City Deposit Bank Co. of Columbus, Ohio, v. Green

• Decision Date: 06 April 1905
• Parties: CITY DEPOSIT BANK CO. OF COLUMBUS, OHIO, v. GREEN ET AL.
• Court: Iowa Supreme Court

103 N.W. 96

CITY DEPOSIT BANK CO. OF COLUMBUS, OHIO,

v.GREEN ET AL.

Supreme Court of Iowa.

April 6, 1905.

Appeal from District Court, Calhoun County; F. M. Powers, Judge.

Action on a promissory note for $1,000, with interest. Verdict for plaintiff for $730.30 and interest and costs. From judgment on this verdict, plaintiff appeals. Affirmed.J. M. Toliver and M. R. McCrary, for appellant.

Hutchinson & Jacobs, for appellees.

McCLAIN, J.

The note sued on was in form a joint and several note, with 13 signers. The evidence showed that it was one of three notes executed in pursuance of a contract for the purchase by the signers of the note, who were also signers of the contract, of a stallion from McLaughlin Bros., made payable to them, and by them indorsed to plaintiff before maturity. The contract was in the following form: “Lake City, Iowa, ______, 1901. Name of Stallion Tactitian. McLaughlin Brothers agree to sell the above named stallion for $3000.00 to the undersigned subscribers who wishing to improve their stock agree to pay McLaughlin Brothers $200.00 for each share in said stallion. Capital stock $3000.00. No. Shares 15. Payments to be made cash or one third in two years one-third in three years, one third in four years after July 1, 1901, secured by joint and several notes, with interest.” Two of the defendants made default, and the other defendants interposed the defense that they were liable severally, and not jointly, each for a certain proportion of the amount of the note, and also that their signatures to the note had been procured by fraud. And they further alleged that the plaintiff was not a purchaser for value.

With reference to the question whether plaintiff was a purchaser for value, there was evidence tending to show that when the note was indorsed to plaintiff by McLaughlin Bros. plaintiff gave credit to McLaughlin Bros. for the agreed purchase price of the note; and that the amount thus placed to their credit remained to their account until after the bank had notice that defendants claimed a defense to the note. And the court instructed the jury as follows: “Where a bank discounts paper for a depositor, and gives him credit upon its books for the proceeds of such paper, it is not a bona fide holder for value, so as to be protected against infirmities in the paper, unless, in addition to the mere fact of crediting the depositor with the proceeds of the paper, some other and valuable consideration passes. Such a transaction simply creates the relation of debtor and creditor between the bank and the depositor, and, so long as that relation...