Farmers' & Merchants' Bank of Ireton v. Wood Bros. & Co.

• Decision Date: 17 November 1908
• Citation: 118 N.W. 282,143 Iowa 635
• Parties: FARMERS' & MERCHANTS' BANK OF IRETON v. WOOD BROS. & CO.
• Court: Iowa Supreme Court

143 Iowa 635

118 N.W. 282

FARMERS' & MERCHANTS' BANK OF IRETON

v.WOOD BROS. & CO.

Supreme Court of Iowa.

Nov. 17, 1908.

Appeal from District Court, Woodbury County; David Mould, Judge.

Action at law for the recovery of damages. Verdict and judgment for plaintiff, and defendant appeals. The material facts are stated in the opinion. Affirmed.Hubbard & Burgess, for appellant.

Milchrist & Scott, for appellee.

WEAVER, J.

At the time of the transaction in controversy plaintiff was conducting a banking business at Ireton, Iowa, and one J. T. Dittmer was a purchaser and shipper of live stock at the same place, and a frequent borrower at said bank of money with which to carry on said traffic. During the same period Samuel E. Wood, James Wood, and Arthur Nash constituted a partnership under the firm name of Wood Bros., doing business as live stock commission merchants at the Union Stockyards in Chicago, Ill., and the defendant herein, Wood Bros. & Co., was a corporation doing a similar business at Sioux City, Iowa. The stock in this corporation was held by Samuel E. Wood, James Wood, and Thomas Dealtry. Its principal officers were Samuel E. Wood, president, James Wood, vice president, and James Dealtry, secretary; the latter being a resident of Sioux City and the person in actual charge and supervision of the business at that point. Both houses took consignments of live stock for sale, and each at times promoted said business by advancing money or making loans to stock shippers. The loans made by Wood Bros. in the vicinity of Sioux City, or some of them, were accomplished through the agency of Wood Bros. & Co. acting by Dealtry. Naturally the similarity of names under which these parties were doing business, their unity of interest, and the dual capacity in which they were acting tends to involve the record in some obscurity and confusion, and it doubtless created some confusion in the minds of persons dealing with them as to the identity of the party or parties with whom certain items of business were transacted. Dittmer, the stock shipper above named, had frequently consigned shipments of live stock to Wood Bros. in Chicago, and at other times to the Sioux City house. He seems, however, not to have comprehended the fact that the two houses were distinct entities, or independent concerns. In the fall of 1903 Dittmer told S. E. Wood that he might in the near future need some money in preparing cattle for market, and Wood promised that it would be advanced to him, telling him when he wished to obtain it to apply to Dealtry in Sioux City. On December 29, 1903, Dittmer applied to Dealtry for the advancement of needed money. It appears that at this time Wood Bros. & Co. already held Dittmer's note for $623.22, and, as he desired $300 more, Dealtry took from him a written application for such loan upon a blank form directed to Wood Bros., but evidenced the entire indebtedness by two promissory notes, one for $523.22, payable February 15, 1904, and one for $400 payable March 15, 1904, making both payable to Wood Bros. & Co. The money actually advanced upon this occasion appears to have been from the funds of Wood Bros. & Co. On April 30, 1904, Dittmer, desiring to raise $1,000 to complete a shipment of cattle to Chicago, applied to the plaintiff bank for an advancement of the required sum. He was already owing said bank upon previous loans and for overdrafts upon his account to the amount of about $7,500, and it declined to enlarge the credit without security. Dittmer consented to give such security as he was able to furnish on condition that the bank consent to increase his total credit to some extent in order that he might realize money with which to pay certain other outstanding claims. It was finally arranged between them that he should give a new note for $10,500, to be secured by a second mortgage on his farm, and a chattel mortgage on his personal property, and by turning over to the bank a draft for $1,000 to be drawn on Wood Bros. against the shipment of cattle about to be made. The notes and mortgages were thereupon made and executed by Dittmer, and, together with the draft for $1,000 on Wood Bros., were delivered to the plaintiff; it being understood that Dittmer's wife would thereafter sign the mortgages. On the same day the cattle were shipped to Wood Bros., and, by mail departing at or about the same time, Dittmer notified the consignee of the shipment and of the fact that the proceeds were payable to the plaintiff. On the same day Dealtry went to Ireton to collect the notes given by Dittmer to Wood Bros. & Co. as above related. Dittmer informed him of his present inability to pay or secure the debt, and told him that the proceeds of the shipment then being made had been turned over to the bank. Dealtry denies this, but Dittmer so swears, and their relative credibility was a question for the jury. Moreover, the circumstances as a whole quite strongly corroborate the plaintiff's theory in this respect. Thereupon Dealtry returned to Sioux City, and by wire notified Wood Bros. of the shipment by Dittmer, and asked or directed them to withhold the proceeds of the sale for the payment of the two notes above mentioned, and at the same time he forwarded said notes to the Chicago firm by mail. This was the first time the notes had ever been out of the possession of the Sioux City house, though Dealtry claims that the original loan was made for and on account of Wood Bros., and that the notes were indorsed by Wood Bros. & Co. at or about the time they were given. The cattle reached Chicago Monday morning, May 2, 1904, and were sold the same day by Wood Bros. for the sum of $1,068.85. The draft made against this shipment was on the same day presented to said consignees, who refused payment. On the same day Wood Bros. wrote to Dittmer, acknowledging receipt of the shipment and of the letter notifying them of the draft given to the plaintiff, but saying: “We find that our house in Sioux City holds your paper for $923.22 and interest, all past due, and they wire us to hold this money to meet these notes, which we presume will be satisfactory to you. If so, we will send you the canceled notes and the balance of the money.” This outline omits many minor details, all having some bearing on the claims of the respective parties, but we have related sufficient to indicate the general nature and trend of the controversy.

The plaintiff brings its action at law, seting forth its version of the transaction, and asks judgment against Wood Bros. & Co. for the amount of the draft of which money it claims to have been deprived by the wrong of said defendant. Defendant resists this demand, alleging, in substance, that the notes were at all times owned by Wood Bros., and that the only relation of Wood Bros. & Co. to the transaction was that of mere agent or local representative. It also pleads by way of estoppel that, when Dealtry was in Ireton on April 30, 1904, he applied to the plaintiff bank for information as to the financial condition of Dittmer, and especially whether he had drawn any draft against the shipment in question, and was informed by said bank that said Dittmer was in sound financial condition, that the cattle so shipped had been fully paid for and that plaintiff had no interesttherein, and that, in reliance upon this information, Dealtry returned to Sioux City without taking other steps to collect or secure said claim. By way of further estoppel, it is also alleged that on May 3, 1904, Dittmer made a general assignment for the benefit of his creditors, and that plaintiff filed with the assignee its claim for the indebtedness due to it from Mr. Dittmer, including therein the item of $1,000 for the amount of the unpaid draft on Wood Bros. This claim it is alleged was allowed, and a dividend paid thereon. The election to pursue such remedy, the defendant claims, is inconsistent with the right to maintain the present action. Defendant also states that, by plaintiff's conduct in filing said claim with the assignee, Wood Bros. were led to believe that plaintiff had elected to waive its claim to the proceeds of said cattle and the defendants, Wood Bros. & Co., was deprived of its right to present the claim for the amount of said notes against the estate.

The issues thus joined were tried to a jury resulting in a verdict and judgment for plaintiff, and the defendant appeals. The following are the principal propositions on which a reversal of the judgment below is demanded.

1. At the close of the plaintiff's testimony in chief, the appellant moved for a verdict in its favor on the ground, among others, that the loan made through Dealtry to Dittmer was for and on account of Wood Bros. and the plaintiff's right of...