Baird v. Publishers' Nat. Serv. Bureau

• Citation: 51 N.D. 374,199 N.W. 757
• Parties: BAIRD v. PUBLISHERS' NAT. SERVICE BUREAU et al.
• Decision Date: 29 July 1924
• Court: North Dakota Supreme Court

51 N.D. 374

199 N.W. 757

BAIRD

v.PUBLISHERS' NAT. SERVICE BUREAU et al.

Supreme Court of North Dakota.

June 21, 1924.

Rehearing Denied July 29, 1924.

Syllabus by the Court.

Where the directors of a corporation indorse a note in their individual names without disclosing the corporation and without indicating that they signed in any representative capacity, they are personally liable on the contract of indorsement.

Representations by the payee to the effect that an indorsement by a corporation is desired, and that it may be effected by the members of the board of directors indorsing their individual names, is a misrepresentation as to the legal effect of their act in so indorsing and does not constitute a defense to an action against the indorsers in their individual capacity.

Where an instrument is executed in the manner in which both parties intended it to be executed and the legal effect of its execution is to bind parties, individually and personally, a mistaken impression, though contributed to or induced by the other party, that they would not be bound personally is not a defense.

Additional Syllabus by Editorial Staff.

Under Comp. Laws 1913, § 6903 (Negotiable Instruments Law, § 18), one whose name does not appear on a negotiable instrument is not bound thereby.

Evidence to establish that a person signing an individual name to an instrument did so in order to bind another whose name does not appear is inadmissible.

One knowingly placing his signature on a negotiable instrument must be held to intend the legal consequence of his act and cannot be heard to say that the other party, with whom he was dealing at arm's length, had contributed to or induced a misunderstanding by him as to the legal effect of his own act.

Appeal from District Court, Grant County; F. T. Lembke, Judge.

Action by L. R. Baird, as receiver of the People's State Bank of Leith, against the Publishers' National Service Bureau and others. From a judgment dismissing the action, plaintiff appeals. Reversed and remanded, with directions.

A. T. Nelson, of Carson, and Newton, Dullam & Young, of Bismarck, for appellant.

Jacobsen & Murray, of Mott, and Charles L. Crum, of Bismarck, for respondents.

BIRDZELL, J.

This is an appeal from a judgment dismissing the plaintiff's action on a promissory note. The facts are as follows: On or about October 1, 1919, one Cahill, cashier of the People's State Bank of Leith, an unnamed agent of the Publishers' National Service Bureau, and the four individual defendants, William Clausen, Robert Franzen, W. B. Noyes, and H. A. Seely, met at William Clausen's place near Carson, and had some discussion relative to certain indebtedness owing to the Leith Bank, on account of the operations of the Grant County Publishing Company, publisher of a paper known as the Grant County Leader. During the conference the note in suit was executed, which is in words and figures as follows:

“No. 544. October 1st, 1919.

On or before the 1st day of March, 1920, without grace, we promise to pay to the order of the People's State Bank of Leith eight hundred forty-seven and 30/100 dollars. Value received, with interest at the rate of 10 per cent. per annum from date until paid. Payable at the People's State Bank of Leith. The respective makers and indorsers hereof severally waive presentment for payment, protest, notice of nonpayment, and of protest of this note.

Publishers' National Service Bureau,

847.30. By W. W. Liggett, General Manager.”

Indorsements: “Wm. Clausen.

Robert Franzen.

W. B. Noyes.

H. A. Seely.”

Some time later the People's State Bank failed, and the above note was found among its assets. This action is brought by the receiver. The complaint is in the usual form. The answer of the defendants is in effect a general denial, to which is added an affirmative defense as follows: The defendants-

“deny that they ever intentionally, knowingly, or otherwise indorsed or subscribed their names to the note as individuals, but, on the contrary, allege that they subscribed their names to the instrument for the sole purpose of affixing the liability of the corporation to it, the Grant County Farmers' Press (meaning Grant County Publishing Company), as an indorser of said note; that these answering defendants were induced to attach their names to the said note under the following circumstances: That it was represented to these answering defendants by the Publishers' National Service Bureau, and its servants and agents, and by the plaintiff, and its agents and servants, that the said bureau and the plaintiff bank desired and required the indorsement of the Grant County Farmers' Press, a corporation, on said note, and that, in order to affix the indorsement and liability of the said Grant County Farmers' Press on said note, it was necessary for these answering defendants, who were then and there officers and directors of the said Grant County Farmers' Press, to subscribe their names on the back of said note; that these answering defendants relied upon and believed said representations, and believed that it was necessary for them, as directors, to subscribe their names on said note, in order to affix the indorsement and liability of the Grant County Farmers' Press as an indorser on said note; and that these answering defendants, so believing and so relying, did subscribe their names; that the plaintiff at all times knew that these defendants were not attaching their names to said note for the purpose of binding themselves individually or personally, but for the sole purpose of affixing the liability of the Grant County Farmers' Press; that at the time these answering defendants so affixed their signatures to said note they were the duly elected, acting, and qualified directors of the said Grant County Farmers' Press; that these answering defendants at no time received any consideration for affixing their signatures to said note, and specifically allege that they are in no manner liable, personally, as indorsers or otherwise on said note.”

At the trial evidence was adduced over objection to...