Commercial Nat. Bank of Council Bluffs v. Citizens' State Bank of Armour

• Decision Date: 22 October 1906
• Citation: 109 N.W. 198,132 Iowa 706
• Parties: COMMERCIAL NAT. BANK OF COUNCIL BLUFFS v. CITIZENS' STATE BANK OF ARMOUR, S. D. ET AL.
• Court: Iowa Supreme Court

132 Iowa 706

109 N.W. 198

COMMERCIAL NAT. BANK OF COUNCIL BLUFFS

v.CITIZENS' STATE BANK OF ARMOUR, S. D. ET AL.

Supreme Court of Iowa.

Oct. 22, 1906.

Appeal from District Court, Woodbury County; John F. Oliver, Judge.

Suit on a certificate of deposit. There was a directed verdict for the plaintiff, and a judgment thereon. The defendants appeal. Reversed and remanded.F. E. Gill, for appellants.

J. J. Stewart and H. C. Sanders, for appellee.

SHERWIN, J.

The defendant bank issued to its codefendant Dwyer a certificate of deposit for $850, on which it afterward paid, and there was indorsed, $50. On the 5th day of April, 1904, Dwyer indorsed the certificate in blank, and delivered it to the Buck Grove Bank of Buck Grove, Iowa, for collection. The Buck Grove Bank was a private banking institution, owned and operated by the owner and operator of the Exchange Bank of Dow City, Iowa. The former bank sent the certificate to the latter on the day that it received it, and from there it was sent to the plaintiff bank, where it was received on the 6th of April. The Exchange Bank was at the time indebted to the plaintiff, and, upon receipt of the certificate, the amount thereof was credited on the books to the Exchange Bank, and the certificate was forwarded for payment by the defendant bank. On the same day that Dwyer left the certificate with the Buck Grove Bank, a receiver was appointed for that bank and for the Exchange Bank; both of them having been insolvent for some time prior thereto. At the close of the evidence the jury was instructed to find for the plaintiff, and thereafter the defendants moved for judgment notwithstanding the verdict.

The controlling question in this case is whether the plaintiff was a bona fide purchaser in the due course of business, and our conclusion thereon makes it unnecessary to consider the other questions argued by the appellants. The certificate was payable on demand and the return thereof, and was a negotiable instrument. But the undisputed evidence shows that the plaintiff did not give the Exchange Bank absolute credit therefor. The credit given was provisional; that is, if the certificate was paid by the issuing bank the credit became absolute thereafter, but if it was not so paid the same was to be charged back to the Exchange Bank. This was nothing more than a conditional credit, and the plaintiff did not thereby become a bona fide purchaser, either under the general law or by virtue of the statute...