Exch. Bank of Marcus v. Schultz
Decision Date | 21 October 1914 |
Docket Number | No. 29589.,29589. |
Citation | 167 Iowa 136,149 N.W. 99 |
Parties | EXCHANGE BANK OF MARCUS ET AL. v. SCHULTZ. |
Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Woodbury County; John F. Oliver, Judge.
Action at law upon five promissory notes, executed by the Glendell Dairy Company, by Henry O. Harstad, president, and defendant J. E. Schultz. Defendant pleaded a mutual mistake in the signing of the notes, in that his signature was appended thereto, not for the purpose of assuming a personal liability, but for and on behalf of the dairy company, and as its secretary; and he asked that the notes be reformed so as to express this intent. The case was transferred to the equity docket and tried to the court, resulting in a judgment dismissing the petition as to two of the notes, and plaintiffs appeal. Reversed and remanded.Sargent, Strong & Struble, of Sioux City, for appellants.
E. J. Stason, of Sioux City, for appellee.
The Exchange Bank is a partnership doing business under that name, and composed of plaintiffs Edmonds & Londergan. The Glendell Dairy Company was a corporation, doing business under that name, at the town of Marcus, and at the time material to our inquiry Henry O. Harstad was its president and defendant Schultz was its secretary.
On the 19th day of December, 1911, the dairy company and defendant Schultz executed and delivered to plaintiff three promissorynotes for the aggregate sum of $1,500, and on July 15, 1912, they executed two more notes, aggregating the sum of $545. Each of these notes was signed: This action is upon these notes, each of which is due and unpaid. Schultz is the sole defendant, and he pleaded that he did not sign the notes in his individual capacity; that while he signed in the manner indicated it was solely as secretary of the company, and to bind the corporation and no one else; that he was not indebted to plaintiff and received no consideration for signing the notes; that if they, as signed, impose any legal liability upon him, it was due to his mistake in signing the same without using the words “by” before his name, and “secretary” afterward; and that the failure to use the words was due to a mutual mistake of both payor and payee. He also alleged:
“That the plaintiffs by their statements and representations and by the statements and representations of the said Henry O. Harstad, the president of the Glendell Dairy Company, he, the defendant, was led to believe that his signature was to be attached to the said notes for the purpose of completing the corporate signature on account of the fact that he was its secretary, and for no other purpose; that he attached his signature for such purpose and for no other, and if the plaintiffs and the said Harstad sought and did secure his signature to the said notes for any other purpose, it was with the intention of procuring his signature by fraud, and with the intention of perpetrating a fraud upon him, and the obligation he incurred, if any, is fraudulent and void, and the defendant is not bound or liable in any manner personally.”
[1][2] The notes as signed by their terms impose a personal obligation on Schultz, and to escape liability he must show by the testimony that they were signed by him as they now appear, through a mutual mistake of the parties, or that the payees obtained his signature thereto through fraud and misrepresentation; the burden being upon defendant to show the mistake or fraud by clear, satisfactory, and convincing testimony. Hunt v. Gray, 76 Iowa, 268, 41 N. W. 14.
[3] Again, the mistake must have been a mutual one, or of the defendant alone coupled with such fraud on the part of the payees in taking advantage of the mistake, as in equity will relieve him of responsibility because the payees knew of the mistake on the part of the maker, and fraudulently took advantage thereof. Marshall v. Westrope, 98 Iowa, 324, 67 N. W. 257.
These propositions are well understood, and the only question in the case is: Has defendant proved the mistake or fraud pleaded by him? The trial court found the defendant liable on the first three notes, amounting to $1,500, but relieved him from liability on the last two, and plaintiffs alone appeal. As the case is triable de novo, the only question for our consideration is the correctness of the finding that these last two notes should be canceled, either because of mistake or fraud.
[4] The issues are of fact, and the case is triable anew here, so we must take the testimony as we find it and render such judgment or decree as the trial court should have rendered.
Defendant testified regarding these two notes substantially as follows:
Harstad testified in substance:
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