Goedhard v. Folstad
| Decision Date | 12 October 1923 |
| Docket Number | 23,530 |
| Citation | 195 N.W. 281,156 Minn. 453 |
| Parties | GEORGE GOEDHARD AND O. W. MICHALSON, DOING BUSINESS AS GOEDHART-MICHALSON MOTOR COMPANY v. A. FOLSTAD, A. J. FOLSTAD AND J. O. FOLSTAD |
| Court | Minnesota Supreme Court |
Two actions in the district court for Pipestone county to recover $2,500 and $3,000, respectively, upon two promissory notes and attorneys' fees. The cases were tried together before Nelson, J., who at the close of the testimony denied plaintiffs' motion for a directed verdict, and a jury which returned a verdict in favor of defendants in each action. From an order denying their motion for judgment notwithstanding the verdict or for a new trial, plaintiffs appealed. Reversed and judgment entered in favor of plaintiffs without interest.
Evidence conclusive that plaintiffs held notes in due course.
1. Action on two promissory notes. Plaintiffs claimed to be holders thereof in due course. Defense that the notes had been procured by fraudulent misrepresentations of which plaintiffs had knowledge, and that the contract had been rescinded. Held that the undisputed evidence conclusively established that plaintiffs were holders in due course under the Negotiable Instruments Act.
Court should have directed verdict for plaintiffs.
2. The evidence that the notes had their inception in fraud was sufficient to cast upon plaintiffs the burden of showing that they were holders in due course, but, as they disclosed fully the transaction in which they acquired them and the record discloses nothing which would justify a finding of bad faith it became the duty of the court to direct a verdict.
When undisputed evidence cannot be disregarded.
3. Clear, positive and undisputed testimony, not improbable or contradictory, given by unimpeached witnesses, cannot be rejected or disregarded, unless the evidence discloses facts and circumstances which furnish a reasonable ground for doing so.
Note which carries attorney's fee and increased interest, if unpaid at maturity, negotiable.
4. A note is not rendered non-negotiable by a provision for reasonable attorney's fees if not paid at maturity, nor by a provision for an increase in the rate of interest if not paid at maturity, but under our statute a provision for an increase in the rate of interest after maturity works a forfeiture of all interest.
Minnesota contract.
5. The contract was a Minnesota contract.
Judgment for plaintiffs notwithstanding verdict.
6. The verdict could not be sustained even if all defenses to the notes were available against plaintiffs, for defendants did not rescind the contract nor attempt to do so, and there is no evidence as to the amount of the damages, if any, which they sustained by reason of the alleged fraud.
George P. Gurley and Gamble & Luddy, for appellants.
James H. Hall and Charles Dealy, for respondents.
On April 12, 1920, the defendants, residents of Ruthton in Pipestone county, Minnesota, entered into a contract with the San Benito Land Company of Kansas City, Missouri, for the purchase of a tract of land in the state of Texas, and as a part of the transaction executed to the land company two promissory notes, one for the sum of $2,500 payable July 12, 1921, and the other for the sum of $3,000 payable October 12, 1921. The land company indorsed these notes without recourse to G. F. Hutchinson, its agent who had negotiated the sale of the land, and Hutchinson indorsed them to plaintiffs who were dealers in automobiles at Sioux Falls, South Dakota. In September, 1921, plaintiffs brought suit on the first note, and in November, 1921, brought suit on the second note. Defendants asserted in their answers that the notes were procured by means of false representations made by Hutchinson concerning the character, condition and value of the Texas land; that they had rescinded the contract; and that plaintiffs purchased the notes with full knowledge of all the facts. Plaintiffs asserted in their replies that they were holders of the notes in due course. The two actions were consolidated and tried together. The court submitted two questions to the jury: Whether the notes were procured by fraudulent misrepresentations; and whether plaintiffs were good faith holders of them. He instructed the jury, in substance, that plaintiffs were entitled to a verdict if the notes were not procured by misrepresentations, or if the plaintiffs were good faith purchasers, but that defendants were entitled to a verdict if the notes were procured by misrepresentations and plaintiffs were not good faith purchasers. The jury returned a verdict for defendants. Plaintiffs appeal from an order denying their motion in the alternative for judgment notwithstanding the verdict or for a new trial.
Plaintiffs claim that they are holders of the notes in due course and that the evidence will not justify or sustain a finding to the contrary.
It appears that Hutchinson resided in Sioux Falls in the summer and fall of 1920, and that he had two business deals with plaintiffs. Plaintiffs disclosed these deals fully. Hutchinson came to them to buy an automobile. They did not then know him, but the representative of an automobile company, with whom they had done business for some three years, told them that he had grown up with Hutchinson from boyhood and recommended him highly. On July 1, 1920, plaintiffs sold Hutchinson a Stutz car for the sum of $3,960 and took his promissory note in the sum of $2,185, secured on the car, for a part of the purchase price. In September, 1920, after negotiations lasting several days, the second deal was consummated. Hutchinson had the two notes in controversy indorsed by the land company. By inquiring of a Minnesota bank plaintiffs learned that the makers were responsible, plaintiffs knew that the notes had been given on the purchase of land in Texas and that the makers resided in Minnesota and the payee in Missouri, but had no other or further knowledge concerning the transaction in which they had been given. As a result of the negotiations with Hutchinson, plaintiffs, on September 20, 1920, sold to him a Stewart truck for the sum of $2,150 and an Oakland roadster for the sum of $1,165, and canceled and surrendered to him his promissory note for the sum of $2,185. These three items amounted to the sum of $5,500, and in payment therefor Hutchinson indorsed the two notes in controversy, of the face value of $5,500, and delivered them to plaintiffs who accepted them as such payment. Both parties waived the interest on the notes held by them respectively. Shortly after obtaining these notes, plaintiffs deposited them together with other notes in the Security National Bank of Sioux Falls as collateral security for loans made them by the bank. While the foregoing facts rest mainly on the testimony of the two plaintiffs, there is no evidence contradicting or disputing them in any respect.
A week or two before the first note became due, plaintiff Michalson and the cashier of the bank which held it as collateral security drove to the residence of defendants at Ruthton and saw A. Folstad, who is one of the defendants and the father of the other two defendants. Both parties agree that the conversation was wholly between the cashier and Folstad and that Michalson took no part in it, but disagree as to what was said. According to the cashier he showed the note to Folstad, saying that the bank held it as collateral, and while it was not yet due that he wished to know whether it would be paid at maturity; that Folstad did not dispute the note, but said they were not prepared to pay it; that thereupon he offered to give an extension of time on receiving security; that Folstad expressed a wish to talk to Hutchinson before doing anything; that he suggested that Folstad and the two boys come to Sioux Falls the next day and that he would have plaintiffs and Hutchinson come to the bank where they could all talk over the situation; and that Folstad agreed to do so. According to Folstad the cashier showed him the note and he refused to pay it, saying that Hutchinson had "made a false deal out of it." He admits, however, that the cashier offered to extend the time of payment if given security, and that he promised that he and his sons would go to Sioux Falls the next day to fix it up, and also admits that they did not do so.
Some two...
To continue reading
Request your trial