Farmers & Traders State Bank of Bonaparte v. First National Bank of Farmington

• Decision Date: 25 June 1925
• Docket Number: 36140
• Citation: Farmers & Traders State Bank of Bonaparte v. First National Bank of Farmington, 204 N.W. 404, 201 Iowa 73 (Iowa 1925)
• Parties: FARMERS & TRADERS STATE BANK OF BONAPARTE, Appellee, v. FIRST NATIONAL BANK OF FARMINGTON, Appellee; GEORGE MATTERN, Guardian, Appellant
• Court: Iowa Supreme Court

204 N.W. 404

201 Iowa 73

FARMERS & TRADERS STATE BANK OF BONAPARTE, Appellee, v. FIRST NATIONAL BANK OF FARMINGTON, Appellee;

GEORGE MATTERN, Guardian, Appellant

No. 36140

Supreme Court of Iowa, Des Moines

June 25, 1925

REHEARING DENIED DECEMBER 17, 1925.

Appeal from Van Buren District Court.--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 interpleaded defendant appeals.

Reversed.

Hollingsworth & Hollingsworth, for appellant.

Sloan & Sloan and J. C. Calhoun, for appellee.

DE GRAFF, J. FAVILLE, C. J., and STEVENS and VERMILION, JJ concur.

OPINION

DE GRAFF, J.

The essence of the petition of plaintiff is the recovery of a judgment by it as an indorsee and 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;American Exp. 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 denying 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 five 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.The contest, therefore, is between the payee and a stranger to the certificate of deposit.SeeRoy v. Duff,170 Iowa 319, 152 N.W. 606.The pleaded cause is bottomed on indorsement, and none other.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?

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 Corpus Juris 998, 999.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 of 1924.

It follows, therefore, that the...