Benton Cnty. Sav. Bank v. Boddicker

• Decision Date: 31 May 1902
• Citation: 117 Iowa 407,90 N.W. 822
• Parties: BENTON COUNTY SAV. BANK v. BODDICKER ET AL.
• Court: Iowa Supreme Court

117 Iowa 407

90 N.W. 822

BENTON COUNTY SAV. BANK

v.BODDICKER ET AL.

Supreme Court of Iowa.

May 31, 1902.

Appeal from district court, Benton county; Geo. W. Burnham, Judge.

Action at law against defendants as sureties upon the bond of G. A. Miller & Sons. Verdict and judgment for defendants, and plaintiff appeals. Affirmed.Tom H. Milner and Caldwell & Walters, for appellant.

Heins & Heins and Gilchrist & Whipple, for appellees.

WEAVER, J.

This case was before us upon a former appeal, and the decision there rendered disposes of some of the questions raised by the pleadings. See 105 Iowa, 548, 75 N. W. 632, 45 L. R. A. 321, 67 Am. St. Rep. 310. The partnership of G. A. Miller & Sons were engaged in business at Norway, and in the year 1891 were not only indebted to the plaintiff bank in the sum of several thousand dollars, but were making more or less frequent applications for further accommodations or extensions of credit. About this time, the bank having requested that a bond be given to secure the existing indebtedness as well as future loans, Miller & Sons, under circumstances hereinafter more fully explained, delivered to it the obligation now in suit, with the signatures of the firm as principal and the defendants, Joseph Boddicker and V. A. Thoman, as sureties thereto subscribed. The bond remained in the possession of the bank some five years before this action was brought thereon, during which time it gave Miller & Sons additional credit. This obligation is in the penal sum of $5,000, and its condition is stated in the following words: “It is the intention and purpose of this instrument or obligation to fully protect and indemnify the said Benton County Savings Bank or its assigns against any and all loss by reason of failure of the said G. A. Miller & Sons to pay their indebtedness now owing or which may be contracted hereafter to the said Benton County Savings Bank. The condition of the above obligation is such that, if the said G. A. Miller & Sons shall pay the full amount of their indebtedness to the said Benton County Savings Bank, then this obligation to be void and of none effect; otherwise to remain in full force and virtue.” Plaintiff alleges that it accepted this security, and upon faith thereof advanced and loaned to Miller & Sons large sums of money, of which more than $5,000 is past due and unpaid, and asks judgment against defendants for the full amount of the penalty of the bond. By way of answer the defendants allege that they each signed the bond upon the express condition that it should be signed by five sureties before being delivered to the bank, and before it should become of any validity or effect against them; that it was delivered to the bank without their authority or consent, and that the bank received it with knowledge and notice of said condition upon which their signatures had been obtained. Numerous other defenses are pleaded, but, as we dispose of the appeal upon the issue already stated, it is unnecessary to set them out in detail.

1. Upon the former hearing this court held, in substance, that if the bond in suit was signed by the defendants, Boddicker and Thoman, and by them given to Miller & Sons, with the understanding and agreement that said instrument should not be delivered to the bank or become of any validity until it had been signed by five sureties, and if, without the consent of said defendants, and in violation of said agreement, Miller delivered it to the bank, then the question whether defendants can rely upon such conditional execution as a defense depends upon whether the bank is or is not a holder of said bond in good faith. In other words, if the bond was in fact executed by these sureties upon the condition here pleaded by them, and the bank received it with knowledge of such conditional delivery, or with knowledge of such facts as would have caused a person of reasonable prudence to investigate and discover that the delivery was not authorized, then it is not a holder in good faith, and cannot recover from the sureties. If, however, the conditional delivery by the sureties is not established by the evidence, or if it is so established, and the bank received the bond without notice of the condition, and without knowledge or information to put it upon inquiry, then the alleged violation of such condition will not avail as a defense to the claim in suit. It was also there decided that, if the conditional delivery be shown, the burden of proof is then cast upon the bank to establish the good faith of its ownership of the bond by a preponderance of the evidence. With this holding, evidently, in view, the district court upon the second trial submitted to the jury certain special findings, which were answered as follows: “Did George E. Miller, at the time of procuring defendants' signatures to the bond in suit, represent to them that there would have to be five certain persons sign the bond before it should be accepted or become binding? Answer. Yes.” “Did Joseph Boddicker sign the bond in suit relying upon the representations of Geo. E. Miller that five sureties would sign the same before it should be delivered, become binding, or money be advanced thereon? Answer. Yes.” “Did E. E. Hartung have knowledge or notice of the representations or conditions upon which Joseph Boddicker signed said bond? Answer. Yes.” “Did the defendant V. A. Thoman sign the bond in suit relying upon the representations of Miller that five sureties should sign the same before it should become binding, or money be advanced thereon? Answer. Yes.” “Did E. E. Hartung, plaintiff's cashier, have knowledge or notice of such facts, at the time he received the bond signed by the defendants, as would have caused a person of reasonable prudence to investigate as to whether its delivery was authorized? Answer. Yes.” To fully understand the bearing of these questions and answers, it should be said that E. E. Hartung therein mentioned was cashier and active agent of the plaintiff bank in procuring the bond from Miller & Sons. Taking, then, the rules above adverted to as the law of this case, it is manifest that under the special findings here quoted the judgment below is right, unless it can be said that such...