First Nat. Bank of Montpelier v. Bertoli

• Citation: 89 A. 359,87 Vt. 297
• Parties: FIRST NAT. BANK OF MONTPELIER v. BERTOLI.
• Decision Date: 13 January 1914
• Court: United States State Supreme Court of Vermont

89 A. 359

87 Vt. 297

FIRST NAT. BANK OF MONTPELIER

v. BERTOLI.

Supreme Court of Vermont. Washington.

Jan. 13, 1914.

Exceptions from Washington County Court; Frank L. Fish, Judge.

Action by the First National Bank of Montpelier against Maria Bertoli. A verdict was directed for plaintiff, and, judgment having been rendered thereon, defendant brings exceptions. Exceptions sustained, and judgment reversed and remanded.

Argued before POWERS, C. J., and MUNSON, WATSON, HASELTON, and TAYLOR, JJ.

Erwin M. Harvey, of Montpelier, for plaintiff. John W. Gordon and S. Hollister Jackson, both of Barre, for defendant.

TAYLOR, J. The action is general and special assumpsit to recover on a note signed by the defendant and payable to the plaintiff. There was trial by jury, and verdict directed for the plaintiff for the amount of the note with interest.

The defendant was the wife of the late Harry J. Bertoli. They had lived together as husband and wife for more than 20 years prior to his death on March 22, 1911. Mr. Bertoli was a granite manufacturer in the city of Montpelier. He had done business at the plaintiff bank for more than 15 years prior to his death. On September 11, 1908 he had paper which the plaintiff bank had discounted and held to the amount of about $14,500. Previous to this time the United States bank examiner had had some talk with the officers of the bank in regard to the amount of Mr. Bertoli's paper held by the bank. The plaintiff's evidence tended to show that it called upon Mr. Bertoli to reduce his indebtedness, and that after some talk with him he presented on September 11, 1908, a note payable to the order of the plaintiff 90 days from September 11, 1908, for $5,000 signed by the defendant and one G. Gentili; that the plaintiff bank took this note and surrendered to Mr. Bertoli and canceled as paid about $4,000 of his notes, indorsing the balance of the $5,000 note upon other notes held by the bank against him; that the plaintiff bank knew at the time they received the note of the defendant and Gentili that the defendant was Harry J. Bertoli's wife; that no part of the proceeds of said note went for the benefit, directly or indirectly, of the defendant or Gentili or to them together; that it held this note for the 90 days, whereupon Mr. Bertoli presented a renewal note signed by the defendant and Gentili for 90 days; that there were five renewals of said note at intervals of 90 days by the defendant and Gentili; that the discounts were paid by Mr. Bertoli on each of such renewal notes; that the last renewal of the $5,000 note by both the defendant and Gentili was on November 12, 1909; that thereafter the note was renewed by the defendant signing it alone, and the bank knew that it thereby released Gentili; that the defendant's renewals extended a little beyond the date of the husband's death on March 22, 1911; that Arthur G. Eaton was cashier of the plaintiff and did all the business relating to the matters in controversy as a duly authorized agent of the plaintiff; that, at the time the plaintiff took the note of the defendant and G. Gentili, both signers did not own property above mortgages to exceed $3,000; that the plaintiff received no security whatever for the said $5,000 note. The plaintiff's evidence further tended to show that on January 16, 1902, some six years previous to the giving of the $5,000 note, Mr. Bertoli gave a mortgage of his homestead to the plaintiff for $305 "and to secure other and further indebtedness," but this mortgage was not given by Mrs. Bertoli.

The defendant's evidence tended to show that her husband had asked her to sign the $5,000 note in 1908, and that she refused to sign it; that thereupon Mr. Arthur G. Eaton, representing the plaintiff, came to her and urged her to sign the note on the ground that it would be taken and held only as security for her husband's indebtedness to the plaintiff, that her husband, Mr. Bertoli, had a great deal of money coming due and more than enough to cover the $5,000 note, and that the first money received on his collection would be applied in payment of this note, and that her signing the note would help the bank with the examiner; that on this understanding she finally consented to sign the note and renewed the same from time to time during the lifetime of the said Mr. Bertoli; that after his death on March 22, 1911, Mr. Eaton, representing the bank, came to the defendant and asked her to pay the note out of $5,000 of Insurance money that she had received on the life of her husband; that she objected to the payment of the note and told Mr. Eaton that it belonged to the estate to pay it; that he told her that he would take her home and just leave her $500 for a homestead; that she afterwards saw her attorney, and that he told her she would have to pay it; that she then went to the bank on April 24, 1911, and paid on the note $3,468.76 and gave a note, which is the note in suit, for the balance of $1,673.90; that she proved the note against her husband's estate upon the advice of the commissioners; that she subsequently dismissed her first attorney and employed others; that there was never any consideration moving between the plaintiff and the defendant for the original $5,000 note or any renewals thereof or of the note in suit; that the defendant never had any benefit of the proceeds of said note and she only signed it by way of surety for her husband's indebtedness to the plaintiff; that the defendant never authorized her husband to exchange her original $5,000 note for his, as the plaintiff's evidence tended to show was done, and that she never knew that such a transaction occurred until the time of the trial; that her husband never had any authority whatever to dispose of her note >n the way he did; that the note was not payable to him, but was payable to the plaintiff itself.

At the close of all the evidence, the court directed a verdict for the plaintiff for the amount due on the note on the ground that all the evidence showed no question to be submitted to the jury and that as a matter of law the plaintiff was entitled to recover. The defendant excepted to the action of the court in ordering a verdict and rendering judgment thereon.

On the foregoing facts, was the defendant entitled to go to the jury?

Defendant claims that there was evidence tending to show that the note created no obligation against her and that it was without consideration. Whether her contention is well founded depends upon her true relation to the transaction. It is argued that there was evidence for the jury tending to show that the obligation attempted to be created was that of surety for her husband's debt to the plaintiff, which the law forbids. If that is the legal effect of the transaction, it will not be doubted that she cannot be held liable: (a) On the original note and its renewals because of the statute prohibiting a married woman from becoming surety for her husband's debt (P. S. 3039); nor (b) on the note in suit given after her husband's death in part payment of the last renewal note, because, if void, it furnished no consideration for her promise after she became sole. Hayward v. Barker, 52 Vt 429, 36 Am. Rep. 762; Hubbard v. Bugbee, 58 Vt. 172, 2 Atl. 594; Valentine v. Bell, 66 Vt. 280, 29 Atl. 251.

In directing the verdict for the plaintiff, the court, in effect, ruled that the evidence, if tending to show that the first note was given merely as collateral to the husband's debt, was rendered immaterial by her subsequent conduct in giving renewal notes and finally in paying part and giving the note sued on for the balance. Confessedly there was evidence tending to show that the original undertaking, whatever its form and legal effect, was, in essence, an undertaking of suretyship. The case states that defendant's evidence tended to show that, after her husband had asked her to sign the original note and she had refused, plaintiff's representative came to her and prevailed upon her to sign it upon the understanding that it would be taken and held only as security for her husband's indebtedness to the bank, and that on the same understanding the note was renewed from time to time during the lifetime of her husband; so that there was evidence fending to show that defendant's relation to the transaction remained unchanged during the time covered by the several renewals all of which were made during the lifetime of her husband.

Considering the evidence in the light most favorable to the defendant, although the original note signed by the defendant and Gentili was in form a promise from the defendant to the plaintiff and on its face the defendant was maker and not surety, still it was signed with the express understanding that it was to be held by the plaintiff only as security for Mr. Bertoli's existing indebtedness to satisfy the objections of the bank examiner. It was further agreed: That the first money received by the bank on Mr. Bertoli's collections should be applied in payment of this note; no part of the proceeds of the note inured to the benefit of the signers; it was used, without the knowledge of the defendant, until after the final transaction in which the note in suit was given, to pay and discharge a portion of Mr. Bertoli's indebtedness to the bank; at the time of receiving the note the plaintiff knew that the defendant was wife of the principal debtor and that the note was signed by her for use as collateral security. On these facts, was she undertaking to become surety for her husband's debts within the meaning of P. S. 3039?

The inquiry is not affected by the recent negotiable instruments act, as its provisions do not apply to negotiable instruments made and delivered prior to June 1, 1913 (No. 99, Acts of 1912, § 195). Prior to the passage of No. 140, Acts of 1884, relating to the property rights of married women, now embodied in P. S. c. 147, a note executed by a woman while feme covert was held to be...