First National Bank v. Browne
| Decision Date | 20 January 1925 |
| Docket Number | 36304 |
| Citation | 203 N.W. 277,199 Iowa 981 |
| Parties | FIRST NATIONAL BANK OF ALTA, Appellant, v. A. R. BROWNE et al., Appellees |
| Court | Iowa Supreme Court |
OPINION ON REHEARING APRIL 7, 1925.
Appeal from Buena Vista District Court.--D. F. COYLE, Judge.
ACTION on promissory note, secured by mortgage. Defendant claims credit for $ 909 thereon, and from a judgment of foreclosure in which defendant was given credit for the $ 909, plaintiff appeals.--Modified and affirmed.
Modified and affirmed.
Whitney & Whitney, for appellant.
C. H Wegerslev and Healy & Breen, for appellees.
The defendant Browne, for many years up to June, 1922, was president of the plaintiff bank. One Jens Peterson was a borrower, and in March, 1921, was indebted to the bank in the sum of $ 6,600, which at that time was collateraled with a land contract, which afterwards became worthless. Browne, to protect the interest of the bank, negotiated with Peterson for security, and proposed to Peterson that he make a deed to his land to the bank. Peterson was in straightened circumstances, owed some interest, approximately $ 300, on the incumbrances on his land, and had another obligation, amounting to approximately $ 500, which was crowding him. He proposed to Browne that, if Brown would advance him enough money to pay his interest and pay the $ 500 obligation, he, Peterson, would deed his land to the bank, to secure the then existing indebtedness, and also the $ 900 necessary to relieve the present pressure. The bank, being a national bank, was unable to loan this money to Peterson, because, by so doing, it would exceed the limit which it was allowed, under Federal law, to loan to any one individual. An agreement, however, was perfected between Browne and Peterson in the following manner. Browne drew a draft for $ 313.58, which was the amount of interest owed by Peterson, and forwarded the draft to the holders of the mortgage. To offset this, he made his personal note to the plaintiff bank for that amount, and the same appeared in the assets of the bank. As to the $ 500 agreed upon, Peterson drew a sight draft on the plaintiff bank for that amount. Browne honored and paid the sight draft, and made his personal note to the bank for $ 510, which represented $ 500 in payment for the sight draft, and $ 10 cash then borrowed by Peterson. At the same time, he took from Peterson a note for $ 500, payable to Brown individually, covering the aforesaid loan of $ 500. This note was never turned over to the bank, and never appeared in its assets, and was always held by Brown as his personal property, until the trial of this lawsuit, when he brought it into court, and tendered it to the bank.
In June, 1922, differences arose between Browne and the directors of the bank, resulting in Browne's retirement as an officer of the bank. At that time, the bank held, in its assets, certain personal notes of Browne's, aside from the two made to take care of the Peterson matter. He was called upon to make adjustment and secure the same. There was also a note of $ 1,700 in the bank, made by one Hans Smith, which had been personally indorsed by Browne. The bank demanded that Browne secure his personal notes, the aforesaid $ 1,700 note of Smith, and the two notes growing out of the transaction with Peterson, by a mortgage on his home property. Browne utterly refused to secure the $ 1,700 note. He claimed, as to the $ 313 and the $ 500 notes, that they were not his personal obligations, and explained to the officers of the bank the transaction with Peterson, as hereinbefore related, and claimed that he was not liable therefor. However, after several conferences over the matter, Browne executed the note in suit herein, together with the mortgage securing the same, and delivered them to the bank.
The defendant, in answer to the petition of the plaintiff setting out substantially the above facts, pleads that there was a partial failure of consideration for the notes sued on herein, in the sum of $ 909, being the amount covered by the aforesaid two notes growing out of the Peterson transaction.
The evidence in the case is practically undisputed, and shows the above recited facts, in addition to the fact that the Peterson deed to the bank was duly recorded, and the land therein described was carried as a part of the assets of the bank. One other fact which seems material to the consideration of this matter is that, at the time of the making of the mortgage and note sued on herein, the bank officials stated to the defendant Browne that, when the Peterson land was sold by the bank, this matter would be adjusted, and Browne's money returned to him; but, as no issue was made in the pleadings...
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