Citizens' Bank & Trust Co. v. McGaa
| Decision Date | 31 December 1924 |
| Docket Number | 5383. |
| Parties | CITIZENS' BANK & TRUST CO. v. McGAA et al. |
| Court | South Dakota Supreme Court |
Appeal from Circuit Court, Pennington County; Walter G. Miser Judge.
Action by the Citizens' Bank & Trust Company against W. D. McGaa and another. From judgment in favor of defendant the Dacotah Packing Company, plaintiff appeals. Affirmed.
Buell Denu & Philip, of Rapid City, for appellant.
Schrader & Lewis, of Rapid City, for respondents.
This action was brought to recover on a promissory note made by the defendant W. D. McGaa and payable to plaintiff. The Dacotah Packing Company is joined as a defendant and claimed by plaintiff to be liable on said note because of an alleged indorsement and guaranty by defendant. The note involved was given as a renewal note in the place of a past-due note for an equal amount. At the time of the giving of the note set up in plaintiff's complaint, McGaa gave to plaintiff a second note in payment of the interest due on the said overdue note, and which note bears an indorsement and guaranty similar to that on the one set out in the complaint.
The original note, executed by McGaa, was payable to defendant packing company, and was given to a sales agent of said packing company in payment for capital stock therein. Said sales agent by a general indorsement sold and transferred said note to plaintiff. Said agent was authorized by a written authority to indorse the notes of the company, but "without recourse" only. When the note was transferred to plaintiff it issued and delivered to said agent a certificate of deposit payable to defendant, equal in amount to the face of the note, but payable at a date later than the date of the maturity of the note. When the note became due McGaa was unable to pay the same, of which fact plaintiff notified the packing company, and demanded that it either pay the same or return the certificate of deposit that had been issued in payment therefor. Some negotiations were had between the officers of the plaintiff and one Rinehart who was vice president and treasurer of the defendant packing company, and H. F. Fellows, its secretary. As a result of such negotiations McGaa was permitted to give a new note in lieu of the old one, and the interest note above mentioned each of which notes was indorsed as follows:
When the said interest note became due plaintiff deducted a sufficient amount to pay the same from money the packing company had on deposit in plaintiff's bank, and sent the said note to the packing company.
In a counterclaim set up in its answer defendant demanded judgment for the amount of money so taken by plaintiff, and also in a separate counterclaim demanded judgment for another and different amount that had been deducted from money belonging to said defendant on deposit in plaintiff's bank in payment of a certain other note payable to the packing company that had been indorsed by a general indorsement by one of defendant's sales agents, but who had authority to indorse notes "without recourse" only.
The case was tried to the court without a jury. Findings of fact, conclusions of law, and judgment were in favor of defendant packing company, and plaintiff appeals.
Numerous errors are assigned by appellant, but a determination of the controversy depends upon the binding effect on the packing company of the indorsements of the sales agents and the secretary of the packing company as above set out. At the time of the execution of the note sued on in this action, and at the time of the indorsement and guaranty thereof by Fellows as secretary of the packing company, said company still had in its possession the certificate of deposit that had been issued in payment for the original note. Plaintiff notified the packing company that it would have to either pay the McGaa note or return the said certificate of deposit, and that unless it did one or the other of these two acts plaintiff would charge the amount due on the note against the packing company's deposit in plaintiff's bank. The result was the giving of the new note by McGaa with the indorsement and guaranty by Fellows as secretary of the packing company. Later on the packing company presented the said certificate of deposit for payment, and it was paid in full by plaintiff.
It is the contention of appellant that Fellows as secretary of the packing company had authority as such secretary to guarantee the McGaa note, and that if he did not have such authority then that the payment of the certificate of deposit that had been given for the note was such a consideration for the guaranty of the note that the...
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