Anderson v. First Nat. Bank of Grand Forks

• Decision Date: 04 October 1897
• Citation: 72 N.W. 916,6 N.D. 497
• Parties: ANDERSON v. FIRST NAT. BANK OF GRAND FORKS.
• Court: North Dakota Supreme Court

6 N.D. 497

72 N.W. 916

ANDERSON

v.FIRST NAT. BANK OF GRAND FORKS.

Supreme Court of North Dakota.

Oct. 4, 1897.

Syllabus by the Court.

1. All objections to depositions, except for incompetency or irrelevancy, must be taken before the trial is commenced, or they are forever waived.

2. The construction of a written agreement is a question of law, for the court; and therefore, ordinarily, it is incompetent to prove what either party to a written contract considered its meaning or its legal effect.

3. Questions decided on the former appeals in this case reaffirmed.

4. The promissory notes of individuals have no market value, and evidence of their market value is therefore incompetent. Witnesses are not permitted to testify generally as to the value of such paper, but must confine their evidence to facts which bear upon the question of value. The insolvency of the maker, the fact that the paper is not secured, or that the security is inadequate, the existence of a defense to the paper, and other facts of a like nature affecting the value of such paper, may be proved. But mere opinions as to value are not competent. This is the rule, not only in actions for conversion of such paper, but also in actions in which the party injured waives the tort, and sues in assumpsit for the value of such paper, on the theory of a sale.

5. Prima facie, a chose in action is worth what appears to be due upon it; and, unless the presumption is rebutted by legal evidence, it is conclusive.

Appeal from district court, Grand Forks county; Charles J. Fisk, Judge.

Action by Alexander Anderson against the First National Bank of Grand Forks. From an order directing a verdict for plaintiff, defendant appeals. Affirmed.

Burke Corbet, for appellant. Phelps & Phelps, for respondent.

CORLISS, C. J.

This cause, having been tried four times in the district court, is before us a fourth time on appeal. On the last trial the trial court directed a verdict for plaintiff for the amount due upon the notes at the time of their conversion by defendant, less the sum that had been paid by defendant to plaintiff by a remittance to plaintiff, on the theory that it was remitting the proceeds of a sale thereof by defendant as agent for plaintiff. In its main features, the case is practically the same as on the last appeal. There is only a slight difference in the facts,-none calling for any change of decision on the points already disposed of. The answer, as before, puts in issue the question of agency. But the undisputed facts conclusively establish such agency. It is true that the offer by plaintiff of one of the telegrams which had been repeatedly received in evidence on the former trials was strenuously objected to, and it is here urged that such telegram was not proved by competent evidence. This is the telegram from defendant to plaintiff dated October 3d. We may strike this from the record, and yet there remains unanswerable proof of agency. Defendant's letter of September 14th contains an offer by defendant to act as agent for plaintiff in the sale of the notes in question. This letter embodies the following statement: “If I had a basis to work on, I might find some one who would take the paper. You offered it at a $350 discount. We offered you a trade at a $1,000 discount. Now, if you will make it $700 or $800, and allow us a small commission, I will try and place the paper for you.” Defendant's letter to plaintiff of October 7th reports a sale of the notes by defendant as agent for plaintiff; the sale purporting to have been made by defendant in answer to a telegram from plaintiff to defendant, offering to sell at a certain discount. This telegram was in answer to defendant's proposition to sell the paper, as agent for plaintiff, for a small commission. In this letter of October 7th, defendant charged plaintiff a commission of $35 for making the sale. In view of these uncontroverted facts, it becomes unnecessary for us to determine whether there was error in receiving in evidence the telegram of October 3d. Eliminating it from the case does not in the least affect the question of agency.

Some new questions are presented to us for consideration. Among them is the question of the admissibility of certain evidence offered by defendant to prove the value of the notes in question. This evidence was the opinion of experts. Prima facie, the value of these notes, both at common law and under our statute, was the full amount due thereon at the time of the conversion thereof by defendant. Rev. Codes, § 5012; Comp. Laws, § 4615. Several witnesses were called by the defendant, and defendant offered to prove by their testimony what the value of such notes was, and that the value thereof did not exceed the sum of $6,000. This evidence, being objected to by plaintiff, was excluded, and it is here urged that in so doing the district court committed error. It is to be noted that no attempt was made to show the insolvency of the makers of these notes, or that there was any defense to them, or that any portion thereof had been paid. Indeed, it was established on the trial, and does not appear to be disputed, that the land on which these notes were secured by a mortgage was of greater value than such notes. No evidence tending to show that the security was insufficient was offered by defendant, despite the fact that the witnesses who testified on its behalf swore that they knew the value of the land. The case before us, therefore, is the case of notes executed by solvent makers, amply secured, subject to no defense, and on which the full amount of principal was due, together with some accrued interest. These notes bear a good rate of interest, even for North Dakota, the rate being 9 per cent. To allow witnesses to conjecture about the future solvency of the parties, to speculate about the possible decline in the value of the security, and on such a basis express an opinion-a mere guess-as to the value of the paper, would be a dangerous doctrine. Paper of this character, unlike chattels, and municipal, state, and national bonds, and corporate stock, is not generally bought and sold in the market, and cannot be said to have a market value. There may at times be local dealings in such securities of considerable magnitude, but we must establish the rule to apply to all communities in the state, and under all circumstances. We do not think that the fact that there were at the time of the conversion of this paper a large amount of individual notes bought and sold in commercial circles in Grand Forks city furnishes any reason why we should establish a rule that such paper has a market value, when we well know that, taking the state at large, and considering the general trend of business,there is a wide distinction between chattels and such securities, as marketable property. The chief dealing in paper of this kind is at the banks and loaning institutions, where money is borrowed by debtors upon their notes, secured or unsecured. Such paper is not sold in open market, as wheat or municipal securities, or other like property. There is therefore no standard of value to apply to it, except that which each witness creates in his own mind; basing his opinion, perhaps, upon what he would give for the property, or on a conjecture as to the future solvency of the maker. In this particular case the foundation of the opinions of the experts as to the value of these notes would seem to be the risk of the future insolvency of the makers thereof. Defendant offered to prove by any one of its witnesses “that the risks of the insolvency of the makers of negotiable instruments which are to become due in one, two three, four, and five years is a material element in depreciating the value of the paper, notwithstanding the fact that the parties may be perfectly solvent at the time of making, or at any particular time thereafter; that the risk of insolvency itself is an element which does actually depreciate the value of the paper.” Had this witness been permitted to express his opinion as to the value of these notes, we know that it would have rested largely upon the remote possibility of the future insolvency of the makers, although, as a matter of fact, the notes were adequately secured, and were therefore good, without reference to the solvency of such makers. Extreme cases can be imagined where the rule which we follow in this case may work some slight measure of hardship; but in the great majority of instances-indeed, in practically every case-it is the only rule which will not result in placing the owner of choses in action at the mercy of every wrongdoer, and the surmises and guesses of persons who really know nothing about the market value of such property, because, as a rule, it has no market value. Would-be wrongdoers can protect themselves against this rule, if they deem its operation harsh, by keeping their hands off from the property of others. Persons who buy such property can protect themselves by an agreement as to the price to be paid. The cases fully support our decision on this point. In fact, no ruling to the contrary can be found. Holt v. Van Eps, 1 Dak. 208, 46 N. W. 689;Booth v. Powers, 56 N. Y. 22; Atkinson v. Printing Co., 43 Hun, 167; Potter v. Bank, 28 N. Y. 654. In Potter v. Bank the court said: “It was insisted on the trial that the proper question to put to the witness, in order to arrive at the measure of damages, was, ‘What was the value of the note?’ And the ground on which the right to put the question is that such is the inquiry in all of the cases where the value of property is sought to be recovered. The general rule is that the value of property must be ascertained by answers to the direct questions as to its value. And the reason is that persons are examined who know its value, and can speak from their own personal knowledge in relation thereto. But this rule cannot apply to choses in action that have no intrinsic value, as a horse or an...