Citizens' Sav. Bank v. Houtchens

• Decision Date: 24 July 1911
• Citation: 64 Wash. 275,116 P. 866
• Court: Washington Supreme Court
• Parties: CITIZENS' SAVINGS BANK v. HOUTCHENS et al.

116 P. 866

64 Wash. 275

CITIZENS' SAVINGS BANK v. HOUTCHENS et al.

Supreme Court of Washington

July 24, 1911

Department 2. Appeal from Superior Court, Stevens County; D. H. Carey Judge.

Action by the Citizens' Savings Bank against C. T. Houtchens and others. From a judgment for defendants, plaintiff appeals. Affirmed.

Anderson & Stull, for appellant.

Jesseph & Grinstead, for respondents.

CROW J.

Action by the Citizens' Savings Bank, a corporation, of Columbus, Ohio, against C. T. Houtchens, J. E. Seale, S.W Champ, S. H. Bryan, M. W. Teeple, W. L. Pike, H. M. Jaggers O. P. M. Simcoke, James Grawford, and A. G. Smith, on a promissory note claimed to have been purchased from McLaughlin Bros., payees, for value, before maturity and in due course. The defendants answered with denials, and pleaded three affirmative defenses, by which, in substance, they contended the note was without consideration, had been fraudulently obtained, had not been delivered to the payees, had not been signed by the defendant Houtchens, or by any other person authorized to sign for him, and that the plaintiff had obtained the note with notice and knowledge of infirmity in the instrument and defect in the title of the payees who negotiated it. A verdict was returned for defendants. The plaintiff has appealed from the final judgment entered thereon.

Respondents are citizens of Stevens county, in this state. The note is for $1,400, dated September 9, 1905, due September 1, 1907, bears interest from date, and is payable to the order of McLaughlin Bros., at Colville, Wash. Respondents' evidence shows' that one Olmstead, representing McLaughlin Bros., whose headquarters were in Columbus, Ohio, and Kansas City, Mo., made a proposition to sell to respondents a stallion then in his possession, which he represented and warranted to be a first-class, imported Percheron horse, sound in every respect; that his representations were false and fraudulent; that they were relied upon by respondents; that in compliance with Olmstead's insistence and demand a corporation to own the horse was to be organized by respondents, under Olmstead's direction and supervision; that he fraudulently procured possession of the note without its being delivered; that he immediately left Colville, taking the note with him; that he has not been there since; that the corporation was never formed; that the horse, not being as warranted, was tendered to McLaughlin Bros. and a return of the notes demanded; that later two other notes, each of like amount, fraudulently procured from respondents, were returned to them; that the horse was returned to McLaughlin Bros. through another agent; and that the note now in suit was never returned to the makers. The facts showing the alleged fraud of Olmstead, the nondelivery of the note, and the want of consideration are more fully stated in the pleadings and briefs, but need not be here recited in detail. Sufficient evidence was introduced by respondents to sustain their affirmative defenses.

Appellant made no attempt whatever to controvert to rebut any of this evidence, but in its brief says: 'The respondents, though denying the allegations of the complaint, have utterly failed to substantiate such denial by evidence, but confine their proof to the support of their affirmative defenses. As to these defenses, aside from the allegations contained therein imputing knowledge of defect in title to the appellant, they appear to have a preponderance of evidence--that is to say, evidence as to the alleged fraud between the original parties to the note in suit; but they fail to support the further allegations contained in said affirmative defenses, to wit, the allegations that appellant had knowledge of the facts and circumstances constituting said alleged fraud.'

The vital question on this appeal is whether, under sections 3443 and 3450, Rem. & Bal. Code, appellant has been shown to be a bona fide holder for value, before maturity and in due course, the title of the original payees having been defective, under section 3446, Rem. & Bal. Code.

It is however, first contended that the trial court erred in denying appellant's motion to strike the three affirmative defenses. Appellant alleged its incorporation under the laws of Ohio; that McLaughlin Bros. had indorsed the note in blank, and that appellant is now the owner and holder thereof. These allegations were denied. In pleading their affirmative defenses, respondents, however, alleged: '* * * And the said plaintiff corporation, its officers, agents, and employés,...