Farmers' & Stockgrowers' Bank v. Pahvant Valley Land Co.

• Decision Date: 08 May 1917
• Docket Number: 2978
• Citation: 50 Utah 35,165 P. 462
• Parties: FARMERS' & STOCKGROWERS' BANK v. PAHVANT VALLEY LAND CO. et al
• Court: Utah Supreme Court

165 P. 462

50 Utah 35

FARMERS' & STOCKGROWERS' BANK v. PAHVANT VALLEY LAND CO. et al

No. 2978

Supreme Court of Utah

May 8, 1917

Appeal from District Court, Third District; Hon. F. C. Loofbourow Judge.

Action by the Farmers' & Stockgrowers' Bank against the Pahvant Valley Land Company and others and Charles A. Welch and others.

From a judgment for plaintiff upon the pleadings, defendants Charles A. Welch and others appeal.

AFFIRMED.

Evans Evans & Folland, Walton & Walton and P. H. Neeley for appellants.

APPELLANTS' POINTS

"It is sufficient to prevent a judgment on the pleadings if the answer presented a single material issue. (25 Cyc. 769; 11 Ency. Pl. & Pr. 1032-1033; Widmer v. Martin, 87 Cal 88, 25 P. 264; Martin v. Porter, 84 Cal. 476, 24 P. 109; Botto v. Vandament, 67 Cal. 332, 7 P. 763; Willis v. Holmes, 28 Ore. 265, 42 P. 989)." Town of Mapleton v. Kelly, 39 Utah 252, 254.

Section 2986, C. L. Utah 1907, provides that: "In the construction of a pleading for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties."

In the case of Hancock v. Luke, 46 Utah 26, 148, P. 453, 455, this statute was construed to mean that:

"Where it is clear, * * , that a denial of particular allegations of the complaint was intended, the mere form of such denial is not always conclusive."

The court also says, (opinion page 455):

"Motions for judgment on the pleadings are not favored by the courts, and upon such a motion the pleadings will be construed with great liberality in favor of the party whose pleadings are assailed. Bowles v. Doble, 11 Ore. 480; Currie v. So. P. Co., 23 Ore. 400, 31 P. 963; James River, etc., Bank v. Purchase, 9 N.D. 280, 83 N.W. 7; Giles, etc., Co. v. Recamier Mfg. Co., 15 N.Y. St. Rep. 354."

Our Statute (C. L. Utah 1907, Sec. 1616, sub. 1) provides that where a person, not otherwise a party to an instrument payable to the order of a third person, places thereon his signature in blank before delivery, he is liable as indorser to the payee and to all subsequent parties. That the contract of indorsement is very different from that of guaranty will scarcely be controverted. On that point the authorities are in perfect accord. Belden v. Hann, (Iowa) 15 N.W. 591; Harnett v. Holdredge, et al., (Neb.) 97 N.W. 443; Farmer v. Rand, 14 Me. 225. The placing of the words, "Notice and protest waived" over the name of an indorser in blank of a promissory note, converts his contingent liability into an absolute one. (Davis v. Eppler (Kan.) 16 P. 793; Schwartz et al. v. Wilmer (Md.) 44 A. 1059.)

Stewart, Bowman, Morris & Callister for respondents.

RESPONDENTS' POINTS

The note on its face is payable at the Farmers' & Stockgrowers' Bank and the Farmers' & Stockgrowers' Bank is the payee. Section 1639 of the present negotiable instrument act under such circumstances makes the note itself equivalent to a check or an order on the bank to pay. No further demand or presentment is required. Even without the aid of our negotiable instrument act no demand and presentment is required where the note is made payable at the bank and is owned by the bank. (Daniels on Negotiable Instruments, 6th Ed., Vol. 1, Sec. 637, also Sec. 657.) Presentment and demand are not necessary where the notes are owned by the bank and by their terms are payable there. (Havlin v. Continental Nat. Bank, 161 S.W. 741, 743; Bank of U.S. v. Smith, 11 Wheat [U.S.] 171; Berkshire Bank v. Jones, 6 Mass. 523; Central Bank v. Stoddard, 76 A. 472.) Of course the fact as to whether the defendants received notice of non-payment was a fact within their own knowledge and could not be denied on information and belief. If they did not receive notice, they knew this fact and knew it at all times. (Gridler v. Farmers and Drovers Bank, 75 Ky. 333; Davis v. Miller, 55 N.W. 89; Glidden v. Chamberlain, 46 N.E. 103.) Notice of dishonor to the indorsers was not in any sense material. For the indorsers admit they paid five installments upon the note six months after it became due, at a time when they are presumed to have known it had not been paid. Their conduct in so doing was an implied waiver of laches and failure to give notice. The waiver is as effective as though they had written "Notice and protest waived." (Daniel on Negotiable Instruments, 6th Ed., Vol. 2, Secs. 1165 and 1166; Knapp v. Runals, 37 Wis. 135; Whitaker v. Morrison, 1 Fla. 29; Sigourney v. Wetherell, 6 Met. 555; Sherer v. Easton Bank, 33 Pa. 134; Amor v. Stoeckle et al., 78 Me. 1046; 7 Cyc. 1133; 3 L.R.A. [N.S.] 1079, note.) There is no allegation that these payments were made at a time when the defendants were ignorant that they had not been served with notice of dishonor. Indeed, they could not well say so. It was a matter of personal knowledge. They knew and must have shown six months after the note became due whether or not they had been notified. And were the rule otherwise, the unqualified admission that they made payments implies that they made these payments with knowledge of the fact. If they were ignorant at the time they made the payments that proper steps had been taken to hold them they should have so pleaded, for the admission casts upon them the burden of showing their ignorance. (Loose v. Loose, 36 Pa. 538; Oxnard v. Carnum, 111 Pa. 193.)

CORFMAN, J. FRICK, C. J., and McCARTY, J., concur.

OPINION

CORFMAN, J.

This was an action brought in the district court of Salt Lake County by the plaintiff on a promissory note against the defendant Pahvant Valley Land Company, a corporation, as maker, and the nineteen other defendants, as guarantors thereof. The complaint is in the usual form, alleging: Execution of the note on the part of the defendant Pahvant Valley Land Company, as maker, and the indorsement thereof by the other defendants guaranteeing payment and waiving notice and protest; that demand was made at maturity upon Pahvant Valley Land Company and the other defendants; that the note has not been paid, except the interest in part; that the plaintiff is the owner and holder of the note; that the note provides for reasonable attorney's fees; and that $ 1,000 is a reasonable fee to be paid in the suit. Judgment is prayed for $ 10,000, the principal sum, $ 761.89, interest, $ 1,000, attorney's fees, and costs. A copy of the note with indorsements is attached to and made a part of the complaint.

The answer of the defendants here appealing was as follows:

"(1) That prior to the execution and delivery of the said note plaintiff held three certain instruments purporting to be promissory notes executed by the defendant Pahvant Valley Land Company, representing an alleged indebtedness in a sum less than $ 10,000, and that the plaintiff, for the purpose of enhancing the value to it of the said alleged indebtedness, agreed to advance to the said defendant Pahvant Valley Land Company an additional sum, which, together with the original sum, should amount to $ 10,000, upon condition that the $ 10,000 note should receive the indorsements of certain persons among whom were these defendants; that in pursuance thereof, and without any consideration whatever moving to these defendants, they and each of them were induced to, and did, write their names on the back of said note before its delivery to the plaintiff, and that the plaintiff, through its officers and agents, by representations and persuasions induced these defendants to become indorsers on said notes; that at the time of the indorsement of said note by these defendants, as aforesaid, it was represented to each of them that the signatures of certain parties other than those who actually did indorse, to the total number of approximately thirty, would be obtained in the same manner as were the signatures of these defendants, and on condition that all such other indorsements should be obtained, and with that distinct understanding, and relying upon said promise and representation, each of these defendants did write his name upon said note as aforesaid, but the said promissory note was not indorsed by the number, nor by the persons whose signatures were to have been thus obtained before these defendants should in any event become liable as indorsers upon said note.

"(2) That these defendants, if bound at all upon said note, were liable as accommodation indorsers, and not otherwise, but that plaintiff did not give notice of nonpayment by the defendant Pahvant Valley Land Company to any of these defendants, and therefore none of these defendants are indebted in any sum whatever to the plaintiff.

"(3) These defendants further allege that an examination by them of the original note upon which they wrote their names in blank as aforesaid has, since they so wrote their names thereon, been altered by the placing thereon of the following words by means of a stamp; 'Notice and protest waived, and for value received payment of the within note quaranteed by'--and that said stamp was placed upon said note fraudulently subsequent to their signing as aforesaid, and without the knowledge or consent of these defendants."

A reply was filed by the plaintiff to the answer.

Before proceeding to a trial, on the day set for hearing in the district court a motion was made by the plaintiff for a judgment on the pleadings, which motion was sustained by the court with the proviso that defendants have until the following day to propose amendments to their answer. Defendants declined to amend their answer, whereupon the court rendered judgment on the pleadings in favor of the plaintiff and against the defendants, from which judgment this appeal is prosecuted. The only question for this court to determine...