Gibbs v. Farmers' & Merchants' State Bank

• Decision Date: 07 May 1904
• Citation: 99 N.W. 703,123 Iowa 736
• Parties: SARAH V. GIBBS AND CHAS. S. GIBBS, Appellees, v. FARMERS' & MERCHANTS' STATE BANK AND C. D. BUTTERFIELD, Appellants
• Court: Iowa Supreme Court

99 N.W. 703

123 Iowa 736

SARAH V. GIBBS AND CHAS. S. GIBBS, Appellees, v. FARMERS' & MERCHANTS' STATE BANK AND C. D. BUTTERFIELD, Appellants

Supreme Court of Iowa, Des Moines

May 7, 1904

Appeal from Fremont District Court.--HON. A. B. THORNELL, Judge.

ACTION at law to recover an amount claimed by plaintiffs to have been overpaid by them to the defendants upon a note executed to the defendant bank for the sum of $ 2,100. It is claimed that the amount was paid through mistake, and was due to the fraud of the defendants in concealing certain payments theretofore made upon said note. The defendants answered admitting certain payments made in satisfaction of the note but denying any fraud or overpayments. On the issues thus joined the case was tried to a jury, resulting in a verdict and judgment for the plaintiffs in the sum of $ 938, and defendants appeal.

Reversed.

Burke Harl and Tinley & Stevens for appellants.

George E. Draper and W. E. Mitchell for appellees.

OPINION

DEEMER, C. J.

The execution of a note for $ 2,100 by plaintiffs to the defendant bank is conceded. It also appears without controversy that certain indorsements were made upon the back of the paper on which the note was originally written, and that these indorsements were at some time--the exact date being a matter of dispute--covered over by a green slip of paper, which was pasted upon the back of the note, completely obscuring all of the original indorsements save one, and that this piece of green paper also bore certain indorsements as having been paid upon the note. It is also conceded that on December 4, 1901, plaintiffs paid the defendants the sum of $ 1,266.84, the amount which defendants claimed was at that time due upon the note after allowing all proper credits. It is further admitted that when the note was delivered to the plaintiffs as fully paid and canceled, it had this green strip of paper pasted thereon, which completely obscured all indorsements made on the original paper on which the note was written save one; and that thereafter the plaintiffs removed the green paper, and produced it with the original note showing indorsements thereon and presented both papers on the trial of the case. Plaintiffs claim that they paid to the defendants the amounts shown by the indorsements on both papers, while defendants insist that no such payments were made, and that all credits were shown by the note as delivered to the plaintiffs after the green piece was pasted on the back thereof. As will be observed, the action is to recover money had and received by the defendants, due to a payment made by plaintiffs through mistake superinduced by the fraud of the defendants. The defendants denied the alleged fraud and mistake, although they admitted the final payment of something more than $ 1,200, but claimed that this was the amount due on the note. Defendants explain the appearance of the green paper in this wise: After they took the note, they rediscounted it to a bank or individual at St. Joseph, Mo.; but plaintiffs paid interest and part of the principal to the defendants before it is claimed the note was due, or at least before interest payments matured. Plaintiffs were given credit for the amounts paid upon defendants' books, but the amounts thus paid were not remitted to the owner of the note until the interest payments were due. When due, these interest payments, with whatever was paid upon the principal, were sent to St. Joseph, to the party holding the note, and he made the indorsements at the time he received the money. Defendants claim that thereafter Chas. S. Gibbs appeared at defendants' bank, for the purpose of ascertaining the amount due, and insisted that the payments should be credited upon the note as of the time he made them to the defendants, and that defendants acceded to this request. That the strip of green paper was pasted upon the note in order to obliterate the indorsements thereon made, and that the indorsements were made on this green paper according to the date of payment to the defendants. This is denied by the plaintiffs, and they insist that all payments indorsed either on the original note or on the green paper were actually made, that they did not agree to the pasting of this green strip on the back of the note, and did not know of it until they came to make final payment, and that they were misled thereby into making payment for more than the amount actually due. At the time the last payment was made, plaintiffs gave defendants a check therefor which recited that it was in full for the amount of the $ 2,100 note, restated the amount theretofore paid on the note, and also referred to a check issued by plaintiff Chas. S. Gibbs, on the defendants, stating that it was offset by the return of the check. Plaintiffs claim that everything appearing upon this check, save what would naturally appear on an ordinary instrument of that character, was added after they had signed it, and assert that the check therein referred to, while returned as stated, was paid by the defendant bank, and, as we understand, was charged to his account by the defendants. Plaintiffs attempted to account for the manner in which they acquired the money with which they claim to have made the payments on the note, but this was attempted to be met by the defendants, by a showing that they (plaintiffs) did not acquire the money as stated, and made no more payments, except the last, save those appearing upon the note after the green strip of paper was pasted thereon and delivered to the plaintiffs.

Such were the issues and the testimony on which the case was tried. To make out their claim of overpayment, it was necessary for plaintiffs to show that they made all payments appearing upon the back of the note as originally written, and also those appearing on the green strip of paper. Defendants were insisting that no payments were made save those appearing upon the instrument as delivered to the plaintiffs when the final sum was paid. They, of course, insisted that the indorsements originally made upon the note were covered by the indorsements entered upon the green strip of paper after it was pasted on the original. The action was not upon the note, but for overpayments made thereon, due to mistake or fraud on the part of the defendants; in other words, for money had and received. Defendants denied the receipt of the money claimed to have been overpaid. Plaintiffs were relying, not on the instrument as it was re-delivered to them by the defendants with the green strip of paper pasted thereon, but on the indorsements on both pieces of paper after they had removed the green strip from the original.

On this record the trial court gave the following, among other, instructions: "Aside from the credits or amounts it is admitted by the defendants in evidence were in fact paid by the plaintiffs on said note, there are other indorsements that appear on the back of said note that the defendants admit in evidence were placed there at the date they purport to bear by the persons having at the time the legal custody of the note. These indorsements are as follows: '$ 147.00 March 3, 1896. $ 350.00 March 25, 1896. $ 124.00 May 21, 1897. $ 300.00 July 9, 1897.' As these indorsements appear on the back of the note, the presumption is, in the first instance, that, in the absence of other evidence, that said amounts were in fact paid on said note at the time said indorsements purport to bear date. But this presumption is not conclusive, but it does cast the burden on the defendants to show by the greater weight of the evidence that said disputed credits are contained or included in those admitted by them as before explained." In another instruction the court said: "The burden rests with the defendants to show by the greater weight or preponderance of the evidence that said disputed indorsements are contained or included in said indorsements of October 19, 1895, and September 18, 1896." And in still another: "But, as before stated, the burden rests with the defendants in the first instance to show by the greater weight of the evidence that the disputed indorsements are included in said indorsements of October 19, 1895, and September 18, 1896."

Remembering the nature of this action, and what plaintiffs are compelled to show in order to be entitled to a verdict, these instructions were erroneous. Had all the indorsements been made upon the paper on which the note was originally written instead of being obscured or obliterated by the green paper pasted on the back thereof, it is clear that these indorsements should be treated in an action of this kind simply as declarations against interest, or as admissions made by the defendants as to payments made, which were not conclusive, because not arising to the dignity of a contract, but as tending to show payments in the amounts and at the times the indorsements were made. The burden was upon the plaintiffs at all times to prove the overpayments alleged by a fair preponderance of the evidence, and that they were made through fraud or mistake. The issues between the parties were plain and simple. Defendants did not admit the receipt of all the money claimed to have been paid by the plaintiffs, nor did they attempt to confess and avoid the allegations of the petition. They simply admitted the receipt of certain payments, and denied the making of any other. Plaintiffs introduced the papers to which we have referred for the purpose of showing all payments claimed to have been made by them, but this evidence was not conclusive, nor did it shift the burden of proof. Conceding, arguendo, that such papers were admissible, it by no means follows that the burden of proof was shifted to the defendants to prove that these indorsements did not...