Fransham v. Tow Bros.

• Decision Date: 11 December 1923
• Docket Number: No. 35564.,35564.
• Parties: FRANSHAM v. TOW BROS. ET AL.
• Court: Iowa Supreme Court

196 Iowa 1082

196 N.W. 71

FRANSHAM

v.TOW BROS. ET AL.

No. 35564.

Supreme Court of Iowa.

Dec. 11, 1923.

Appeal from District Court, Benton County; James W. Willett, Judge.

Action to recover on a promissory note. At the close of the plaintiff's testimony a motion for directed verdict in favor of the defendants was sustained by the court. Judgment for costs was entered on the verdict. Plaintiff appeals. Reversed.J. M. Dower, of Marengo, and Kirkland & White, of Vinton, for appellant.

DE GRAFF, J.

This is an action to recover on a negotiable promissory note executed on October 7, 1920, in the sum of $5,000, payable to Ernest Melberg, and signed by Tow Bros., a partnership consisting of Gus H., Linc, and Chester Tow. Gus H. Tow died subsequently to the execution of the note, and Bertha Tow, as administratrix, was substituted. Nominally the plaintiff sues in his individual capacity, but his petition alleges that he is “the holder and owner of said note in trust.” It is further pleaded, and the evidence so shows, that prior to the maturity of the note the payee, Melberg, indorsed and transferred the note to the Amana Society, and thereafter said society transferred said note in writing in trust to the plaintiff herein.

The provocation for the ruling of the trial court in directing a verdict for defendants, which constitutes the basis of this appeal, is the allegation in plaintiff's petition that the payee “indorsed, transferred, and negotiated said promissory note to the Amana Society, a corporation,” and that plaintiff is “the holder and owner of said note in trust for said Amana Society, a corporation.”

The trust agreement whereby plaintiff became the trustee of said note is in words and figures the following:

“The undersigned, the Amana Society, a corporation, does by these presents turn over to A. D. Fransham in trust a certain promissory note for five thousand dollars ($5,000), dated October 7, 1920, and executed by Tow Brothers, Gus H. Tow, Linc Tow, and T. G. Tow, in favor of Ernest Melberg, and indorsed and transferred by the said Melberg to the Amana Society.

The undersigned does hereby give full authority to the said Fransham to collect the same, and if necessary he is hereby given authority to institute an action in his own name against all of said makers and said indorser, Melberg, and to obtain a judgment against them and to take all such steps as he deems necessary to enforce the collection of said note from any or all of said parties.

Now in consideration of which, the undersigned further hereby indemnifies and holds the said Fransham harmless against all costs, fees and expenses incident to the collection, includingthe prosecution of an action to recover upon said note.

Dated at Marengo, Iowa, May 7, 1921. Amana Society, by Wm. F. Foerstner, Its Agent.”

The defendant makers answer by general denial, but expressly admit in the answer that Gus H., Linc, and Chester Tow constituted a partnership at the time the note was executed, and further admit that said partnership executed a note payable to Ernest Melberg. The defendant Melberg, in answer to plaintiff's petition, admits the allegations therein as to the execution and delivery of the note, and the sale and transfer thereof by him to the Amana Society. Tow Bros. also pleaded fraud in the inception of the note which caused a reply to be filed by plaintiff which contained the statutory recitals necessary to constitute him a holder in due course. Neither the question of fraud nor the bona fides of the plaintiff are involved on this appeal, as no evidence was introduced on these issues.

[1][2][3][4][5] At the close of plaintiff's testimony defendants moved for a directed verdict. This motion was sustained on the ground that there was no evidence to support plaintiff's action. This is the primary question, and in making answer thereto some elementary legal propositions must be restated. The stage setting is easy to understand. Clearly the plaintiff had the statutory right to institute in his name the instant suit. He was a trustee of an express trust, and was entitled to sue in his own name without joining with him the party for whose benefit he prosecuted the action. Code, § 3459. Furthermore, plaintiff was the holder of a negotiable instrument and was entitled to sue thereon in his own name, and payment to him in due course would discharge the instrument. Section 3060a51, Code Supp. 1913. The note in suit is order paper. It was indorsed in blank. It was in the possession of a person other...