26 Mont. 285 | Mont. | 1902
delivered the opinion, of the court.
In the spring of 1894 the Globe National Bank, theretofore-doing business at Kalispell, Mont., went into liquidation. At that time it held certain, promissory notes, which, it seems,, were not then due, viz.: One made by the Libby Townsite & Lumber Company for $9,006.02; one made by Oullette & Tlier-riault, copartners, for $3,742.82; and a third, made by one John Weitman and Kate Weitman, his wife, for $6,522.24. Wishing to obtain in cash the amounts called for by these notes,, the authorities of the bank, through their agent, B. D. Hatcher,, who had charge of the business of the bank, assigned them to the Northwestern National Bank of Great Falls, Mont., which thereupon advanced the full amount of them in cash. To protect the Northwestern National Bank against possible loss by reason of the accommodation thus extended to the directors and agents in charge of the affairs of the Globe National Bank, the defendants, for and on behalf of the persons whose names-then appeared of record as stockholders of the latter, executed, and delivered to the former the following writing:
■ “Whereas, the Globe National Bank of Kalispell, Montana,, and the Northwestern National Bank of Great Falls, Montana, have arranged to consolidate and do business in the name of the Northwestern National Bank of Great Falls, Montana,, the Globe National Bank of Kalispell having decided to dis-incorporate; and
“Whereas, the said Globe National Bank, through its agents, and directors, is desirous of transferring to said Northwestern. National Bank certain of its assets consisting of notes and obligations owing it by the Libby Townsite & Lumber Company, the Kalispell Water & Electric Company, John Weitman,. and Oullette & Therriault, each being separate obligations, and’, amounting in the aggregate to a sum exceeding twenty-two thousand dollars, and is desirous of having said Northwestern.*288 National Bank accept eacb and all of said notes and obligations at their face value, and credit the said Globe National Bank and its owners with same as so much cash; and
“Whereas, the officers and directors of the said Northwestern National Bank demand that said notes and obligations be further secured before they are willing to accept same under the conditions named:
“Now, therefore, in consideration of the said Northwestern National Bank, through its officers and trustees., accepting said notes and obligations as so much cash, and at their face value, the persons whose names appear of record as the stockholders of the said Globe National Bank on June 24, 1894, do hereby, through their agents and attorneys in fact lawfully authorized so to do, guaranty the payment of each and all of said notes and obligations, and further expressly agree that said notes, or any one or more of them, may be renewed or extended at such times, under such conditions, and as often and for such time or times as the officers or agents of said Northwestern National Bank may deem proper or choose, and all without the further consent or knowledge of the guarantors or their agents; or any of them; and it is further expressly agreed that this guaranty shall extend to such renewals as long as any one of said obligations, or any part thereof, remain unpaid.
“This agreement is meant to be a full guaranty on the part of said stockholders of said Globe National Bank that the debts above specified will be paid in full, and the guarantors herein, through their agents or attorneys in fact, J. A. Coram and B. D. Hatcher, promise and agree that if said notes, or any of them, are not paid when payment thereof is demanded of the princip.als therein by the said Northwestern National Bank, then upon demand by said bank the guarantors herein will pay each and all of the same.
“Bor the faithful performance of the conditions of this guaranty, said guarantors, through their said agents and attorneys*289 in fact, bind themselves severally and jointly, their heirs, executors, administrators, and assigns, firmly by these presents.
“Dated this 27111 day of June, 1894.
“[Signed]
“J. A. Co Ram, Agent and Attorney in Fact.
“13. D. Hatcher, Agent and Attorney in Fact.”
At the time the Globe National Bank went out of business, B. D. Hatcher, one of the defendants, was its cashier, and thereafter acted as the agent of the directors and stockholders in settling up its affairs. While engaged in this business he was also employed as cashier of the Northwestern National Bank, and continued to1 act for it in this capacity until February 5, 1897, when it also closed its doors and went into the hands of a receiver. The plaintiff was appointed its receiver on May 5, 1897. Meantime the three promissory notes heretofore mentioned had been renewed from time to time; in each instance the interest’ due and not paid being added to the principal, and the renewal note including both interest and principal. All these renewal notes were made payable to the Northwestern National Bank, and contained a provision for reasonable attorney’s fees. This action was brought against the defendants upon the written guaranty quoted above, the complaint alleging previous demand upon both the makers and the defendants as guarantors.
Each of tire notes is the basis of a separate cause of action. The defendant Hatcher suffered judgment by default. The defendant Coram appeared and filed his answer, in which various defenses are interposed, some of which apply to all of the demands, while others apply to some particular one of them. Their nature will be apparent from a, discussion of the contentions made by appellant. The cause was tried by the court without a jury, and from the evidence adduced the court found all the issues in favor of the plaintiff, and caused to be entered a judgment in his favor for the principal sums specified in the notes, with interest and costs, including attorney’s fees. From
1. One of tbe issues presented by tbe pleadings is whether tbe defendant was a record stockholder of tbe Globe National Bank on June 24, 1894. Contention is made that tbe evidence does not support a finding in favor of plaintiff on tbis issue. It appears that when tbe bank closed its doors, in tbe spring of 1894, Hatcher, .who bad been its cashier from tbe time at which it began business in 1892, retained all its books of account and other records as agent, of tbe directors and stockholders to wind up tbe business. In. May of that year be became tbe cashier of tbe Northwestern National Bank. He thereupon employed one Wininger, an attorney residing at Kalispell, to close up tbe business, and delivered to bim tbe books and records. He retained them for some months, and sent them to Hatcher at Great Balls. They were found among tbe records of tbe Northwestern National Bank when plaintiff became its receiver. They were in tbe same condition at tbe trial as when they came into tbe possession of Wininger. Among them was tbe stock ledger, all tbe " entries in which were in tbe bandwriting of Hatcher. Tbe list of stockholders in tbis book included tbe name of tbe defendant Coram. It is admitted in tbe pleadings that be was a stockholder, and Hatcher, who was examined as a witness, testified that be and defendant Coram guarantied tbe payment of tbe notes mentioned in tbe complaint on behalf of themselves and other record stockholders of tbe bank. These facts are amply sufficient to sustain tbe finding. When it was made to appear from tbe ledger, which was identified as tbe record of tbe bank, that tbe defendant’s name was in tbe list of stockholders referred to in the contract of guaranty, tbe burden was cast upon bim to rebut tbe prima, fade, case thus made against bim. This be did not attempt to do. Though be gave bis deposition, which was read at tbe trial, be did not refer to the matter at all.
2. Tbe contention is made that no recovery can be bad upon tbe notes in this action, for the reason that they embody a
Coram agreed that, if the Northwestern National Bank would accept the original notes as cash, he would upon demand pay them, in case they were not paid upon demand upon the makers. He also agreed that they might be renewed “at sirch times, under such conditions, and for such time or times as the officers or agents of the said Northwestern National Bank might deem proper, and all without further consent or knowledge of the guarantors,” etc. This stipulation in the contract contemplated conditions under which the makers might obtain such accommodations from the assignee as they might have obtained from it, had it been named as payee in the first instance, hinder these circumstances it was fairly within the contemplation of the parties that at each renewal the interest should be paid, and the note renewed for the amount of the principal, or that the interest should, when due and the parties should so agree, be converted into principal and be incorporated in the new note. Otherwise, the only purpose to> be served by the stipulation for renewal would seem to be to avoid the bar of the statute of limitations in case the notes were not paid within the prescribed limit. If the purpose of this stipulation was to substitute the Northwestern National Bank in place of the Globe National Bank as payee — which we think was the ease—
The foregoing cases show the condition of the law in the territory and state until the adoption of the Code of 1895, which overturns the rule established by these cases by a specific provision that parties may contract in writing for the payment of
There is nothing in such a contract inherently wrong, or in violation of any principle of public policy or good conscience. IVben interest falls due, it becomes a debt, just as tbe principal is a debt. Tbe debtor may pay tbe vhole debt, or, if be choose and bis creditor is willing to grant it, obtain forbearance. In this case tbe transaction is equivalent to a new loan, whether tbe interest be capitalized in a new obligation for tbe whole amount or a separate obligation be given for tbe interest. If a separate obligation be given for it, embodying a provision for interest, the forbearance obtained is a good consideration for such interest, just as an agreement to pay interest upon any other character of indebtedness is supported by an agreement on the part of tbe creditor to forbear. So, if tbe interest be capitalized with tbe original principal, tbe resixlt is exactly tbe same. Tbe transaction is so deary lawful, in tbe absence of a statutory prohibition, that it scarcely admits of disucssion. It is supported by tbe overwhelming weight of authority. (Porter v. Price, 80 Fed. 655, 26 C. C. A. 70; Eslava v. Lepretre, 21 Ala. 530, 56 Am. Dec. 266; Camp v. Bates, 11 Conn. 487; Meeker v. Hill, 23 Conn. 577 ; Ellard v. Mortgage Co., 97 Ga. 329, 22 S. E. 893 ; Thayer v. Mining Co., 105 Ill. 540; Niles v. Commissioners, 8 Blackf. 158 ; Otis v. Lindsey, 10 Me. 315 ; Wilcox v. Howland, 23 Pick. 167; Hoyle v. Page, 41 Mich. 533, 2 N. W. 665; Mason v. Callender, 2 Minn. 350 (Gil. 302), 72 Am. Dec. 102; Perkins v. Coleman, 51 Miss. 298; Young v. Hill, 67 N. Y. 162, 23
3. Defendant insists that he is not liable to pay the notes in suit, for the reason that, by the incorporation of the interest in them and the provision therein for attorney’s fees, a change has been effected in them without his consent, thereby increasing the extent of his burden under his contract beyond what is fairly contemplated by its terms. As we have already seen, however, it was contemplated by the parties that the notes should be renewed upon such terms and conditions as could be mutually agreed upon by the makers and the assignee. The terms of the renewals were both lawful and reasonable. Furthermore, the evidence does not tend to show that the original notes did not contain a provision for attorney’s fees. In the absence of such evidence^ the presumption must be indulged that they did, even though we concede the position of counsel that the guaranty did not contemplate the addition of such a condition to the new notes. The court could not presume that the bank exacted conditions from the makers which were not authorized by the guaranty. There is no merit in the contention.
4. The note of the Libby T'ownsite & Lumber Company grew out of the following transaction: In 1893 one Mumbrue obtained a contract from the United States to> survey certain public lands in the vicinity of Libby, Flathead county. It was agreed between him and the company, through one Leonard, its secretary, that the company would furnish' funds to- pay the expenses of the survey, and that Mumbrue would reimburse the company out of the funds paid him by the United States upon completion of the contract. The company was also1 to share in the profits, if any, made under the contract. Leonard then arranged with the Globe National Bank for a loan of funds to the company from time to time as they were needed. This arrangement was carried out until the indebtedness of the company to the bank on this account amounted to something over $2,000. The bank authorities, not desiring to- furnish any
Counsel relies npon the general rule that notice to the agent is notice to his principal of all matters connected with the business of the principal which fall within the scope of the agent’s authority. Without pausing to inquire whether the general rule should be extended to cases where the knowledge of the agent has been acquired prior to his employment, but reserving this question, we think that, under well-established principles of the law of agency, the knowledge possessed by Hatcher should not be imputed to the bank. The presumption that the agent has imparted his knowledge to his principal does not prevail where the agent is acting in his own or another’s interest, and adversely to that of his principal, particularly when the agent is acting, not as agent, but openly and avowedly for himself. In such case, by reason of his antagonistic attitude toward the interests of his principal, the presumption does not arise that he has communicated his knowledge to his principal, but that, on the contrary, he has refrained from so doing from motives of self-interest. (Mechem on Agency, Sec. 723; 1 Am. & Eng. Enc. Law (2d Ed.), 1145 ; Frenkel v. Hudson, 82 Ala. 158, 2 South. 758, 60 Am. Rep. 736; Wickercham v. Zinc Co., 18 Kan. 481, 26 Am. Rep. 784; Allen v. Railroad Co., 150 Mass. 200, 22 N. E. 917, 5 L. R. A. 716, 15 Am. St. Rep. 185; Innerarity v. Bank, 139 Mass. 332, 1 N. E. 282, 52 Am. Rep. 710; In re Plankinton Bank, 87 Wis. 378, 58 N. W. 784; Hickman v. Green, 123 Mo. 165, 22 S. W. 455, 27 S. W. 440, 29 L. R. A. 39; Third National Bank v. Harrison (C. C.), 10 Fed. 243.)
The facts detailed above show that Hatcher in making the contract was acting for himself and the other record stockholders of the Globe National Bank, and adversely to the NorthWestern National Bank. When he went into- the employment of the latter, the affairs of the other bank and its stockholders were mere private matters, about which his employer was not in any way interested; and, when he came to deal with his em-
5. It is said that the trial court erred in finding that demand was made upon appellant for tbe payment of tbe Libby ‘Townsite & Lumber Company and tbe Oullette & Therriault notes before this action was brought, for that there was no evidence tending to support such a finding. The plaintiff was examined as'a witness, and, among other things, testified: “I m acquainted with Joseph A. Coram, tbe defendant in this ■case. I met him over in Butte, Mont, along in tbe month of May, 1897, and bad a conversation with him at that time relating to these notes. ” As to paying them, or any part of them; be said that suit would have to be brought, so that be could collect from tbe ,-toekholders of tbe Globe National Bank, — tbe •other stockholders. I don’t remember bis exact language, but be said suit would have to be brought before be would pay them,' — words to that effect.” Tbe defendant also testified, but failed to admit or deny tbe statement of plaintiff. This evidence was sufficient to warrant a finding that demand was waived, and that any demand short of suit would be of m> avail. Tbe purpose of demand in such cases is. to enable tbe party upon whom, under tbe terms of tbe contract, it must be made, to discharge bis liability without a suit. When be unqualifiedly refuses to perform bis obligation, a demand is useless, and therefore unnecessary. Tbe law does not require a useless thing. (9 Am. & Eng. Enc. Law (2d Ed.), 209 ; Bennett Bros. Co. v. Fitchett, 24 Mont. 457, 62 Pac. 780.) While tbe trial
6. The next contention made by appellant is that the district court erred in finding in favor of plaintiff upon the issues made upon the payment of the Weitman note, which is the basis •of the third cause of action.
On March 8, 1895, the original Weitman note was renewed; the new note being made payable to “Benton D. Hatcher’’ 12 months after date, and negotiable and payable at the Northwestern National Bank. It was thereupon indorsed in blank by Hatcher, and thereafter carried upon the account of bills receivable by the bank. The original note was secured by real and chattel mortgages. Upon the renewal of it on March 8, 1895, a new mortgage upon three lots in Kalispell was executed to Hatcher by Weitman and wife. The records of the bank did not at any time disclose the existence of this mortgage, nor, apart from the note itself, that it was payable to Hatcher. During all of this time, and, in fact, up to the time the bank closed its doors, Hatcher had general control of the affairs of the bank, and the books were kept under his direction. So the matter stood until January Y, 1896, when Hatcher agreed with Weitman that, if the mortgaged property should be conveyed to himself by Weitman and wife, he would accept it as 'payment of the note. The conveyance was made to “B. D. Hatcher, agent,” and the note was accordingly canceled and delivered to Weitman. On August 13, 1896, Hatcher executed to the bank his note for the full amount of the Weitman note, signing it “B. D. Hatcher, Agent.” This note does not on its face show upon whose behalf it was executed. The books of the bank show that it was credited against the Weitman note and interest as payment thereof, and from its date it was treated, and still is treated, as an asset of the bank. The uncontradicted statement of Hatcher is to the effect that at the time of the transaction with Weitman he told the plaintiff, who was vice president of the bank, that he was going to take the property from Weit-
During his connection with the Northwestern National Bank, Hatcher appears to have acted as agent in several capacities, and made use of several different signatures. When acting for the bank, he used the signature, “B. D. Hatcher, Cashier.” When acting for the stockholders of the Globe National Bank, he signed, “B. D. Hatcher, Agent.” When acting in other capacities he signed, “B. D. Hatcher,” or “Benton D. Hatcher.” During his negotiations looking to a settlement of the Weit-man note, considerable correspondence was had-between him and Weitman and Wininger, his agent at Kalispell, and in each instance, save twOj he signed his letters, “B. D. Hatcher, Cashier.” In one of these instances he signed, “Hatcher/’ and in the other, “B. D. Hatcher.” For his services in this and other matters connected with the business of liquidation, Wininger was paid by Hatcher out of the assets of the Globe National Bank, though Wininger understood that in the transaction he was acting for Hatcher as cashier. After the execution of the written guaranty by Coram, he was absent from Montana, residing at Lowell, Mass. Further than that Hatcher had charge generally of the settlement of the affairs of the Globe National Bank, he was never expressly authorized to act for Coram in any capacity whatever. When the Northwestern National Bank closed its doors, Hatcher being under arrest, Coram hastened to Montana, took over all the assets of the Globe National Bank, and paid Wininger a balance due him for services to- Hatcher in connection with his previous employment, but took no conveyance of the Weitman lots. Thereafter he acted for the
The trial court found upon these facts that, in taking the deed from Weitman and canceling his note, Hatcher acted without the scope of his authority as cashier, and that he acted for and on behalf of Coram and the other stockholders of the Globe National Bank. Hence the conclusion that the transaction did not amount to a payment of the note, so as to' discharge Coram from his guaranty. Do the facts properly warrant this inference ? It must not be overlooked that the defendant sustained two distinct relations to the affairs of the Globe National Bank. He was one of its record stockholders. As such he was interested in the settlement of its affairs. He, with others who sustained a like relation to it, was bound by the contract of guaranty individually to pay the debts in.controversy upon the1 happening of the contingencies stated therein. His liabilities growing out of the former relation were imposed by law by virtue of his connection with the bank, and existed in favor
So it appears that Hatcher did not, in his dealings with the Whitman note and the mortgage security, represent Coram in any capacity whatever. It is apparent, also, that no authority, obtained directly or impliedly from the stockholders, empowered him to direct the mode by which payment of the note could or should be made. The control of the note had passed from them by the assignment to the Northwestern National Bank, and they had no authority to interfere with it. His action in the premises v’as either a gratuitous intermeddling on his individual account, or must be deemed to have been authorized by the bank. But for the fact that he occupied the position of
Upon tbe facts stated, we think tbe defendant not liable upon tbe third cause of action for another reason. Conceding that tbe note has not been paid as was contemplated by tbe contract, tbe original note has been canceled and delivered up as paid. Whitman cannot now be held liable thereon. Tbe debt guarantied by Coram has been substituted by another and a different one, due from a different person, namely, Hatcher. If Coram should be held to pay, bis only recourse would be against Hatcher, — a contingency not contemplated by his undertaking. Tbe bank, in dealing with tbe original debtor through Hatcher, has permitted a material change in the situation of the debt guarantied, by substituting another as the principal debtor. It has also put the security, which otherwise might have been available to the guarantor, beyond his reach. Under the principles of law applicable, Coram is entitled to claim his release. (Civil Code, Sec. 3650.)
We find no error in the action of the district court upon tbe first and second causes of action. As to these the judgment and order are affirmed. The defendant is entitled to a new trial upon the third cause of action. As fir this, therefore, the judgment and order are reversed, and the cause is remanded, with directions to grant a new trial. Defendant may recover his costs.
