Black Hawk Nat. Bank v. Monarch Co.
Decision Date | 09 February 1926 |
Docket Number | No. 36916.,36916. |
Citation | 207 N.W. 121,201 Iowa 240 |
Parties | BLACK HAWK NAT. BANK v. MONARCH CO. ET AL. |
Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Black Hawk County; George W. Wood, Judge.
Action at law by plaintiff, as payee of a negotiable promissory note against the Monarch Company, as maker, and against the Webster City Savings Bank on its written guaranty securing the obligation evidenced by the note. The opinion states the issuable facts. Cause was tried to the court; the jury having been waived by the consent of all parties. Verdict for the plaintiff, and from the judgment entered thereon the defendants appeal. Affirmed as to the Webster City Savings Bank, and as to the Monarch Company reversed.Burnstedt & Hemingway, of Webster City, for appellant Monarch Co.
P. H. Paulsen and Mears & Lovejoy, all of Waterloo, for appellee.
DE GRAFF, C. J.
Two defendants are involved in this action: (1) The Webster City Savings Bank on a liability predicated on its written guaranty to the plaintiff, securing an obligation evidenced by a negotiable promissory note payable to plaintiff; and (2) the Monarch Company, a corporation, the alleged maker of said note.
[1] The record discloses that subsequently to the entry of judgment nothing was done by the defendant Webster City Savings Bank except to perfect its appeal to this court. Its appearance is not entered here. No brief points or propositions are made, and no argument has been filed. Under these circumstances this court will not search the record to discover reversible error, and we shall consider the appeal abandoned. The judgment entered by the trial court as to the Webster City Savings Bank is affirmed.
We turn, therefore, to the propositions involved on the appeal of the defendant the Monarch Company. Two issues presented by plaintiff, on whom rests the burden, are determinative of this cause as to this defendant: (1) Estoppel; and (2) due course holder. That the evidence presently recited may be understood and applied in the light of the pleadings, it is necessary to state the issues in some detail.
[2] The plaintiff, as payee and in possession of a negotiable promissory note, upon profert of the instrument was entitled to rest its case as against the defendant Monarch Company. Marshak v. Fontana, 195 Iowa, 511, 190 N. W. 387. It was a temporary rest, however, by reason of the allegations in the answer of this defendant and the reply thereto.
What are the issues? The defendant maker of the note in suit in answer denies that it had any knowledge or information of the execution and delivery of said note to the plaintiff; that nothing of value was received by it for the alleged note; and that, so far as the maker is concerned, there was a total failure of consideration; that no one on behalf of the defendant maker, a corporation, had authority to execute and deliver such promissory note; that said note was not authorized by the board of directors of said defendant corporation; and that, if said note was executed and delivered, it was done without the knowledge on the part of the board of directors, and contrary to and in violation of authority given to any person purporting to act with such authority; that, if said note was executed and delivered to the plaintiff, bearing the name of the defendant, as maker, it was not for the benefit of the defendant, but was merely an accommodation to enable some person or corporation to obtain credit; and that such execution and delivery was therefore ultra vires, illegal, and void.
By way of reply, plaintiff states that the defendant maker by its articles of incorporation had authority to borrow money and issue its promissory notes in the name of the corporation, and that the said note is a negotiable instrument; that by the act of issuing said note the defendant maker stated and represented that the same was issued for a legitimate purpose of its incorporation and as defined by its articles; that the plaintiff took and accepted said note in good faith, for a valuable consideration, in the regular course of business, and without any notice of any infirmity in the instrument or defect in the title of the person negotiating it; and, further, that by reason of the pleaded facts the defendant maker is estopped to claim that for any reason it is not liable on said note and is estopped from making any defense thereto. It is also averred that said defendant accepted the benefits of the transaction and received the money represented by the note in suit, thereby ratifying the transaction, and is now estopped to deny the authority of its officers to execute and deliver said promissory note.
What are the facts? The Monarch Company is a manufacturing corporation, with its principal place of business at Webster City, Iowa. The plaintiff, Black Hawk National Bank, is a national bank, doing a general banking business at Waterloo, Iowa.
It appears that on or about August 9, 1921, the Webster City Savings Bank was hard-pressed financially, and was desirous that the plaintiff should furnish it funds. The matter was discussed between the two banks, and the cashier of the Savings Bank was told by the cashier of the plaintiff National Bank that the latter was in a position to meet the request for a loan, provided that the Savings Bank could furnish commercial paper that was subject to rediscount at the federal reserve bank. The Monarch Company note, as eligible paper, was discussed, and the cashier of the savings bank was told that such a note would be acceptable. The cashier was also told at this time that, as the savings bank was not a member of the federal reserve bank, in order that plaintiff could handle the note, it would be necessary to have the Monarch Company make the Black Hawk National Bank the payee, and that the savings bank should give a separate written guaranty for the payment of the note to cover the rediscount proposition.
The savings bank subsequently sent a Monarch Company note payable directly to plaintiff for $10,000, together with a copy of a resolution purported to be signed by the Monarch Company, which recited that--
“The president and secretary of the Monarch Company be and they are hereby authorized to borrow and execute notes for and in behalf of said corporation, not to exceed the sum of $45,000.”
Upon the receipt of these papers the plaintiff placed $10,000 to the credit of the savings bank, which sum was fraudulently checked out by its (savings bank) cashier. At this time the written guaranty was sent, as requested.
The Monarch Company note was sent by the plaintiff to the federal reserve bank and rediscounted. Upon its maturity the note was forwarded for collection, whereupon the cashier of the savings bank wrote to the plaintiff requesting that the latter accept a renewal of the original note. This was agreeable, and a new note for $10,000 was sent by the savings bank to the plaintiff, and the renewal was credited to the account of the savings bank. Several renewals were, in fact, subsequently made, and the note in suit is the last renewal. This note was signed by the Monarch Company by E. S. Johnson, president. The...
To continue reading
Request your trial