First National Bank of Hibbing v. Schirmer
| Citation | 159 N.W. 800,134 Minn. 387 |
| Decision Date | 10 November 1916 |
| Docket Number | 20,016 - (162) |
| Parties | FIRST NATIONAL BANK OF HIBBING v. A. C. SCHIRMER |
| Court | Supreme Court of Minnesota (US) |
Action in the district court for St. Louis county to recover $1,700 upon certain promissory notes. The facts are stated in the opinion. The case was tried before Hughes, J., and a jury which returned a verdict in favor of defendant. From an order granting plaintiff's motion for judgment notwithstanding the verdict, defendant appealed. Affirmed.
Bills and notes -- guaranty of payment.
1. Evidence held insufficient to sustain the defense that the guaranty of payment of the notes involved in the action was procured by the fraudulent representations of plaintiff.
Principal and agent -- implied authority.
2. Implied authority of an agent includes such acts and only such acts as are incident and necessary to the exercise of the authority expressly granted.
Principal and agent.
3. An agent clothed with authority to accept promissory notes with the indorsement of the payee as security to a loan by his principal has no implied authority to contract with the indorser to pay the mortgage registry tax and to record an unassigned mortgage securing the payment of the same.
Bills and notes -- duty of creditor to guarantor.
4. The indorsement, being in the form of a guaranty of payment, the law imposed no duty upon the creditor to pursue the maker of the notes, or to record a mortgage securing the payment thereof, not assigned to him, in protection of the guarantor.
Victor L. Power, for appellant.
D. T Collins, for respondent.
It appears from the pleadings and evidence in this case that at the time of the transaction in issue defendant was engaged in the plumbing and heating business at the city of Hibbing with a branch establishment at Chisholm, a city not far from Hibbing, in St. Louis county. One Neally was engaged in the construction of a large hotel building at Chisholm, and defendant entered into a contract to install the heating plant therein. The contract was completed early in June, 1909, and the value of the labor, and of the material furnished by defendant, was agreed upon at $4,166. Neally was apparently without ready money and unable to pay in cash. Defendant understood this before entering into the contract, and he laid the matter before the president of plaintiff, and secured from him an agreement to discount Neally's promissory notes to be executed after the completion of the work, properly indorsed by defendant. On June 3, 1909, after the completion of the contract, Neally executed and delivered to defendant his several promissory notes for $200 each, aggregating the amount due under the contract, payable to defendant at the time stated in each. Defendant carried an account in plaintiff's bank at Hibbing, and also an account in the Miners' State Bank at Chisholm. He desired the proceeds of the notes to be deposited to his credit in the latter bank, and arrangements were made to that end. He presented the notes indorsed by him in blank, to that bank, and upon authority communicated from plaintiff they were accepted and defendant's account credited with the full amount thereof, namely, $4,166. Whereupon the Chisholm bank transmitted the notes to plaintiff, and was by plaintiff credited upon its books with the same amount. The Chisholm Bank had no pecuniary interest in the transaction, and the discount of the notes took this form for the convenience of defendant. There is no controversy about these facts. There was default on the part of Neally in the payment of the notes, and plaintiff insisted upon a series of new notes in denominations of $100 each, payable monthly, in place of the dishonored paper, and defendant agreed to procure the same. On December 15, 1910, defendant presented to plaintiff such renewal or new notes, all payable to defendant, and he indorsed upon each a guaranty of payment, waiving demand and notice of protest. Other renewals were made in 1911 and in 1912, in the same form, and bearing the same guaranty of payment and waiver of demand and notice of protest. Neally failed to pay the notes, and this action was brought to recover upon defendant's contract of guaranty. Defendant's liability on the original notes was that of an indorser in blank, but on the renewed notes was that of a guarantor of payment.
Defendant interposed in defense: (1) That the indorsement upon the renewal notes by which defendant became a guarantor of payment was procured by the fraud of plaintiff; and (2), that a mortgage given by Neally to secure the payment of the original notes was delivered with the notes when negotiated, which plaintiff agreed to have recorded, and negligently failed and neglected to do so, whereby defendant lost the security by reason of other mortgages being placed upon the property, the whole amount of which exceeded the value thereof.
The action was tried with a jury and a verdict was returned for defendant which, on plaintiff's alternative motion, was vacated, and judgment for plaintiff ordered notwithstanding the same. Defendant appealed.
It is contended by defendant: (1) That the question whether the indorsement of a guaranty of payment upon the back of the notes was procured by fraudulent representations was one of fact, that the verdict is supported by the evidence therefore that the trial court erred in ordering judgment in plaintiff's favor; (2) that the evidence disclosed an express agreement on plaintiff's part to record the mortgage securing the payment of the notes, and that its failure to do so released defendant from his guaranty; and (3) that the obligation to record the mortgage for the protection of defendant was imposed upon plaintiff as a matter of legal duty, even in the absence of an express or implied agreement to that effect. We dispose of these claims in the order stated. Neither requires extended discussion. The...
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