Capitol Hill State Bank v. Rawlins National Bank

• Decision Date: 21 November 1916
• Docket Number: 841
• Citation: 24 Wyo. 423,160 P. 1171
• Parties: CAPITOL HILL STATE BANK v. RAWLINS NATIONAL BANK
• Court: Wyoming Supreme Court

160 P. 1171

24 Wyo. 423

CAPITOL HILL STATE BANK v. RAWLINS NATIONAL BANK

No. 841

Supreme Court of Wyoming

November 21, 1916

ERROR to District Court, Carbon County; HON. V. J. TIDBALL, Judge.

Action by the Capitol Hill State Bank against the Rawlins National Bank of Rawlins to recover upon a certificate of deposit issued to another. Judgment for defendant and plaintiff brings error. The facts are stated in the opinion.

Affirmed.

E. E Sarchet and George E. Brimmer, for plaintiff in error.

The plaintiff proved that the certificate was negotiated to-wit before maturity for its face value less a bank discount and that the certificate was protested for non-payment; the plaintiff made out a prima facie case. (5 Am. & Eng. Ency. of Law 805; Parsons on Bills and Notes, pg. 26; Bolles Modern Law of Banking, and cases there cited.) A certificate of deposit is negotiable. (3 R. C. L. 846; Kirkwood v. The First National Bank, 40 Neb. 484, 42 Am. Rep. 683; Smilie v. Stevens, 39 Vt. 315; Cassidy v Bank, 30 Minn. 87; 3 R. C. L. 847; 5 Am. & Eng. Ency. 805; Miller v. Austin, 54 U.S. 217; Kilgore v. Buckley, 14 Conn. 363.) Possession of the instrument was prima facie evidence that the holder was the owner; the presumption in favor of the holder's title throws the burden of proving defects of title upon the party attacking the title. Plaintiff testified that the instrument had been negotiated to it, thus establishing a prima facie case. (4 Ency. of Law, 318, 320; 3 R. C. L. 980; Joyce Defenses to Commercial Paper, Section 96, Page 118; Gumaer, et al., v. Sowers, 31 Colo. 164; Collins v. Gilbert, 94 U.S. 753; Dawson v. Woodhull, 67 F. 451; Michigan Ins. Co. v. Klatt, 90 N.W. 754; New Haven Mfg. Co. v. New Haven Board Co., 55 A. 604; Section 3217, Comp. Stats. 1910.) Even if the indorsement be not in evidence, production of the instrument at the trial is prima facie evidence of ownership and entitles the holder to recover. (Gumaer, et al., v. Sowers, supra; Jackson v. Love, 82 No. Car. 405; Carnahan v. Lloyd, 4 Kans. App. 605, 46 P. 323; Bank v. Moore, 137 F. 505; Martin v. Martin, 51 N.E. 691; Garner v. Cook, 30 Ind. 331; Ruby v. Culbertson, 35 Ia. 264; Harriman v. Hill, 14 Me. 127; Netterville v. Stevens, 2 How. 642; Ryan v. West, 63 Neb. 894; Greeley State Bank v. Line, 50 Neb. 434; Sanford v. Lichenberger, 62 Neb. 501; Robertson v. Dunn, 87 No. Car. 191; Triplet v. Foster, 115 No. Car. 335; Bell v. Moon, 79 Va. 341; Section 3207 Comp. Stats. 1910.) The presumption is that the plaintiff was the holder in due course. (Section 3174, Comp. Stats. 1910.) An instrument indorsed in blank becomes payable to bearer and the holder in order to make a prima facie case need only produce the instrument at the trial and introduce it in evidence. (3 R. C. L., Sections 179 and 196.) The court erred in refusing to strike portions of the second defense. (Eaton & Gilbert on Commercial Paper, page 385.) Defendant did not plead even a breach of the agreement or knowledge of the endorsee on the part of plaintiff when it took the certificate. (Davy v. Kelly, 66 Wis. 452, 29 N.W. 232; Rice v. Ragland, 1 Hump. 545 (Tenn.), 53 Am. Dec. 737; Smith v. Moberly, 10 Ky. 543, 52 Am. Dec. 533; McIntosh H. Co. v. Rice, 13 C. A. 393; Wells v. The Colo. Mutual Life Assurance Co., 49 Colo. 508.) The court erred in not receiving certain evidence offered by plaintiff, as to the holder of the instrument; the answer admits that the certificate was turned over to Paul Fayn, who indorsed it and delivered it to plaintiff. His authority to indorse must be presumed. (Thompson on Corporations, Vol. 2, Sec. 1428.) It is unnecessary to disprove an affirmative defense in order to establish a prima facie case. (3 R. C. L., Sec. 208, p. 998.)

N. R. Greenfield, for defendant in error.

The only questions that can be considered are such as were presented in the motion for a new trial. Mere possession of a negotiable instrument does not prove title where title is in issue; a confused definition of "holder" is contended for. Defendant was not required to offer evidence, as plaintiff failed to make a prima facie case. Inconsistent defenses are permissible. (Section 4390, Comp. Stats. 1910.) Neither defense can be construed as a waiver of the other, nor as an admission to destroy the other. (31 Cyc. 211; 8 Cyc. 153; 1 Ency. Pl. & Prac. 853; 31 Cyc. 149; Lake Shore & M. R. Co. v. Warren, 3 Wyo. 136, 6. P. 724; Stebbins v. Lardner, 2 S.D. 140, 48 N.W. 847; Mayers v. Merillion, 118 Cal. 352, 50 P. 662; Ray v. Moore, 56 N.E. 937 (Ind.); O'Rourke v. O'Rourke, 144 P. 890 (Colo.) Plaintiff did not prove an indorsement of the certificate. Testimony of plaintiff that the certificate was negotiated was a mere legal conclusion. Section 3189, Comp. Stats. 1910, defining negotiation, contemplates the occurrence of facts showing a transaction amounting to a negotiation; the written indorsement did not prove itself; the admission of the certificate did not prove the indorsement; the indorsement was denied, placing the burden upon plaintiff to establish its title. (Stair v. Richardson, 108 Ind. 429, 9 N.E. 300; Johnson v. English, 74 N.W. 47 (Neb.); Doty v. Braska, 126 N.W. 1108; Lumber Co. v. Surety Co., 80 S.W. 238; Nakagawa v. Okamoto, 130 P. 707, 709 (Cal.); Calloway v. Mining Co., 89 P. 1070 (Cal.); Bovard v. Dickenson, 131 Cal. 162, 63 P. 162; Walker v. Land & T. Co., 59 Kan. 777, 53 P. 476; Payne v. Liebee, 91 N.W. 851 (Neb.); Shonkwiler v. Dunivan, 27 N.E. 991 (Ind.); Tolle v. Alley, 24 S.W. 113 (Ky.); Vickery v. Burton, 6 N.D. 245, 69 N.W. 193.) The indorsement or assignment upon an instrument to which it refers is no part of the original instrument, but is a separate and distinct instrument and its execution must be duly proved, if denied. (14 Ency. of Evi. 736; 17 Cyc. 425-427, note 83; Hugumin v. Hinds, 71 S.W. 749, 97 Mo.App. 346; Terrell v. Morgan, 7 Minn. 368, 82 Am. Dec. 101; Johnson v. English, 53 Neb. 530, 74 N.W. 47; Schroeder v. Neilson, 39 Neb. 335, 57 N.W. 993; Mayer v. McRimmon, 53 S.E. 447, 111 Am. St. Rep. 879; Jones v. Wheeler, 23 Okla. 771, 101 P. 1112; Ayre v. Hixon, 53 Ore. 19, 98 P. 515, Ann. Cas. 1913E, 659; Witt v. Segar Co., 66 Ore. 144, 134 P. 316; Rio Grande Ex. Co. v. Colby, 7 Colo.App. 481, 3 P. 481.) It was incumbent upon plaintiff to show the power and authority of the repudiated agent who made the assignment. (8 Cyc. 218; 14 Ency. Pl. & Pr. 615; 31 Cyc. 1381; 10 Cyc. 929; 7 Cyc. 784; 10 Ency. of Evi. 7; Rio Grande Ex. Co. v. Colby, 7 Colo. 299, 3 P. 481; Hamilton Nat. Bk. v. Nye, 77 N.E. 295.) The discussion of instruments payable to order and indorsed in blank is immaterial for the reason that there was no evidence of indorsement in blank, or otherwise. The possession of unindorsed negotiable paper payable to order is no evidence of title in the possessor. (8 Cyc. 231; Shepard v. Hanson, 9 N.D. 249, 83 N.W. 20; Wade v. Boone, 168 S.W. 360; Witt v. Segar Co., 66 Ore. 144, 134 P. 316; Sloan v. Gilmore, 167 S.W. 1089 (Tex.); Bank v. Bank, 59 So. 348 (Ala.); Shonkwiler v. Dunivan, 1 Ind.App. 505, 27 N.E. 991; Escamilla v. Phngree, 141 P. 103 (Utah.); 4 Am. & Eng. Ency. of Law (2nd Ed.) 319; Daniel Neg. Instr. No. 812; Randolph Com. Paper, 792; Baker v. Warner, et al., 16 S.D. 292, 92 N.W. 393; Turner v. Mitchell, 61 S.W. 468, 22 Ky. L. R. 1784.) Under Sections 3188, 3189 and 3349, Comp. Stats. 1910, a stranger to a negotiable instrument can only become a holder by indorsement of the instrument or upon a paper attached to the instrument.

E. E. Sarchet and George E. Brimmer, in reply.

A careful review of the cases relied on by counsel for defendant in support of his proposition that it was unnecessary to offer evidence to overcome the presumption of title existing in favor of the plaintiff will show them to be clearly distinguishable in principle from the matters involved in this action, especially after a careful analysis of the facts involved in each of said cases. It is true that an indorsement or assignment upon an instrument is no part of the original instrument, but counsel overlooks the settled law of presumptions in favor of the holders of the negotiable paper. It is held in the 14th Ency. of Evi. 736, that the slightest proof of indorsement is sufficient and defendant does not deny the point we contend for. The text is supported by Isbell v. Brinkman, 70 Ind. 118, which supports our position. Mayer v. McRimmon, 53 S.E. 447, 111 Am. St. Rep. 879, is not in point. Jones v. Wheeler, 23 Okla. 771, 101 P. 1112, cited by counsel, we believe fully supports our position. As to the necessity of proof of agent's authority, defendant's counsel also cites authority, but overlooks the statutory presumptions that establish a prima facie case. (Daniel on Neg. Instr., Section 1201; 8 Cyc. 156, 157.) The authority of the agent was not put in issue by the general denial. Defendant's answer admitted that defendant bank delivered the certificate to Paul Fayn. They are estopped to deny the authority of Fayn to negotiate the certificate. (City Bank v. Perkins, 29 N.Y. 566.) Gumaer v. Sowers, 31 Colo. 164, is at variance with the weight of authority, and is not an authority in Wyoming, where a different rule is fixed by statute.

POTTER, CHIEF JUSTICE. BEARD, J., concurs. SCOTT, J., did not sit.

OPINION

POTTER, CHIEF JUSTICE.

This is an action brought by the plaintiff in error, Capitol Hill State Bank, against The Rawlins National Bank of Rawlins, the defendant in error, upon a certificate of deposit issued by the defendant to the Western States Fire Insurance Company. The petition alleges that the Western States Fire Insurance Company, the payee named and intended to be named in said certificate, assigned and delivered the same before maturity to the plaintiff for a valuable...