Coen v. American Surety Co. of New York
| Decision Date | 03 July 1941 |
| Docket Number | No. 11881.,11881. |
| Citation | 120 F.2d 393 |
| Parties | COEN v. AMERICAN SURETY CO. OF NEW YORK. |
| Court | U.S. Court of Appeals — Eighth Circuit |
R. Carter Tucker and Charles B. Turney, both of Kansas City, Mo. (Harding, Murphy & Tucker, of Kansas City, Mo., on the brief), for appellant.
Thomas E. Deacy, of Kansas City, Mo. (M. J. Henderson, Ben W. Swofford, and
Henderson, Deacy, Henderson & Swofford, all of Kansas City, Mo., on the brief), for appellee.
Before GARDNER, SANBORN, and THOMAS, Circuit Judges.
This is an appeal from a judgment for the defendant in an action brought by appellant on a contract of guaranty in the form of a bond. The case was tried to a jury, and the judgment was rendered upon a verdict directed by the court at the conclusion of the evidence. Jurisdiction is based upon diversity of citizenship.
In his petition Coen, the plaintiff, alleged that on or about March 28, 1935, he purchased of F. E. Colvin a promissory note for the principal amount of $3,500, dated March 14, 1935, payable in 90 days to Colvin or assigns, and made by Gem City Finance Company, Inc.; and that as a part of the consideration paid for the note, Colvin assigned to him a "guaranty bond", also dated March 14, 1935, executed by the defendant, American Surety Company of New York. By the terms of the bond the defendant guaranteed the payment of the note when due to Colvin or his assigns and agreed that if it was not so paid the defendant would pay it with costs of collection. Timely demand and refusal to pay were alleged, and judgment was demanded.
The defendant filed a verified answer alleging that both the note and the bond were forged instruments, and denying liability. The plaintiff's reply denied the allegations of the answer and asserted that the defendant is estopped to deny the genuineness and binding force of the bond. The facts set out in the reply were denied under oath by the defendant.
Upon the trial the plaintiff introduced evidence tending to show that at the time of the transactions out of which the dispute arises Coen, the plaintiff, occupied an office in the Commerce Building in Kansas City, Missouri. On March 5, 1935, F. E. Colvin and W. B. DeArmand came to the office and solicited Coen to purchase a note secured by tax bills in Henderson County, North Carolina. After consulting his attorney, Coen declined to purchase the note. On a third or fourth visit to the office, Colvin and DeArmand brought with them a Mr. Bowers, whom they introduced as a member of the Gem City Finance Company of North Carolina, the maker of the note which it was proposed to sell to Coen. They presented a form of bond or guaranty, and asked if he would be willing to buy the note thus guarantied. Coen took the form of bond to his attorney who made some changes in it, after which Coen told them that if they could arrange with the American Surety Company to give the bond he would consider the purchase of the note. Bowers said that he was a personal friend of a Mr. Nye, an agent of the defendant; that through such friendship this bond could be obtained; and that he would have no trouble in getting it down where Nye was located.
About ten days later the negotiators returned with the note for $3,500 purporting to be signed on the 14th day of March, 1935, by , attested by "J. B. Bowers, Secretary and Treasurer", and bearing the purported seal of the corporation. They had also the alleged bond dated March 14, 1935, purporting to be signed by It bore the purported seal of the company and was typewritten on paper at the top of which were printed the words "American Surety Company of New York, N. Y."
Coen informed them that before closing the deal he would require a confirmation of the bond from the home office of the company in New York, and they agreed to procure such confirmation for him.
As a further precaution, Coen, on March 15, 1935, dispatched the following telegram from Kansas City:
On the next day he received in reply the following telegram dated March 16, 1935:
Upon receipt of this telegram, Coen went to see the W. R. Evans named in the telegram with whom he was well acquainted. He showed Evans the telegram and told him the story of his negotiations with Colvin and DeArmand. Coen testified that at that time Evans said: "I know Bert Nye's signature and when that bond arrives in Kansas City I can tell you beyond any doubt whatsoever as to whether or not it is a genuine bond." Coen told Evans that they were having the bond confirmed and that when the confirmation arrived he wanted Evans to go with him to the First National Bank and see the letter and tell him whether it was genuine and all right in every respect; that he was depending entirely upon the guaranty of the American Surety Company and that he wanted Evans to tell him whether it was "O.K." or not.
Meanwhile on March 21, 1935, Colvin, DeArmand and Coen placed the note, the bond and a cashier's check for $3,000 belonging to Coen in escrow with the First National Bank with a written escrow agreement providing that upon the receipt of confirmation of the bond satisfactory to Coen the bank should issue a draft to Bowers for $2,500, another to DeArmand for $500, and deliver the note and bond to Coen.
About March 28, 1935, Coen received by air mail the following letter of confirmation, written upon the purported stationery of defendant, a copy of which was received on the same day by the bank:
Coen testified that upon receipt of the letter he took Evans to the bank where a Mr. Riley, an officer of the bank, showed him the bond and the letter of confirmation. Upon examining the documents, Evans said: "I can't say positively that that letter was signed by Mr. Reiss but it was signed by some of the boys in authority and there isn't any doubt but what it comes from our office in New York City and it is O.K." Evans also read the bond carefully and said:
The conversation at the bank, as testified to by Coen, was corroborated by Mr. Riley.
After this conversation was concluded the transaction was completed in accordance with the terms of the escrow agreement; the money was paid over to Bowers and DeArmand, and Coen received the note and bond assigned to him by Colvin.
The genuineness of the telegrams of March 15th and 16th was admitted by the defendant. It was also admitted that on March 16, 1935, W. R. Evans was the manager of defendant's branch office at Kansas City and that on March 14, 1935, L. Bert Nye was manager of its branch office at Washington, D. C.
When plaintiff rested, the court upon motion of counsel for defendant struck the testimony of Coen and Riley as to what Evans said at the bank in reference to the genuineness of the letter of confirmation and of the bond, on the ground that the testimony was hearsay and that the statements of Evans were not binding upon the defendant because not within the scope of his employment.
The defendant introduced overwhelming evidence that the purported letter of confirmation of March 27, 1935, was a forgery; that the alleged bond was a forgery; that the note was a forgery; that the purported maker of the note, Gem City Finance Company, Inc., was in receivership since June, 1931, and that its certificate of incorporation was cancelled by the state of North Carolina on February 1, 1932.
The deposition of L. Bert Nye was read in evidence on behalf of the defendant. Nye testified that the bond was not signed by him and that he never was a "general agent" of the defendant. He made a specimen of his true signature on a paper which was introduced in evidence.
Defendant's motion for a directed verdict made at the close of the testimony was sustained on the ground that the evidence failed to establish that the alleged bond was executed, confirmed, ratified or approved by the defendant.
The order of the court directing a verdict for the defendant is assailed by the plaintiff as erroneous on two grounds:
First, it is contended that the court erred because the evidence is sufficient to sustain a verdict that the bond was actually executed by defendant and is genuine; and
Second, that there was error because the defendant is estopped to deny the validity and proper execution of the bond.
The first contention presents the question whether or not as a matter of law there was a conflict in the evidence on the issue of the actual execution of the bond,...
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