Dille v. White
| Decision Date | 20 November 1906 |
| Citation | 109 N.W. 909,132 Iowa 327 |
| Parties | J. D. DILLE, Appellee, v. J. H. WHITE, Appellant |
| Court | Iowa Supreme Court |
Appeal from Ringgold District Court.-- HON. H. M. TOWNER, Judge.
Affirmed.
Miles & Steele and S.W. Steele, for appellant.
Spence & Smith and Fuller & Fuller, for appellee.
OPINION
THE opinion states the case. Judgment affirmed.
The petition alleges that on or about January 14, 1904, the defendant undertook to make a loan to plaintiff of $ 4,400, the repayment of which was to be secured by mortgage upon certain real estate in Ringgold county; that, in pursuance of such agreement, plaintiff did make and deliver to defendant his promissory note and mortgage for said amount, but that no part of said loan has ever in fact been received by the plaintiff, and the defendant refuses to pay or furnish the same to the plaintiff, and refuses to return the said note or to cancel and discharge the mortgage. Upon these allegations, plaintiff demands judgment against the defendant in the sum of $ 4,400, and interest from the date of the delivery of the note and mortgage, or that said securities be canceled and discharged. Answering this claim, the defendant admits the agreement to make the loan, as alleged in the petition, and alleges that, in pursuance of such agreement, he delivered to plaintiff "cashier's checks" upon the Citizens' Bank of Mt. Ayr, Iowa to the amount of $ 4,400, which plaintiff accepted in lieu of cash, and as full and complete performance and satisfaction of defendant's undertaking in respect to said loan. He further alleges that the checks so delivered were, by the said bank, paid to plaintiff by the issuance to him, at his request, of a draft on the Stockyards Bank of St. Joseph, Mo., for an equal amount, and the checks were thereupon marked "paid and canceled." In reply, the plaintiff admits the delivery to him by defendant of the two cashier's checks mentioned, but denies that they were delivered or accepted as a performance of the defendant's agreement to make the loan, or as a payment of the said sum of $ 4,400, but simply as a convenient method or medium by which the actual cash was to be transferred to plaintiff, from the defendant. He further says: That in fact defendant delivered the checks with the representation and upon the understanding that they were drafts of the kind usually issued by banks for the remittance or transfer of money, and that plaintiff, being unacquainted with the forms of such transactions, did not know the real character of the instruments until later on the same day, upon attempting to make use of them, he found that instead of drafts they were simply checks drawn upon the Citizens' Bank by its own cashier, whereupon he went to said bank, and, at his request, the cashier took up said checks and issued to him in place thereof the draft upon the Stockyards Bank mentioned in the answer; that in fact at the time of the transaction with the defendant, and at all times thereafter, the said Citizens' Bank was insolvent; that it had no money with which to pay said checks, nor any in the Stockyards Bank with which to meet said draft, and closed its doors on the morning of the following day; that no part of the checks or draft has been paid, and they are and at all times have been worthless and uncollectible. The plaintiff also tenders a return of the checks to the defendant. The district court found for the plaintiff for the sum of $ 4,400 and interest, but provided that a surrender of the plaintiff's note and mortgage duly canceled if defendant should elect to do so, should operate as a satisfaction of the judgment. The defendant appeals.
From the foregoing statement it is readily apparent that the one question to be determined in this controversy is whether the delivery of the so-called "cashier's checks" by the appellant, and their receipt by the appellee, are to be treated as constituting a payment to the latter of the money which the former undertook to loan him; and hence upon which party the loss occasioned by the insolvency of the bank must fall. The testimony tends fairly to show the following state of facts: Early in January, 1904, the plaintiff, a farmer living near Mt. Ayr, was negotiating for the purchase of a tract of land, and, for this purpose, he desired to borrow $ 4,400. He went to appellant to procure a loan of the sum, and explained to him the purpose to which the money was to be applied. Appellant expressed his willingness to lend the money upon proper security. On January 14, 1904, the negotiations appear to have culminated, and the parties, having first met at the home of the appellant, started together to go to the office of the notary, who was to prepare the papers. On the way appellant asked appellee whether he would take the amount of the loan "in check or draft." The parties are not quite agreed in their testimony as to the exact language used. Appellee says Dr. White used the words above quoted, while the latter says he used the words "money, check, or draft." They agree, however, that appellee replied in substance that he would take it in two drafts; one for $ 1,000, and the other for $ 3,400. At this stage of the conversation the parties were near the office of the Citizens' Bank, where appellant had the money on deposit, and appellant went in and procured the two instruments which have already been mentioned as cashier's checks. From this place they proceeded to the notary's office where it was discovered that a defect existed in appellee's title to some of the land to be included in the mortgage, and the consummation of the loan was postponed until the following day to give appellee time to procure a deed which was needed to cure the defect. Pending the production of this deed, the note and mortgage which had been executed by the appellee, and the two instruments which appellant had brought from the bank, were, by mutual agreement, left in the notary's possession, with the understanding that, if the appellee succeeded in perfecting his title to the mortgaged property, the deal was to be consummated and the papers delivered. Appellee returned to town with the required deed on January 15, 1904, and the notary delivered to him the cashier's checks. Appellee took them at once to the agent through whom he was making the land purchase, and this agent, discovering the true character of the checks, advised that they be exchanged for drafts. Thereupon appellee went to the bank, returned the checks, and took in place thereof the draft on the Stockyards Bank of St. Joseph, Mo. By this time it was too late in the afternoon for appellee to close the purchase of the land. After closing its doors on that day, January 15th, the bank never reopened for business. Its insolvency was publicly announced on the following morning.
It should be noticed in this connection that appellant, as a witness, testifies that when he spoke to the appellee concerning a check as a medium for delivery of the money loaned he meant his own personal check upon the bank, and that by draft he meant the ordinary draft or bill of exchange drawn by a bank upon its correspondent, and, even in the absence of this admission, it would probably be presumed that such was the intention of the parties. He further admits that when he went to the bank he asked the cashier for "drafts" and took the instruments given him without special examination, supposing them to be drafts. In the conversation at the notary's office he told the appellee he had the drafts ready to be delivered when the security was perfected. Indeed, he continued under the impression and belief that the instruments were in fact drafts until after the failure of the bank had occasioned investigation. On the other hand the appellant received them, supposing them to be drafts, and was enlightened as to their real purport only when he sought to make a payment upon his land purchase. The cashier of the bank who issued the checks says that Dr. White asked for drafts. He does not claim that he explained the difference in the character of the instruments, but says appellant took them without objection. It is quite probable that the cashier, knowing that his bank had no money in its correspondent's hands against which to draw the drafts, issued the bank's check upon itself, without explanation, in the hope that the hour of confessed failure might thereby be postponed. The ease with which the deception was practiced is still further explained by the fact that the blank form on which the checks were drawn is identical with the one on which the bank drew its drafts. The check being converted into a draft by impressing with a rubber stamp on the lower left-hand corner the words "To St. Joseph Stockyards Bank, St. Joseph, Missouri." That men not familiar with banking business and methods should have been misled, as both appellant and appellee appear to have been, into the belief that they were getting bank drafts, and that these drafts would be effectual to transfer to the appellee the amount of money agreed to be loaned, is not at all strange, and it is not necessary to the disposition of this appeal that any question be raised or entertained as to the good faith of either of them.
If this were a case in which, as urged by appellant's counsel the appellee could fairly be said to have negotiated for the purchase from appellant of checks or drafts which had been drawn by the Citizens' Bank, it could then be conceded that, under the ordinary rule, the delivery of the instruments which were the subject of the negotiation would have served to pass the title, and, in the absence of fraud or misrepresentation by the appellant, the risk of the bank's failure...
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