Feder v. Elliott
| Decision Date | 28 June 1924 |
| Docket Number | 35643 |
| Citation | 199 N.W. 288,198 Iowa 447 |
| Parties | MILTON FEDER, Appellee, v. W. G. ELLIOTT et al., Appellants |
| Court | Iowa Supreme Court |
REHEARING DENIED SEPTEMBER 20, 1924.
Appeal from Buchanan District Court.--G. W. WOOD, Judge.
ACTION on two certificates of deposit issued by the Farmers & Merchants Bank, of which the defendants are the owners, as partners. The court directed a verdict for the plaintiff, and the defendants appeal.
Affirmed.
Edwards Longley, Ransier & Harris and M. A. Smith, for appellants.
Lane & Waterman and R. J. O'Brien, for appellee.
I.
This action is brought upon two certificates of deposit of $ 1,000 each, which are identical, and are as follows:
"The Farmers & Merchants Bank 72-1119
Aurora, Iowa. Dec. 10, 1918, $ 1000.00 W. G. Hopkins has deposited in this bank Pay $ 1000.00 . . . Dollars Payable to the order of self in current funds on the return of this certificate properly endorsed 6 months after date with interest at 4 per cent per annum for the time specified only.
No interest after maturity. W. G. Elliott Cashier."
The certificates were duly indorsed by the payee, W. G. Hopkins. The evidence discloses that the certificates were issued by appellant Elliott, as cashier of said bank, as part payment on a certain land contract entered into between Elliott and the Daniel Hayes Company, for the purchase of certain real estate in the state of California. Appellants offered evidence to show that the certificates of deposit were obtained by false and fraudulent representations made to Elliott by the representatives of the Daniel Hayes Company. Thereupon, it became incumbent upon appellee to establish that he was a purchaser of said certificates of deposit in due course. Appellants contend that the case presented a jury question, and that the trial court erred in directing a verdict for appellee.
We have frequently had a similar situation before us for consideration, and have repeatedly announced the rules of law applicable to such cases. The appellants having offered testimony in regard to the fraudulent representations that induced the execution of the certificates of deposit, the burden then rested upon appellee to establish that he was a holder in due course. Code Supplement, 1913, Section 3060-a59; State Bank of Chicago v. Oyloe Piano Co., 195 Iowa 1152, 193 N.W. 403; Anderson Sav. Bank v. Hopkins, 195 Iowa 655, 192 N.W. 824; Smith v. Breeding, 196 Iowa 670, 195 N.W. 208: Second Nat. Bank v. Scanlon, 196 Iowa 1305, 196 N.W. 65; Arnd v. Jones, 197 Iowa 244, 197 N.W. 45.
We have also frequently recognized the two lines of decisions under this rule: one where the evidence that the payee of a negotiable instrument is a holder in due course may be so indubitable as to make it the duty of the court to direct a verdict in behalf of the holder of such instrument, even though it be established that the instrument was procured by fraud on the part of the original payee; and the other line of cases holding that, although the payee may offer testimony direct and positive to the effect that he is a holder in due course, the facts and circumstances surrounding the transaction, as shown by the evidence, may be such as to leave the question as to whether or not payee is a holder in due course one for the determination of the jury, and in such event the court should not direct a verdict in behalf of the holder. The authorities on said propositions are collected in Second Nat. Bank v. Scanlon, supra. See, also, Arnd v. Jones, supra.
We have carefully examined the record in this case, and it appears therefrom that the certificates of deposit in question were sold for the face value thereof to appellee prior to their due date, and that, at the time of said purchase, appellee had no knowledge or information of any kind or character in relation to the transaction between the issuing bank and the payee. There are no facts or circumstances established in the testimony that in any way tend to impeach the testimony in behalf of appellee that he did so purchase said certificates of deposit in due course before maturity and for an adequate consideration. If the instruments in question are negotiable instruments, then, under the record, it must be held that appellee was a purchaser in due course, and that the court did not err in directing a verdict in his behalf.
II. It is urged by appellants that the certificates of deposit in question are not negotiable instruments, because of the provisions therein that the amount specified is to be paid "in current funds." This is the important question in this case.
This question first came before this court in 1860, in the case of Rindskoff Bros. & Co. v. Barrett, 11 Iowa 172, wherein we held that an instrument payable "in currency" was not payable in money, and therefore was not a promissory note.
In Pilmer v. Branch of The State Bank at Des Moines, 16 Iowa 321, decided in 1864, we considered a draft made payable "in currency." The action was brought by the payee against the drawer of the instrument. Justice Dillon discussed at length the meaning of the words "in currency," and held that "it calls for payment in anything which circulates current as money," and that, as between the original parties, the evidence of bankers, business men, and others was competent to show what, in popular meaning, or among business men, bankers, etc., the word "currency" meant at Chicago, where the draft was payable at its date.
In 1870, in Huse v. Hamblin, 29 Iowa 501, we considered a certificate of deposit in a bank which was made payable "in currency," and held that the instrument was not negotiable paper.
In Huse v. McDaniel, 33 Iowa 406, we again held that certificates of deposit payable "in currency" were not negotiable paper, citing Huse v. Hamblin, supra.
In Haddock v. Woods, 46 Iowa 433, suit was brought on a certificate of deposit made payable "in current funds." We held that the paper was nonnegotiable. The same rule is recognized in American Emigrant Co. v. Clark, 47 Iowa 671.
The Negotiable Instrument Law was enacted in 1902. By Code Supplement, 1913, Section 3060-a1, it is provided that a negotiable instrument "must contain an unconditional promise or order to pay a sum certain in money;" and by Section 3060-a6 it is provided that:
Two cases in which reference has been made to this question have been before this court since the enactment of said statute. Dille v. White, 132 Iowa 327, 109 N.W. 909, was decided in 1906. The assumption of the nonnegotiability of the checks therein involved, which were made payable "in current funds," was rather incidental than in any manner determined by the decision of the case. The Negotiable Instrument Law was not referred to in the opinion in this connection, and no question appears to have been raised as to the negotiability or nonnegotiability of the instruments. The case goes no further at this point than to assume arguendo that the checks were nonnegotiable, under Huse v. Hamblin, supra, and Huse v. McDaniel, supra. It cannot be said to be determinative of the question now before us.
The other case is Park v. Best, 176 Iowa 7, 157 N.W. 233, decided in 1916. The question now presented for decision was not directly involved in that case. We said:
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