bank. Appellants intended to borrow money of respondent, and respondent intended to- loan money to appellants. It is undoubtedly true that appellants would have been entitled to demand cash from the respondent, but they did not do- so. Respondent tendered to appellants his check upon the Reliance Savings Bank, and they accepted and received it. Even then the check was not payment in the -hands of appellants. They could have presented the check to the bank upon which it was-drawn for payment, and, if it was dishonored and payment refused,, they could have avoided liability upon the- note. Appellants, however, did not see fit to demand cash from respondent, nor did they see fit to make any attempt to turn respondent’s check into cash. Most of the business of this country is transacted by means of bank credits and not by cash. Appellants appeared to have been perfectly willing to assume the validity of the bank credit in this case.
It is the undoubted general rule that, if the payee of a check, instead of demanding and receiving cash for the check
See First National Bank v. Mammoth Blue Gem Coal Co., 194 Ky. 580, 240 S. W. 78; Cohen v. First National Bank Nogales, 22 Ariz. 394, 198 P. 122, 15 A. L. R. 701; First National Bank v. Burkhardt, 100 U. S. 686, 25 L. Ed. 766; American National Bank v. Miller, 185 F. 338, 107 C. C. A. 456; Montgomery County v. Cochran, 126 F. 456, 460, 62 C. C. A. 70, where the court said': “When, in the absence of fraud, a genuine check is presented in bank ,and received as a deposit, the legal effect is that the check is paid. The transaction is the same as if the cash had been handed the depositor, and by him returned to- the bank. This effect cannot, we think, depend on there being- cash enough in the bank at the moment the check is presented to pay it. We find no such limitation of the doctrine in: the cases. Banking, we know, is based largely on a system of credits. New banks, when entirely solvent, could pay in cash checks if presented at once for all liabilities to- depositors. Cash is retained in the till sufficient for the transaction of business, with the knowledge of its usual course— that the business is based largely on a system of credits. So the legal effect given the transaction cannot, we think, be limited by the amount of actual cash that Josiah Morris & Co. had on hand at the date of the deposit of the check.”
None of the parties in this case knew or were chargeable with knowledge of the actual condition of Reliance Savings Bank. None of them made inquiry. All of them assumed that the bank was ready, able, and willing to pay checks upon demand. Respondent tendered his check to appellants, and appellants accepted the same. The check represented a certain amount of bank credit and a
Regardless of any technical question of payment of respondent’s check, the facts indicate a completely executed novation. At the beginning of the transaction, Reliance -Savings Bank owed respondent $2,450. When the transaction was concluded, respondent had' a claim against appellants for this $2,450, and his claim against the bank was diminished to that extent. The bank owed the $2,450 to. appellants instead of owing it to respondent. Appellants owed respondent $2,450, and had that amount due them from the -bank. Appellants were entirely satisfied to accept, as the consideration for their note, and to continue to hold, a claim against the Reliance Savings Bank. They were in no manner deceived or misled by respondent. They will not now be permitted to avoid payment of their note merely because the thing which they accepted' and received therefor by their own voluntary act is discovered to- be not as valuable as they assumed.
Appellants rely upon the case of Dille v. White, 132 Iowa, 327, 109 N. W. 909, 10 L. R. A. (N. S.) 510. An examination of that case shows that it is quite different upon the facts from the instant case. In any event we think the sounder legal view is therein expressed in the dissenting opinions of Mr. Justice D'eemer and Mr. Chief Justice McClain. See, also, Security National Bank v. Old National Bank, 241 F. 1, 154 C. C. A. 1.
The judgment and order appealed from are affirmed.