Anderson v. First Nat. Bank of Grand Forks

• Decision Date: 14 May 1895
• Citation: 64 N.W. 114,5 N.D. 80
• Court: North Dakota Supreme Court

64 N.W. 114

5 N.D. 80

ALEXANDER ANDERSON v. FIRST NAT. BANK OF GRAND FORKS

Supreme Court of North Dakota

May 14, 1895

Appeal from District Court, Grand Forks County; Templeton, J.

Action by Alexander Anderson against the First National Bank of Grand Forks, N. D. Judgment for defendant, and plaintiff appeals.

Reversed.

Order reversed, and a new trial granted.

Phelps & Phelps, for appellant.

Burke Corbet, for respondent.

OPINION

CORLISS, J.

On the former appeal this litigation presented to us the case of the pursuit by the plaintiff of an alleged balance in the hands of the defendant arising from a supposed sale by defendant as agent for the plaintiff of certain promissory notes owned by him. It was on this theory that the complaint was framed. We so held when the case was before us on the previous appeal. See Anderson v. Bank, 4 N.D. 182, 59 N.W 1029. It is true that the question of the proper construction of the complaint was not regarded by counsel on that appeal as being of much moment, and we have therefore felt disposed to consider it anew. Further study of the pleading only confirms our former view. It does not set forth a sale by plaintiff to defendant. Neither does it allege a breach of the agent's duty to sell for the price specified by the plaintiff in his instructions to the agent. It discloses only one theory of liability, and that is the receipt by the defendant, as agent of the plaintiff, of a larger sum on the sale of the property by the defendant than it had accounted for. A reference to the complaint will make this clear. It alleges that: "On the 3rd day of October, A. D. 1891 the defendant telegraphed to the plaintiff at Seattle Washington, requesting plaintiff to telegraph his best offer for a sale of said seven promissory notes by the defendant for the plaintiff to a third person, who was not named in said telegram from defendant to plaintiff, and thereupon the plaintiff telegraphed to the defendant as follows: 'To First National Bank, Grand Forks, North Dakota: Will give discount of five hundred dollars. Alex. Anderson.' That the defendant duly received said telegram from the plaintiff and thereupon the defendant sold the said seven promissory notes to a person unknown to the plaintiff, and received the proceeds of said sale, and on the 7th day of October, A. D. 1891, the defendant remitted to the plaintiff the sum of four thousand three hundred and ninety-seven and 48-100 ($ 4,397.48) dollars, part of the proceeds of said sale, and mailed to the plaintiff his promissory note to the defendant for two thousand ($ 2,000) dollars, hereinbefore mentioned, and notified the plaintiff that defendant's commission for selling said seven promissory notes was the sum of thirty-five ($ 35) dollars, but the defendant has wholly failed to pay or remit, or cause to be paid or remitted, to the plaintiff the balance due him on said sale, and the defendant is now indebted to the plaintiff, as and for said balance due him, in the sum of six hundred and ninety-seven and 52-100 ($ 697.52) dollars, with interest thereon at the rate of seven per cent. per annum from and after the 7th day of October, A. D. 1891. That on receiving from the defendant said remittance of four thousand three hundred and ninety-seven and 48-100 ($ 4,397.48) dollars, and said note for two thousand dollars, the plaintiff forthwith mailed and deposited in the post office at the City of Seattle, in the State of Washington, directed to defendant, at Grand Forks, North Dakota, a written notice that he would not accept said remittance and note as full payment of the proceeds of said sale, but that he should insist that defendant account to plaintiff for and remit to him the balance due him upon the full amount owing to plaintiff on said notes at the time of said sale, to-wit, the sum of seven thousand six hundred and thirty ($ 7,630) dollars, less the five hundred ($ 500) dollars discount which had been agreed to by plaintiff, as aforesaid."

The failure of the plaintiff to allege in terms the amount actually received by defendant does not affect the question. The pleading might have been open to demurrer on that account, or to a motion to make it more specific; but the whole scope of the pleading shows that plaintiff claimed that there was an unpaid balance in defendant's hands arising from such sale, for which he sought to have the defendant account. Our conclusion touching the true interpretation of the complaint destroys the force of defendant's argument that plaintiff had elected to treat the relations between himself and the defendant as that of seller and purchaser, instead of that of principal and agent, and therefore could not, by the proposed amendment hereinafter referred to, seek to hold defendant on the theory of a conversion of the property, on the ground that, while acting as agent, it had, in violation of its duty, attempted to sell the property to itself. The complaint remained in this form down to the time of the second trial. In the course of the trial the plaintiff called as a witness the cashier of the defendant. He testified that the bank did not sell the notes to a third person, but sold them to itself. Thus was revealed a conversion by the defendant of the plaintiff's property. An agent authorized to sell cannot himself make the purchase. This is elementary. Bank v. Simons, 133 Mass. 415; Story, Ag. § 211; Mechem, Ag. § 401, and cases cited. Nor does the fact that he is authorized to sell at a specified price alter the rule. Story. Ag. § 211; Ruckman v. Bergholz, 37 N.J.L. 437; Tyler v. Sanborn, 128 Ill. 136, 21 N.E. 193; Iron Co. v. Harper, 41 Ohio St. 100; Porter v. Woodruff, 36 N.J.Eq. 174.

The defendant, having assumed to own and control these notes by virtue of an illegal and void purchase thereof, converted them to its own use, and became liable for their value. The attitude it took with respect to the paper on the 7th of October, 1891, was hostile to the rights of the plaintiff the owner thereof. It obtained no title by virtue of this attempted sale to itself, and yet it assumed to own them, and has exercised acts of ownership over them ever since that day. Its position on the argument of this case was that it owned them. It thus appears that, on the trial, the defendant's cashier, without any objection being interposed by defendant's counsel, testified to a fact which established that defendant was liable for the conversion of these notes. Immediately upon discovering this fact, the counsel for plaintiff asked leave to amend the complaint by incorporating an allegation of such fact in the complaint. The court denied his motion, and directed verdict against him, except as to the small items referred to in the former opinion. We think that this was an abuse of discretion. Of course, we use this phrase in its legal sense. The undisputed facts showed that defendant had converted the plaintiff's property, and was liable for such conversion. It is true that, despite the testimony of defendant's cashier, defendant might have been able to produce witnesses to show that his testimony was false. But this is extremely improbable. Such evidence, coming from defendant's cashier, was almost equivalent to an admission by defendant of the fact of such conversion. Its failure to claim that it was surprised by the proposed amendment, or that, if the amendment was allowed, it ought to be granted a continuance to enable it to prepare to meet this issue, and show the evidence of its own cashier to be untrue, makes it plain to our minds that the evidence of such cashier was in fact true; and in this view we are confirmed by the statement of defendant's counsel in this court that defendant did in fact buy the notes itself. The defendant was responsible for the error of the plaintiff in framing his complaint. The whole trend of the correspondence between the parties shows that defendant assumed to act as agent for the plaintiff in selling these notes to a third person, and that plaintiff supposed that he had done so. On the 14th of September, 1891, defendant wrote the plaintiff a letter relating to this matter in which the following passage occurs: "We offered you a trade at $ 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." "If you care to have us go to work on these terms, you write or wire me." On the 31st of August the defendant telegraphed plaintiff as follows: "If accepted now, a party is here, so we can send you four thousand dollars together with your note." On the 3rd of September they wrote plaintiff a letter, stating that they had telegraphed him. On October 3rd they telegraphed plaintiff: "Wire us your best offer, so we can advise a party who said he would hold his money till we heard from you." On October 7th the defendant reported to plaintiff the sale, not revealing the fact that it had sold to itself, and the statement it sent the plaintiff indicated the exact reverse, one of the items being a charge against plaintiff by defendant for $ 35 for commission in making the sale. The answer of the defendant expressly avers a sale by it in accordance with the instructions of the plaintiff, and that the proceeds thereof were applied by it as directed by defendant, thus plainly claiming a sale to a third person. The answer stood in this form at the time of the second trial. It is urged that plaintiff's counsel, as early as the first trial, knew...