J. B
McPHERSON, District Judge.
This
suit was brought by the Columbia Fiance & Trust Company, a
corporation of the state of Kentucky, to the use of Attilla
Cox and Oscar Fenley, against R. J. Purcell, Lizzie D
Goodwin, as the executrix of Howard T. Goodwin, and William
D. Yarnall, upon an agreement purporting to be signed by
Purcell, Howard Goodwin, and Yarnall in the month of August
1902. A former trial (142 F. 984) resulted in a verdict
directed by the court in favor of the plaintiff against the
three defendants, but the verdict against Yarnall was set
aside, and upon the present trial, which was against him
alone, a verdict in favor of the plaintiff was again
directed, but with the reservation of the question whether
there was any evidence to go to the jury in support of the
plaintiff's claim. No judgment has been entered upon the
verdict against the other two. The important question now is,
whether the plaintiff has any legally enforceable claim
against Yarnall.
The
agreement upon which the plaintiff's case is based was
signed by Yarnall under the following circumstances: About
the middle of August, 1902, Purcell brought to Yarnall's
office in the city of Philadelphia, and presented to him for
indorsement, a promissory note, of which the following is a
copy:
'$17,000.00.
Louisville, Ky., August 19, 1902.
'Four
months after date we promise to pay to the Columbia Finance
and Trust Company of the city of Louisville, or order,
seventeen thousand dollars, in gold coin of the United
States of America, of the present standard of weight and
fineness, without defalcation, for value received, with
interest in like gold coin at the rate of 6 per cent. per
annum from date until paid, said interest payable with
note. This note is negotiable and payable at the office of
the Columbia Finance and Trust Company in Louisville, Ky.
'We
have this day pledged with the Columbia Finance and Trust
Company the following securities-:
'Note, Central Clay Products Co. to order Perfect
Combustion Co., dated June 10, 1902, at four months for
$22,500.00
'$40,000.00
of first mortgage bonds of the Central Clay Product Co.,
dated June 16th, 1902, and due June 16th, 1912.
'200
shares of preferred and 240 shares of common stock of the
Central Clay Product Company.
'This
pledge is made to secure all sums of money for which the
undersigned may be now or may hereafter become liable to
the said trust company, either as principal, surety,
guarantor, or indorser. The said trust company may at any
time demand further collateral satisfactory to it, to be
deposited for the securing of any debt owing to it by the
undersigned, and, if so demanded, the undersigned promises
to comply with said demands. In default of such compliance,
any or all debts, without regard to the time of maturity
specified in the notes evidencing the same, shall become
due and payable at the option of said trust company or the
holder. In default of payment of this or any other
obligation of the undersigned to said trust company, or of
any interest which may be due and payable according to the
terms of any obligation, whether such maturity occurs by
expiration of time, or by reason of declaration of maturity
under the foregoing provision, or nonpayment by the
undersigned of any overdraft of his account with said trust
company, the said trust company may sell and deliver the
whole, or any part of all collateral which may have been
delivered to it, or left in its possession by the
undersigned as collateral, or for safe-keeping, or
otherwise, at any board of trade, or at public or private
sale, at the option of said trust company, without either
advertisement or notice to the undersigned, which are
hereby expressly waived. If said collaterals are sold at
public sale, the said trust company may purchase the whole
or any part thereof, and have clear title thereto. In case
of such public or private sale, the said trust company may
first deduct from the amount realized all expenses of sale
of the collaterals or property, and may then apply the
residue to any one or more of the said liabilities, whether
due according to their terms or not, as either of its
officers shall deem proper; returning the surplus, if any,
to any of the undersigned, all of whom shall remain liable
to the company for any deficit remaining after such sale.
'It
is agreed that any collateral held by the trust company may
be, by mutual consent of the trust company, and any of the
undersigned, exchanged for other collateral, which new
collateral shall be held by the trust company subject to
the terms hereinabove set forth.
'The
said trust company, in dealing with said collateral, is to
be under no liability or obligation whatever to any person
bound as surety or indorser with the principal hereto, and
may at its option, without any responsibility to any person
so bound, deliver to the principal hereof any or all of
said collaterals, with or without substitution of other
collateral.
'The
Perfect Combustion Co. of America, 'E. C. Brice, Prest.
'Benj. W. Wilson, Treas.'
At the
time the note was presented to Yarnall, it bore upon its back
the signatures of Purcell and Goodwin in that order, but
there was no other writing upon it; and it is not only a
conceded fact in the case, but the jury has specifically
found, that Yarnall did not agree that the contract
hereinafter referred to should be written above his
signature. The note was indorsed by Yarnall below
Goodwin's name, and was then taken to Louisville by
Purcell, where it was delivered to the Columbia Finance &
Trust Company after the following further transaction had
taken place: In pursuance of some previous negotiations
between several persons (whether Yarnall took part or not
does not appear, and the details are not very...
