Farmers' & Traders' State Bank of Bonaparte v. First Nat. Bank of Farmington

• Decision Date: 25 June 1925
• Docket Number: No. 36140.,36140.
• Citation: Farmers' & Traders' State Bank of Bonaparte v. First Nat. Bank of Farmington, 201 Iowa 73, 204 N.W. 404 (Iowa 1925)
• Court: Iowa Supreme Court
• Parties: FARMERS' & TRADERS' STATE BANK OF BONAPARTE v. FIRST NAT. BANK OF FARMINGTON ET AL.

201 Iowa 73

204 N.W. 404

FARMERS' & TRADERS' STATE BANK OF BONAPARTE

v.FIRST NAT. BANK OF FARMINGTON ET AL.

No. 36140.

Supreme Court of Iowa.

June 25, 1925.

Appeal from District Court, Van Buren County; F. M. Hunter, Judge.

Action by indorsee against the maker of a certificate of deposit, in which action the payee of said certificate was interpleaded as a defendant.The opinion states the material facts.On motion of the plaintiff, the cause was transferred to equity for trial.The equities were determined in favor of the plaintiff, and, from the judgment entered, the interpleader defendant appeals.Reversed.Hollingsworth & Hollingsworth, of Keokuk, for appellant.

Sloan & Sloan and J. C. Calhoun, all of Keosauqua, for appellee.

DE GRAFF, J.

The essence of the petition of plaintiff is the recovery of a judgment by it as a holder of a nonnegotiable certificate of deposit against the maker, the original defendant.If the genuineness of the signature of the payee indorser had not been questioned in legal manner, the profert ad curiam of the certificate by the plaintiff, as indorsee thereof, would have been sufficient to establish a prima facie case.Stoddard v. Burton, 41 Iowa, 582;Bigelow v. Burnham, 90 Iowa, 300, 57 N. W. 865, 48 Am. St. Rep. 442;American Ex. Co. v. Peoples Sav. Bank, 192 Iowa, 366, 181 N. W. 701.The impeachment of the indorsement, presently to be noted, gives rise to the primary question on this appeal, and the answer thereto is controlling.

A brief introduction of the parties will make understandable their respective claims.Plaintiff, the Farmers' & Traders' State Bank, is a corporation engaged in the business of banking at Bonaparte, Iowa, and pleads that it is the owner of the certificate of deposit in suit by purchase thereof from J. I. O'Brien, the assignee of one Mary Morrisey, the payee named in said certificate.The defendant First National Bank is a corporation engaged in the banking business at Farmington, Iowa, and is the maker of said certificate.On November 12, 1919, the defendant bank issued to one Mary Morrisey(the interpleaded defendant) its certificate of deposit in the sum of $783.65, payable to order 6 or 12 months after date, with interest at 4 per cent. on the return of the certificate properly indorsed, with no interest after maturity.The defendant maker in answer admitted the execution and delivery to payee, Mary Morrisey, of the certificate in suit, but alleged that, prior to the commencement of the action, a written stop payment order had been given to it by the payee, “for reasons set forth in her affidavit,” bearing date May 13, 1921, attached to and made a part of its answer.Defendant prayed, therefore, that the payee, Mary Morrisey, be made a partydefendant as a necessary party“for the proper determination of the cause.”The prayer was granted and Mary Morrisey was duly interpleaded in the cause.Upon the service of the original notice on Mary Morrisey, it was discovered that she was under legal guardianship in Lee county, Iowa, as a person of unsound mind, and had been since September 21, 1921.Thereupon it was ordered that her guardian, George Mattern, be made a partydefendant and that notice be served upon him as provided by law.This was done and thereafter the guardian filed answer to the petition of plaintiff, alleging under oath that “he has no knowledge or information sufficient to form a belief as to the genuineness of the signature of his ward, Mary Morrisey, to the indorsement of the certificate,” and denies that the signature of his ward in said indorsement is a true and genuine signature.

It appears from the answer of the defendant bank that on April 24, 1921, the certificate was turned over to J. I. O'Brien by Mary Morrisey, and that about 5 days later she demanded its return, and that on the 12th day of May, 1921, she served notice upon the defendant bank, as maker of said certificate, not to pay same, stating that the certificate was not indorsed by her, but that she was induced by fraud to deliver the certificate to the said O'Brien.No reply was filed by plaintiff to the answer of either defendant.

It is undisputed in the testimony that the plaintiff bank on May 14, 1921, purchased from J. I. O'Brien the certificate of deposit, paying therefor a valuable consideration.With this setting for the action, we first ask upon whom rested the burden of proving the genuineness of Mary Morrisey's signature to the indorsement?

[1][2] Under the common-law rule, a plea of non est factum placed the burden upon the plaintiff to prove the execution of the written instrument, including the genuineness of the signature.8 C. J. 998-1000.Until this was done, the instrument was not admissible in evidence.A statute of this state changes the rule.It is provided:

“When a written instrument is referred to in a pleading, and the same or a copy thereof is incorporated in or attached to such pleading, the signature thereto, and to any indorsement thereon, shall be deemed genuine and admitted, unless the person whose signature the same purports to be, shall in a pleading or writing filed within the time allowed for pleading, deny under oath the genuineness of such signature.”Section 11218,Code 1924.

It follows, therefore, that the burden of proving the execution of the certificate in question can be placed upon the plaintiff holder...