Douglas Cnty. State Bank v. Sutherland
| Decision Date | 23 May 1925 |
| Docket Number | No. 4812.,4812. |
| Citation | 52 N.D. 617,204 N.W. 683 |
| Parties | DOUGLAS COUNTY STATE BANK v. SUTHERLAND et al. |
| Court | North Dakota Supreme Court |
The question of the validity (that is, as to whether there is in fact a contract) of a contract is to be determined by the law of the place where it is made. If there was a valid contract under that law, then that contract is valid everywhere. If there was no valid contract under that law, then there is no valid contract anywhere.
A note becomes binding and effective when it is delivered, and it is delivered when, nothing more remaining to be done by either party, it is deposited in the mails, at the direction of the payee, for transmission to him.
Chapter 91, S. L. 1921, was enacted for the protection of the public, and was intended to cover every renewal transaction consummated in the state. Consistent with this legislative purpose, the term “doing business,” as used in the statute, means the completion of any transaction of the sort contemplated therein.
A note is “renewed,” within the meaning of that term as used in chapter 91, S. L. 1921, when a new note evidencing the same obligation is executed and delivered by the maker to the holder of the old note.
Where the illegality of a contract upon which suit is brought does not appear upon the face of the complaint, the illegality must be pleaded in order to be available as a defense. But when, though not pleaded, the facts establishing the illegality are disclosed by the record, the defense becomes available, for no court will consciously lend its aid for the enforcement of an illegal contract.
Where the illegality of a contract upon which suit is brought is not pleaded as a defense, but during the course of the trial evidence tending to establish that the contract is illegal is received without objection, it is error to deny an application to amend the pleadings to conform to the proofs in that respect.
Additional Syllabus by Editorial Staff.
Under Comp. Laws 1913, § 7936, subsec. 41, in absence of proof as to law of another state, it is presumed that common law prevails, and not that law therein is same as law of North Dakota.
Appeal from District Court, Foster County; J. A. Coffey, Judge.
Action by the Douglas County State Bank, a foreign corporation, against W. H. Sutherland and others. From a judgment for plaintiff, and an order denying new trial defendants appeal. Reversed and new trial ordered.
Kelly & Morris, of Carrington, for respondent.
This suit was brought to recover on a promissory note. The defendants,other than Sutherland, are indorsers thereon. The complaint sets out the making, execution and delivery of the note by Sutherland, the indorsement thereof by the other defendants for accommodation of the maker, and the nonpayment of the note.
The answering defendants, for their amended answer, deny generally the allegations in the complaint; and further answering, allege that they conditionally indorsed a note similar to that set out in the complaint, that the condition was not complied with, that no demand was ever made for the payment of the note, that the same was never presented to the defendants, that no notice of dishonor or notice of protest was ever given to the defendants, and that such notices were not waived.
It appears that the defendant Sutherland lived in or near the little village of Bordulac, Foster county, N. D. He conceived the idea that Bordulac could be made a great and prosperous city. He sold this idea to a number of business men and farmers of that vicinity. In order to bring this transformation to pass, he purposed erecting various buildings and establishing various industries in the village. He needed capital to do this, and persuaded the other defendants herein to assist him in financing his scheme. To that end he procured them to sign the following document denominated a letter of credit:
“Bordulac, N. D., April 1, 1919.
Whereas, W. H. Sutherland, a resident of Bordulac, N. D., for the purpose of establishing a larger credit in the amt of $6,500 (six thousand five hundred dollars), same to pay for an electric lighting plant at Bordulac, N. D., to light the city of Bordulac, N. D., and building of a building or buildings to house the same:
The proposed buildings to consist of one 1-story building 32x64 feet with 8-foot post, also containing a concrete floor; one two-story frame building, 30 x60 feet, with a full basement.
The firms' names occupying said buildings to be the Lucky Strike Utilities Company, a corporation incorporated under the state laws of N. D. for the purpose of operating an electric light plant, a garage, and to handle the Kewanee private utilities line of water system, also heating plants; the Lucky Strike Live Stock Company, a partnership firm for the purpose of operating a meat market and general live stock business, also a restaurant and temporary hotel.
We, the undersigned, will not be liable for such establishment of said credit until 10 (ten) men of a business rating of no less a rating than $10,000 (ten thousand dollars).
The money obtained by such credit shall be handled by the Bordulac State Bank, and such buildings as are erected and property acquired by said W. H. Sutherland shall be held by said Bordulac State Bank as collateral to said credit for the term of one year from date of the establishment of such credit.”
Sutherland took the letter of credit to the bank at Bordulac and sought to borrow $6,500 on his note by means of it.
The plaintiff, Douglas County State Bank, is a banking corporation located at Alexandria, Minn. For some years it had been placing some money in Foster county, N. D. Landeene, the president of the Douglas County Bank, was a stockholder in the Bordulac bank. When the Bordulac bank received Sutherland's note and letter of credit it sent them forward to the plaintiff bank with an inquiry as to whether that bank could and would make such a loan. The plaintiff bank wrote back indicating its willingness to make the loan to Sutherland, but took exception to the letter of credit, and said it would require Sutherland's note to be indorsed by the signers thereon. It inclosed a form of note meeting with its requirements, and asked the Bordulac bank to procure the signature and indorsement thereof. The Bordulac bank advised Sutherland as to the requirements of the Alexandria bank and handed him the note. Sutherland executed this note, and procured nine indorsers, including the defendants. This note, known in the record as Exhibit 3, is, with indorsements, as follows:
“Alexandria, Minn., May 3, 1919. No. 25136
One year 191- after date, without grace, for value received I promise to pay to the order of Douglas County State Bank at its office sixty five hundred and no/100 dollars, $6,500.00, with interest thereon at the rate of 8 per cent. per annum from date until paid; interest payable annually.
Extended to
W. H. Sutherland.
P. O.: Bordulac, N. D.”
Indorsements:
“For value received we hereby waive presentment, demand, protest, and notice of protest on the within note.
Angus Ferguson.
E. A. Roach.
W. A. Wentland.
I. T. Harbottle.
Theodore Berglund.
Erick Erickson.
Chas. Zink.
Franz E. Zink.
F. C. Multz.
6,500
Sutherland delivered this note to the Bordulac bank, which in turn sent it forward to the Alexandria bank, and the consideration of $6,500 was transmitted to the Bordulac bank to the credit of Sutherland. All of the funds so placed to his credit were used by Sutherland in carrying out his project, excepting $1,872.61, which was thereafter paid to the plaintiff and indorsed upon the note.
Sutherland's project was not successful. The note was not paid at maturity. The plaintiff sought to make collection, but was unable to do so. In May, 1920, there was an attempt to renew the obligation, but this was not successful. Finally, in the fall of 1921, the plaintiff put the note in the hands of its collectors, and on October 1, 1921, the note on which this action is brought was executed, indorsed, and turned over to the plaintiff. This note, with indorsements, was as follows:
“Alexandria, Minn., October 1, 1921.
November 1, 1922, after date, without grace, for value received, I promise to pay to the order of Douglas County State Bank at its office fifty five hundred forty and 63/100 dollars, $5,540.63, with interest thereon at the rate of 8 per cent. per annum from date until paid; interest payable annually.
Extended to
W. H. Sutherland.
P. O.: Bordulac, N. D.”
Indorsements:
“For value received we hereby guarantee the payment of the within note at maturity, or at any time thereafter, with interest at the rate of 8 per cent. per annum until paid, waiving demand, notice of nonpayment, and protest.
Angus Ferguson.
E. A. Roach.
Erick Erickson.
Frank C. Multz.
M. A. Wentland.
F. E. Zink.
Theodore Berglund.
9/22/22 Pd by rent money, $192.78.”
It was not paid, and this action resulted. The cause was tried to a jury, which returned a verdict in favor of the plaintiff.
After plaintiff had rested, and while the defendants were offering evidence in support of their defenses as pleaded, plaintiff produced the original note, Exhibit 3. Exhibit 3 was not returned to the makers at the time Exhibit 1, the note in suit, was executed and delivered to it. There was no indorsement across the face of Exhibit 3 to in any way indicate that the obligation had been renewed. At the close of the whole case the defendants moved for a dismissal on the ground that the record then disclosed that the note in suit was a renewal of Exhibit 3, and that Exhibit 3 was not indorsed as renewed, as required by the provisions of chapter 91, Laws of 1921. This motion was denied. The defendants thereupon asked for leave to amend their answer to conform to...
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