Central Bank of Bingham v. Perkins

• Decision Date: 04 December 1926
• Parties: CENTRAL BANK OF BINGHAM, a Corporation, Respondent, v. JESSE A. PERKINS, Appellant
• Court: Idaho Supreme Court

251 P. 627

43 Idaho 310

CENTRAL BANK OF BINGHAM, a Corporation, Respondent, v. JESSE A. PERKINS, Appellant

Supreme Court of Idaho

December 4, 1926

BILLS AND NOTES-ACCOMMODATION MAKER-CONSIDERATION-PAROL EVIDENCE INADMISSIBLE-FOREIGN BANK HELD NOT "DOING BUSINESS WITHIN STATE."

1. Under C. S., sec. 5896, failure of accommodation maker to receive consideration is no defense to action on note.

2. That accommodation note was made payable to and delivered to bank does not make bank accommodated party.

3. Parol evidence that accommodation maker had been assured by accommodated parties, one of whom was cashier of bank to which note was payable, that he would not be required to pay note, was inadmissible as tending to vary terms of written contract.

4. Acts of bank of another state in execution and delivery of accommodation note to it did not constitute "doing business within state," within meaning of constitution and statute requiring compliance with laws of state.

APPEAL from the District Court of the Fifth Judicial District, for Bear Lake County. Hon. O. R. Baum, Judge.

Action on a promissory note. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs to respondent.

Geraint Huhpherys, for Appellant.

Plaintiff cannot maintain an action on this note for the reason that it nor the Citizens' State Bank did not comply with the laws of the state of Idaho relating to foreign corporations. (Const., art. 11, sec. 10; C. S., secs. 4772, 4775; Katz v. Herrick, 12 Idaho 1, 86 P. 873; Valley Lumber &amp Mfg. Co. v. Driesell, 13 Idaho 662, 13 Ann. Cas. 63, 93 P. 765, 15 L. R. A., N. S., 299; Valley Lumber & Mfg. Co v. Nickerson, 13 Idaho 682, 93 P. 24; 14a C. J. 1274 and note b, 1275; 12 R. C. L., p. 81, sec. 55.)

Want of consideration is a defense to an action on a written instrument, and is available to the defendant. (C. S., sec. 5895; 2 Williston on Contracts, sec. 644; Burk v. Dulaney, 153 U.S. 228, 14 S.Ct. 816, 38 L.Ed. 698; Brannon, Negotiable Law, p. 112; Central Bank of Bingham v. Stephens, 58 Utah 358, 199 P. 1018.)

The delivery of a note on condition that the maker should not be held liable thereon is a good defense. (Central Bank of Bingham v. Stephens, supra.)

The cashier of a bank, in full control, can accept a note on condition that the maker thereof shall not be held liable. (Central Bank of Bingham v. Stephens, supra.)

Bagley, Judd & Ray and Arthur Hart, for Respondent.

There is nothing in the transaction before the court which in any way prevents Central Bank of Bingham from suing on the note here sued upon, because Citizens' State Bank did not qualify to do business in Idaho pursuant to the laws thereof. (C. S., secs. 4772-4775; Bonham National Bank v. Grimes Pass Placer Min. Co., 18 Idaho 629, 111 P. 1078; Diamond Bank v. Van Meter, 19 Idaho 225, 113 P. 97; Largilliere Co. v. McConkie, 36 Idaho 229, 210 P. 207.)

If it be admitted that defendant himself did not receive consideration, he is still liable as an accommodation maker. (C. S., sec. 5896; German-American State Bank v. Watson, 99 Kan. 686, 163 P. 637; Skagit State Bank v. Moody, 86 Wash. 286, 150 P. 425, L. R. A. 1916A, 1217; McGhee Investment Co. v. Kirsher, 71 Colo. 137, 204 P. 891; Mulany v. Murray, 68 Mont. 245, 216 P. 1105; First Nat. Bank v. Malmquist, 158 Minn. 140, 197 N.W. 271; Seymour & Co. v. Castell, 160 La. 371, 107 So. 143; Security Nat. Bank v. West, 120 Kan. 434, 243 P. 1014; First Bank of Cordova v. Tjosevig, 138 Wash. 231, 244 P. 736.)

There was no delivery which as to plaintiff could be termed a conditional delivery of said note under the authority of Central Bank of Bingham v. Stephens, 58 Utah 358, 199 P. 1018.

WM. E. LEE, C. J. Givens, Taylor and T. Bailey Lee, JJ., concur. BUDGE, J., Dissenting.

OPINION

WM. E. LEE, C. J.

Judgment was obtained in an action on a promissory note given by appellant to Citizens' State Bank of Bingham, Utah. The grounds on which it is sought to reverse the judgment are: That certain findings are not sustained by the evidence; that appellant received no consideration for the note; that the note was delivered on condition that the maker would not be held for its payment; and that since the note was signed in Idaho and both the payee bank and respondent are Utah corporations, not having complied with the laws of this state relating to the doing of business by foreign corporations in this state, the action cannot be maintained.

Kelly was cashier of the Citizens' bank and a brother-in-law of appellant. Webb was president of a company developing a coal mine; Thurman was its attorney; Kelly was its treasurer, actively interested in the promotion; appellant was a stockholder. Webb and Thurman went to Montpelier, Bear Lake county, in this state, told appellant that the bank had already loaned the officers of the coal company all the money the bank examiner would permit, and that Kelly had sent them to ask him to sign a note to the Citizens' bank for $ 2,500 so the bank could lend that amount to be used in the development of the coal mine. Appellant refused unless Kelly "was really desirous of me signing it." Being assured by telephone that such was Kelly's desire, he signed a note due in 90 days, which he received by mail and sent by mail to the Citizens' bank. On the failure of the Citizens' bank, the note went into the hands of the receiver and was, by order of the Utah court, assigned to respondent. The evidence shows that the note was signed to enable Kelly and the other promoters of the coal mine to get $ 2,500 from the Citizens' bank. It was the understanding also that the promoters would pay it; that the note would never be negotiated and that appellant would not be required to pay it. The note was not paid, and the renewal note was given to take up the first one. The promoters got the money on the note, and failed to pay it back; the Citizens' bank failed, and appellant was called on to pay the note. The findings are sustained by the evidence.

Conceding that respondent stands in the shoes of the Citizens' bank and that any defense appellant could have made to an action by the Citizens' bank was available against respondent, the fact that the maker received no consideration for the note will not excuse him from having to pay it. He was an accommodation maker; he signed the note without any consideration moving to himself with the intention of lending his credit to the promoters of the mine. The note was given to the bank for the accommodation of the promoters and they received the consideration. That the accommodation maker received no consideration is not a defense to the payment of the note (C. S., sec. 5896). (Farmers Nat. Bank of Pilger v. Ohman, 112 Neb. 491, 199 N.W. 802; Seymour v. Castell, 160 La. 371, 107 So. 143; Commonwealth Nat. Bank v. Goldstein (Tex. Civ. App.), 261 S.W. 538; State Bank v. Forsyth, 41 Mont. 249, 108 P. 914; Skagit State Bank v. Moody, 86 Wash. 286, 150 P. 425, L. R. A. 1916A, 1217; German-American State Bank v. Watson, 99 Kan. 686, 163 P. 637; Warren Nat. Bank v. Suerken, 45 Cal.App. 736, 188 P. 613; Mulany v. Murray, 68 Mont. 245, 216 P. 1105; Security Nat. Bank v. West, 120 Kan. 434, 243 P. 1014. See, also, Brannan's Negotiable Instrument Law, 4th ed., sec. 29.)

The fact that the note was made payable to and delivered to the bank does not make the bank the accommodated party. (Neal v. Wilson, 213 Mass. 336, 100 N.E. 544; Nalitzky v. Williams, 237 F. 802; Federal Reserve Bank v. Crothers, 289 F. 777; Luverne State Bank v. Dailey, 51 N.D. 688, 200 N.W. 793; Farmers' Nat. Bank v. Ohman, 112 Neb. 491, 199 N.W. 802; Skagit State Bank v. Moody, supra; German American State Bank v. Watson, 99 Kan. 686, 163 P. 637; Security Nat. Bank v. West, 120 Kan. 434, 243 P. 1014; see, also, Brannan's Negotiable Instrument Law, p. 280 et seq.)

The trial court permitted the introduction of evidence that the note was delivered on the agreement that its maker would not be required to pay it, but that payment would be required from those who received the consideration. While the authorities seem to be in substantial accord that, as against persons not holders in due course, evidence is admissible to prove a contemporaneous oral agreement that the instrument was to take effect only on the performance of a condition, it by no means follows that appellant was entitled to prove an agreement that he would not be required to pay the note to the bank. It was distinctly understood between appellant and the promoters, including the cashier, that the note was to be used to secure funds of the bank for the promoters, and the note was delivered for that express purpose. The position of appellant is that having signed the note with the understanding that it would be used by his brother-in-law cashier and the other promoters for the purpose of borrowing money from the bank, since the bank loaned the money on his note and the promoters did not pay it back, as they had promised, he ought now to defeat payment of the note because the cashier, one of the parties accommodated, told him he would not be required to pay it. The note was not delivered with the understanding that it would become operative only on the performance of a condition. There was no condition attached to its delivery; and parol evidence that the accommodated parties assured appellant that he would never be required to pay the principal or interest of the note should not have been admitted. It tended to vary the terms of the written contract. (Burke v. Dulaney, 153 U.S. 228 14 S.Ct. 816, 38 L.Ed. 698; Bank of California v. Starrett, 110 Wash. 231, 9 A. L. R. 177, 188 P. 410; Wheelock v. Hondius, 74 Colo. 400, 222 P. 404; First Nat. Bank v. Wolf, 208 Ill.App. 283; Stevens v. Inch, 98 Kan. 306, 158 P. 43; Stratton v....