Bank of Montreal v. Ingerson

• Decision Date: 11 May 1898
• Citation: 75 N.W. 351,105 Iowa 349
• Parties: BANK OF MONTREAL, Appellant, v. HARVEY INGERSON
• Court: Iowa Supreme Court

75 N.W. 351

105 Iowa 349

BANK OF MONTREAL, Appellant, v. HARVEY INGERSON

Supreme Court of Iowa, Des Moines

May 11, 1898

Appeal from Woodbury District Court.--HON. GEORGE W. WAKEFIELD Judge.

ACTION at law to recover the amount due on two promissory notes. There was a trial by jury, and a verdict and judgment for the defendant. The plaintiff appeals.

Reversed.

Black & Goodwin and J. S. Lothrop for appellant.

Marsh & Henderson for appellee.

OPINION

ROBINSON, J.

The plaintiff is a corporation of Canada, and is doing business in Chicago, in the state of Illinois. From the first part of the year 1888, until June, 1893, it transacted business with the Union Stock Yards State Bank of Sioux City, by lending to it from time to time money for which it gave to the plaintiff its certificates of deposit, secured by promissory notes which it received in the course of its business. The notes in suit were taken by it, and sent to the plaintiff, as a part of the collateral security given on account of two certificates of deposit. The Sioux City bank failed on the tenth day of June, 1893, and this action is for the purpose of recovering of the defendant the amount due on the notes.

I. One of the notes was for five thousand dollars, and was made by D. N. Wheeler as principal and the defendant Ingerson as surety. The other note was for one thousand, four hundred and twenty-three dollars and fifty cents, and was made by T. E Leeper as principal and the defendant Ingerson as surety. A separate action was commenced on each note, in which the makers were named as parties defendant; but Ingerson was the only one who was served with notice of either action, and he alone appeared in court. He filed an answer in each case, and then filed a motion to consolidate the two actions, which was sustained, and the two causes were thereafter tried as one. The appellant complains of the consolidation. Section 2734 of the Code of 1873 provided that, "whenever two or more actions are pending in the same court which might have been joined, the defendant may, on motion and notice to the adverse party, require him to show cause why the same shall not be consolidated, and if no sufficient cause be shown the same shall be consolidated." When the motion to consolidate was pending, the plaintiff did not make any showing in resistance, but merely excepted to the ruling and the order of consolidation. But the plaintiff claims that the actions should not have been consolidated, because each included a separate cause of action and a party who was not a party to the other action. To set out in a petition the name of a person as a defendant is not alone sufficient to make him a party to the action. The service of notice, or an appearance if there be no notice, is essential to give the court jurisdiction of the person named as a defendant. The actions in question were commenced and pending at the same time. It did not appear that the plaintiff intended to make any one but Ingerson defendant. As against him, the actions could properly have been joined, and no reason was shown why they should not be consolidated. Had Wheeler and Leeper entered an appearance in the action, and the cases had then been dismissed as against them, the cases could have been consolidated, under the rule of Harwick v. Weddington, 73 Iowa 300, 34 N.W. 868. In the absence of a showing that the plaintiff intended to bring Wheeler and Leeper into court, the same rule applied, and the actions were properly consolidated.

II. During the progress of the trial in the district court, the plaintiff moved to strike from the files amendments to the answer filed by Ingerson. The amendments contained material averments, and the motion to strike was properly overruled.

III. Both notes were by their terms payable at the Union Stock Yards State Bank. The smaller one was payable on the tenth day of June, 1893, and the other was payable on the twenty-fifth day of the same month. Nearly four thousand dollars have been paid on the larger note, but the other one is wholly unpaid. They were sent to the plaintiff a considerable time before the failure, and, when that occurred, were in its possession. In the evening of the day before the failure, after banking hours, Ingerson and Leeper went to the Sioux City bank, to arrange for the payment of the two notes. Ingerson stated that there was to be a sale of cattle in Omaha the next day, and proposed that about one thousand, eight hundred dollars of the proceeds of the sale be placed to the credit of the Sioux City bank in some bank in Omaha, to apply in payment of the Wheeler note, and that the amount required to pay the remainder due on the Wheeler note, and the amount needed to pay the Leeper note, should be charged to his account the next morning. At that time he had a credit in the Sioux City bank sufficient to make the payments proposed. Mr. Skerry, president of the bank, told him that the notes were in Chicago, but would be sent for, and that he could leave the money required to pay them in the bank; and, when the notes were received, they would be canceled; that the bank would charge the amount required to pay them to his account, and cancel the notes. No check was given by Ingerson, but it was agreed that the amount required for the payment of the notes should be charged to his account in the books of the bank the next day. The bank closed, however, before the entries were made. The Omaha deposit was made as agreed, and has been paid to the plaintiff, and is not in controversy. It is claimed by the appellee that the effect of his transaction with the Sioux City bank was to pay the remainder due upon the notes. The plan adopted and pursued respecting the collateral notes sent to the plaintiff was substantially as follows: The plaintiff received them with knowledge of the fact that they were payable at the Sioux City bank, and would be collected by it, and that some of them would be paid before they were due. It was the custom of the Sioux City bank to send for the notes before or at about the time they matured or were to be paid, and to replace them with other notes, so that the amount of collateral notes held by the plaintiff to secure a certificate of deposit should be kept good. The Sioux City bank collected all the notes, and sometimes received the amount due on such a note before it was due, and while it was in the possession of the plaintiff. The money so collected was not sent to the plaintiff, but when necessary to maintain the required amount of collateral notes, new notes were sent to the plaintiff. The collections were always made for the Sioux City bank. Mr. Skerry testifies that, when he arranged with the plaintiff to borrow money of it, he stated to it that the notes must be at his bank for payment; that some of them would be paid before they were due, and in such cases the Sioux City Bank "would send other paper, take the money from the farmers, and send it," to the plaintiff. This is the only evidence which we find in the record which can be claimed to show that the Sioux City bank was authorized to collect notes which belonged to the plaintiff; but when that statement is considered with other evidence, and with the course of dealing of the parties, it does not show that such collections were authorized. It is true that the plaintiff sent to the Sioux City Bank collateral notes whenever they were requested; but, when that was done, new notes were sent with the request, in exchange for the notes to be returned, or a sufficient amount of collateral notes remained to secure the certificate of deposit, on account of which the notes returned had been held; hence, when collateral notes were returned, they became the property of the Sioux City bank, and were always collected as its property. It is not shown that the plaintiff ever authorized the Sioux City bank to collect a note which had not been returned to it. The evidence shows that the plaintiff never made any objections to what the Sioux City bank did, but, as it is not shown that the plaintiff ever had any knowledge that money was collected by the Sioux City bank on notes which it had not received, the omission to make objections, if such collections were in fact ever made, is of no effect. Not only does the evidence not show that the Sioux City bank was in fact authorized to collect notes not in its possession, but it does not show that the plaintiff is estopped to deny that authority to do so was given.

So far as the evidence submitted shows, the authority, if any, which the Sioux City bank had to receive payment for the notes in suit on the ninth and tenth days of June, 1893, must be found in the notes. Each of those was, by its terms, payable at the Sioux City bank on a date fixed; not "on or before" that date. The plaintiff was not under obligations to leave either note at the place of payment before the date fixed for payment. It may be said with some degree of plausibility, in view of the decision in British & American Mortgage Co v. Tibballs, 63 Iowa 468, 19 N.W. 319, that the agreement made by the defendant with Skerry would have been effectual to pay the note had the Sioux City bank been authorized to receive payment at the time the agreement was made, and if it then had the money with which to make the payment; but the fact that the notes were made payable at the Sioux City bank did not, in the absence of the notes, under any permissible view of the law, authorize the bank to collect anything on either note before it was due; and it is at least doubtful if the evidence shows that the bank had the money with which to make the payment, although the defendant had an ample credit for that purpose. Conceding to the defendant all that can be claimed from the evidence, it only shows...