Union Investment Co. v. Epley

164 Wis. 438 | Wis. | 1916

Siebecker, J.

It is contended by plaintiff that the court erred in admitting evidence, under the issues raised by the pleading, to the effect that the defendant and Gorham had agreed upon a conditional delivery of the note and the blank assignment of the stock. This claim rests upon the ground that defendant by his answer has admitted the making and delivery of the note and blank assignment of stock in consummation of a complete sale of the stock to defendant. The allegations of the answer deny specifically that defendant was indebted to the People’s State Bank as alleged in the complaint charging that defendant on February 16, 1906, became indebted to the bank on the note in question for money loaned by it to him. The answer further alleges that Gorham on this day called at defendant’s place of business and solicited the defendant to purchase stock of the Blue Grass Land Company; that defendant declined to purchase such stock, whereupon Gorham “offered to take a note for said sum of $500, payable to said People’s State Bank, due in one year from date, and that if at any time said defendant was not ready or inclined to pay for said stock, that the sgid People’s State Bank would take said stock and return and cancel defendant’s note, and under these circumstances and pursuant to this agreement said defendant did sign and put into tbe possession of said 0. N. Gorham a writing in the form of a promissory note for $500 running one year from February 16, 1906, . . .”

It is manifest that these allegations do not allege that defendant purchased the stock nor do they necessarily import that the note was given in consummation of a completed purchase and sale of the stock; but the idea conveyed by the language of the allegations is that defendant was to have the right to buy or not to buy the stock, which necessarily implies that there was no consummated sale of the stock. We consider that the trial court, under the facts alleged in the answer, properly received the evidence disclosing the transaction actually entered into by the parties, and that there is no fatal variance between the allegations of the answer and the evidence of defendant on the subject. It is obvious that the pleader did not set out the exact words of the alleged agreement, and the evidence shows the agreement actually made was expressed in different words than those alleged. Under these conditions there is no case of real variance presented.

The plaintiff also assails the court’s finding to the effect that the note and blank assignment were held by Gorham upon the agreed condition that he was to hold them until the defendant decided whether or not he would purchase the stock. We think the evidence sufficiently clear to support the trial court’s finding of fact on this issue. The record sustains the conclusion that Gorham and defendant agreed that defendant should sign the note and blank assignment of stock, that •they were both to be held by Gorham until defendant notified him whether or not defendant decided to purchase the stock, and if defendant decided to purchase the stock then the note was to be delivered in consummation of the stock purchase, otherwise the note was to be canceled and returned to defendant. Under these circumstances the note did not become a complete contract in prcesenti. The defendant, having notified Gorham of his election not to purchase the stock, was entitled to the return of the note. Such a note has no validity between the original parties until the conditions upon which manual tradition thereof was made have béen satisfied. Hodge v. Smith, 130 Wis. 326, 110 N. W. 192; Paulson v. Boyd, 131 Wis. 241, 118 N. W. 841; sec. 1675—16, Stats. 1915.

It is urged that the People’s State Bank was a holder of the note in due course. Sec. 1676 — 22, Stats. 1915 (Negotiable Instrument Law), defines who is a holder in due course. One of the incidents to constitute the holder of a note one in due course is “That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.” Sec. 1675 — 16, Stats. 1915, provides: “Every contract on a negotiable instrument is incomplete and revocable until'delivery of the instrument for the purpose of giving effect thereto. As between immediate parties, and as regards a remote party other than a holder in due course, . . . delivery may be shown to have been conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument.” We are satisfied that Gorham had possession of the note knowing that it was incomplete and revocable until its delivery when defendant elected to purchase the stock. Under these circumstances it was his duty to communicate this information to the bank, and the bank is- chargeable with the knowledge of Gorham as its active officer pertaining to the transaction whereby it became the holder of this note. 7 Corp. Jur. p. 530, Banks and Banking; Paulson v. Boyd, 137 Wis. 241, 118 N. W. 841; First Nat. Bank v. Burns, 88 Ohio St. 434, 103 N. E. 93, 49 L. R. A. n. s. 764, note; Central B. & T. Co. v. Ford (Tex. Civ. App.) 152 S. W. 700; Loring v. Brodie, 134 Mass. 453.

It must be field that the note did not become effective in the hands of the People’s State Bank and that the plaintiff, becoming holder of it after it was over due, holds it subject to the same infirmity and defect that existed against it in the' hands of the bank, and under the facts found plaintiff is not entitled to recover on the note.

By the Gourt. — The judgment appealed from is affirmed.