Grebe v. Swords

• Decision Date: 01 October 1914
• Docket Number: 1905
• Citation: 149 N.W. 126,28 N.D. 330
• Court: North Dakota Supreme Court

149 N.W. 126

28 N.D. 330

LOUIS GREBE v. GEORGE W. SWORDS, as Receiver of the First National Bank of Rugby, North Dakota.

JOHN GREBE v. GEORGE W. SWORDS, as Receiver of the First National Bank of Rugby, North Dakota

No. 1905

Supreme Court of North Dakota

October 1, 1914

Appeal from District Court of Pierce County, A. G. Burr, J.

Actions in equity to cancel certain mortgages of record for failure of consideration of the notes secured thereby.

From a judgment in favor of each of the plaintiffs, defendant appeals.

Affirmed.

Bangs Netcher, & Hamilton, for appellant.

Contemporaneous instruments and having relation to the same subject-matter must be taken as parts of one transaction and construed together, to show the true contract between the parties.Myrick v. Purcell,95 Minn. 133, 103 N.W. 902, 5 Ann. Cas. 148;Sutton v. Beckwith,68 Mich. 303, 13 Am. St. Rep. 344, 36 N.W. 79;McNamara v. Gargett,68 Mich. 455, 13 Am. St. Rep. 355, 36 N.W. 218;Howell v Howell, 29 N.C. (7 Ired.L.) 491, 47 Am. Dec. 335;Brackett v. Edgerton,14 Minn. 174, Gil. 134, 100 Am. Dec. 211;White v. Miller,52 Minn. 367, 19 L.R.A. 673, 54 N.W. 737;2 Century Dig. Contracts, § 746a.

All their negotiations, talk, or conversation prior and leading up to an agreement were merged in the two written instruments, and such instruments only, express their will and intention.Rev. Codes 1905, § 5333;Reeves v Bruening,13 N.D. 163, 100 N.W. 243;Mott v. Richtmyer57 N.Y. 59.

It is the duty of every contracting party to learn and know the contents of the contract before he signs and delivers it.9 Cyc. 388;Little v. Little,2 N.D. 175, 49 N.W. 736;Quimby v. Shearer,56 Minn. 534, 58 N.W. 155;Albrecht v. Milwaukee & S. R. Co.87 Wis. 105, 41 Am. St. Rep. 30, 58 N.W. 72;Deering v. Hoeft,111 Wis. 339, 87 N.W. 298;Fivey v. Pennsylvania R. Co.67 N.J.L. 627, 91 Am. St. Rep. 445, 52 A. 472, 12 Am. Neg. Rep. 313;Greenfield's Estate, 14 Pa. 496;Upton v. Tribilcock, 91 U.S. 45, 50, 23 L.Ed. 203, 205.

Parol evidence of an agreement which has been reduced to writing is inadmissible.Atwood v. Cobb,16 Pick. 227, 26 Am. Dec. 657;Waddle v. Owen,43 Neb. 489, 61 N.W. 731;Blossom v. Griffin,12 N.Y. 569, 67 Am. Dec. 75;Dudgeon v. Haggart,17 Mich. 280;Goddard v. Foster,17 Wall. 123, 21 L.Ed. 589;Springsteen v. Samson,32 N.Y. 706;Clark v. Woodruff,83 N.Y. 522;Adair v. Adair,5 Mich. 204, 71 Am. Dec. 779;Cooper v. Berry,21 Ga. 526, 68 Am. Dec. 468;Sullivan v. McLenans,2 Iowa 437, 65 Am. Dec. 780;MacKinnon Boiler & Mach. Co. v. Central Michigan Land Co.156 Mich. 11, 120 N.W. 26;Pack v. Thomas, 13 Smedes & M. 11, 51 Am. Dec. 135;Rev. Codes 1905, §§ 5342,5343.

The burden of proof of a want of consideration sufficient to support an instrument lies with the party seeking to invalidate it or avoid it.Rev. Codes 1905, § 5326;Bray v. Comer,82 Ala. 183, 1 So. 81;Gibbons v. Dunn,46 Mich. 147, 9 N.W. 140;Jackson v. Wood,88 Mo. 76;Roberts v. Derby,68 Hun, 299, 23 N.Y.S. 34;Atlantic Delaine Co. v. James,94 U.S. 207, 24 L.Ed. 112;Allen v. Chicago, B. & Q. R. Co.82 Neb. 726, 23 L.R.A.(N.S.) 278, 118 N.W. 655.

The evidence required to warrant cancelation of deed must be clear and convincing.2 Pom. Eq. Jur. § 859;3 Greenl. Ev. § 363;Armor v. Spaulding,14 Colo. 302, 23 P. 790, and cases therein cited;Jones, Mortg.§ 335;Holmes v. Fresh,9 Mo. 201;Jones v. Brittan, 1 Woods, 667, F. Cas. No. 7,455;Jasper v. Hazen,4 N.D. 6, 23 L.R.A. 62, 58 N.W. 454;Howland v. Blake, 97 U.S. 624, 24 L.Ed. 1027.

The presumption is in favor of the written instrument.If the proofs are not clear and convincing against it, the instrument will be upheld.Kent v. Lasley,24 Wis. 654;Satterfield v. Malone, 1 L.R.A. 35, 35 F. 445.

The intention of the parties must be found from the language of the instrument.Smyth v. Fogle,150 Iowa 161, 129 N.W. 735;Barkhausen v. Chicago, M. & St. P. R. Co.142 Wis. 292, 124 N.W. 649, 125 N.W. 680;McAlpine v. Millen,104 Minn. 289, 116 N.W. 583;Campau v. National Film Co.159 Mich. 169, 123 N.W. 606;Krbel v. Krbel, 84 Neb. 160, 120 N.W. 935.

Matters not apparent on the face of the paper, such as fraud, duress, or failure of consideration, are equities which cannot avail against a holder in due course.Cristy v. Campau,107 Mich. 172, 65 N.W. 12;First Nat. Bank v. Green,43 N.Y. 298;Jamieson v. Heim,43 Wash. 153, 86 P. 165;Buzzell v. Tobin,201 Mass. 1, 86 N.E. 923;Massachusetts Nat. Bank v. Snow,187 Mass. 159, 72 N.E. 959;Fearing v. Clark,16 Gray, 74, 77 Am. Dec. 395;Rea v. McDonald,68 Minn. 187, 71 N.W. 11;Clark v. Skeen,61 Kan. 526, 49 L.R.A. 190, 78 Am. St. Rep. 337, 60 P. 329;Manhattan Sav. Inst. v. New York Nat. Exch. Bank,170 N.Y. 58, 88 Am. St. Rep. 640, 62 N.E. 1081;Yates v. Spofford,7 Idaho 737, 97 Am. St. Rep. 267, 65 P. 501;Borgess Invest. Co. v. Vette,142 Mo. 560, 64 Am. St. Rep. 567, 44 S.W. 754;Fitzgerald v. Barker,96 Mo. 661, 9 Am. St. Rep. 375, 10 S.W. 45;Bedell v. Herring,77 Cal. 572, 11 Am. St. Rep. 307, 20 P. 129;Nashville Trust Co. v. Smythe,94 Tenn. 513, 27 L.R.A. 663, 45 Am. St. Rep. 748, 29 S.W. 903;Carpenter v. Longan,16 Wall. 271, 21 L.Ed. 314;Hern v. Nichols,1 Salk. 289;Wilson v. Denton,82 Tex. 531, 27 Am. St. Rep. 908, 18 S.W. 620;New Orleans Canal & Bkg. Co. v. Templeton,20 La.Ann. 141, 96 Am. Dec. 385;Woodworth v. Huntoon,40 Ill. 131, 89 Am. Dec. 340;Davis v. Bartlett,12 Ohio St. 534, 80 Am. Dec. 375.

Fraud is no defense against a bona fide indorsee for value and before maturity.Bedell v. Herring,11 Am. St. Rep. 307, and note, 77 Cal. 572, 20 P. 129.

The remedy of the maker of a promissory note which has been sold by the payee to an innocent purchaser is an action for damages for the amount of the note and interest.Myrick v. Purcell,95 Minn. 133, 103 N.W. 902, 5 Ann. Cas. 148;CitingDecker v. Mathews,12 N.Y. 313;Comstock v. Hier,73 N.Y. 269, 29 Am. Rep. 142;Farnham v. Benedict,107 N.Y. 159, 13 N.E. 784;Fahey v. Esterley Mfg. Co.3 N.D. 220, 44 Am. St. Rep. 554, 55 N.W. 580;Canham v. Plano Mfg. Co.3 N.D. 229, 55 N.W. 583.

A failure of consideration after a bona fide transfer does not affect the character of the purchaser, although he had full knowledge of the original consideration for which the note was given.7 Cyc. 947;Splivallo v. Patten,38 Cal. 138, 99 Am. Dec. 358;Rublee v. Davis,33 Neb. 779, 29 Am. St. Rep. 509, 51 N.W. 135;Davis v. McCready,17 N.Y. 230, 72 Am. Dec. 461;Miller v. Ottaway,81 Mich. 196, 8 L.R.A. 428, 21 Am. St. Rep. 513, 45 N.W. 665;McNight v. Parsons,136 Iowa 390, 22 L.R.A.(N.S.) 718, 125 Am. St. Rep. 265, 113 N.W. 858, 15 Ann. Cas. 665;Jennings v. Todd,118 Mo. 296, 40 Am. St. Rep. 373, 24 S.W. 148;Parker v. Sutton,103 N.C. 191, 14 Am. St. Rep. 795, 9 S.E. 283;Hakes v. Thayer,165 Mich. 476, 131 N.W. 174;United States Nat. Bank v. Floss,38 Ore. 68, 84 Am. St. Rep. 752, 62 P. 751;American Nat. Bank v. Lundy, 21 N.D. 167, 129 N.W. 99.

Proof that a full consideration was paid for the note on its transfer prima facie establishes the fact that transfer was in due course.Hodge v. Smith,130 Wis. 326, 110 N.W. 192;Stephens v. Olson,62 Minn. 295, 64 N.W. 898;Fredin v. Richards,61 Minn. 490, 63 N.W. 1031;Wedge Mines Co. v. Denver Nat. Bank,19 Colo.App. 182, 73 P. 873;Cox v. Cline,139 Iowa 129, 117 N.W. 48;Champion Empire Min. Co. v. Bird, 7 Colo.App. 523, 44 P. 764.

A mere suspicion of infirmity will not constitute notice.American Exch. Nat. Bank v. New York Belting & Packing Co.148 N.Y. 698, 43 N.E. 168;Kelley v. Whitney,45 Wis. 110, 30 Am. Rep. 700;Jennings v. Todd,118 Mo. 296, 40 Am. St. Rep. 373, 24 S.W. 148;Second Nat. Bank v. Morgan,165 Pa. 199, 44 Am. St. Rep. 652, 30 A. 957;Chemical Nat. Bank v. Kellogg,183 N.Y. 92, 2 L.R.A.(N.S.) 299, 111 Am. St. Rep. 691, 75 N.E. 1104, 5 Ann. Cas. 158;Johnson v. Buffalo Center State Bank,134 Iowa 731, 112 N.W. 165;Davis v. Bartlett,12 Ohio St. 534, 80 Am. Dec. 375;Johnson v. Way,27 Ohio St. 374;Green v. Wilkie,98 Iowa 74, 36 L.R.A. 434, 60 Am. St. Rep. 184, 66 N.W. 1046;Commercial Bank v. Burgwyn,110 N.C. 267, 17 L.R.A. 326, 14 S.E. 623;Hardman v. Cabot, 60 W.Va. 664, 7 L.R.A.(N.S.) 506, 55 S.E. 756, 9 Ann. Cas. 1030.

The conduct of the plaintiffs had the effect of deceiving not only the bank, and the examiner, but the stockholders, depositors, and creditors of the bank, and the plaintiffs are estopped to plead or show the matters of which they complain.Skordal v. Stanton,89 Minn. 511, 95 N.W. 449;Findley v. Cowles,93 Iowa 389, 61 N.W. 998;Hurd v. Kelly, 78 N.Y. 588, 34 Am. Rep. 567.

Where the maker of a note or bond allows it to be treated as an asset of the bank for three years, and the public to deal with it on that assumption until the bank became insolvent, he is estopped to set up the claim of fraud.Best v. Thiel,79 N.Y. 15;Longmire v. Fain,89 Tenn. 393, 18 S.W. 70;New England F. Ins. Co. v. Haynes,71 Vt. 306, 76 Am. St. Rep. 771, 45 A. 221;Lyons v. Benney,230 Pa. 117, 34 L.R.A.(N.S.) 105, 79 A. 250;People's Bank v. Stroud,223 Pa. 33, 72 A. 341;State Bank v. Kirk,216 Pa. 452, 65 A. 932;Murphy v. Gumaer,18 Colo.App. 183, 70 P. 800;Pauly v. O'Brien, 69 F. 460.

Guy C. H. Corliss, for respondent.

The transfer of the notes and mortgages by Jones to the bank of which he was cashier at the time was not only in bad faith as to the makers, but the knowledge of Jones that he was committing a fraud upon the makers was imputed to the bank.Holden v. New York & El. Bank,72 N.Y. 286;Bolles Bkg.pp. 416-422;Niblack v. Cosler,74 F. 1000, 26 C. C. A. 16, 47 U.S. App. 637, 80 F. 596;Emerado Farmers' Elevator Co. v. Farmers' Bank,20 N.D. 270, 29 L.R.A.(N.S.) 567, 127 N.W. 522;Black Hills Nat. Bank v. Kellogg,4 S.D. 312, 56...