Green v. Wilkie

• Citation: 66 N.W. 1046,98 Iowa 74
• Parties: GREEN v. WILKIE.
• Decision Date: 13 April 1896
• Court: United States State Supreme Court of Iowa

98 Iowa 74

66 N.W. 1046

GREEN

v.WILKIE.

Supreme Court of Iowa.

April 13, 1896.

Appeal from district court, Marshall county; D. R. Hindman, Judge.

Action for the foreclosure of a mortgage. Judgment for plaintiff, and the defendant appealed. Reversed.Anthony C. Daly and T. F. Bradford, for appellant.

Binford & Snelling, for appellee.

GRANGER, J.

This action is on a promissory note for $1,000, and to foreclose a mortgage given to secure the same. The note and mortgage were given to one Lena Fuerth, April 1, 1893. The note was assigned by Lena Fuerth to plaintiff, who resides in Massachusetts, about May 5, 1893, for a consideration of $950. The defendant does not deny that he signed the note and mortgage, but he bases his defense thereto on substantially the following facts: That Joe Fuerth is the husband of Lena Fuerth, and a real-estate agent at Marshalltown, Iowa; that he (defendant) was about to sell a piece of land given him by his father, and purchase another piece; that he went to the office of Joe Fuerth, who was acting for the man to whom he was selling, and the sale and the purchase were completed; that, as to the land given him by his father, his father had a lease or contract by which defendant was to pay a certain rent therefor while he remained single; that, to enable defendant to sell the land, the lease or contract was released; that afterwards Fuerth suggested that defendant give his father a lease of the land purchased, and a note in lieu of the one released, which defendant agreed to do; that defendant is illiterate, and cannot read writing or printing, and can only write his name; that Fuerth, instead of making the note and lease, wrote the note and mortgage in suit, which defendant signed, thinking them to be the note and lease agreed upon; that he never received anything from Lena Fuerth for said note, and never agreed to make any such note. The purchase of the note in suit was made by William Andrews as agent for the plaintiff, and it appears that the plaintiff knew nothing of the note till after it was purchased. The facts as to the fraudulent execution of the note are not in dispute. It may be stated as a fact that, when defendant signed the note and mortgage, he supposed he was signing a lease to his father and a note for $100.

There is something of a hopeless conflict of authorities touching the liability of persons whose names appear to negotiable paper, through fraudulent means, and the paper is in the hands of innocent holders. It would be useless to attempt a reconciliation of them. There are numerous cases in which parties, intending to sign a contract, have, through fraudulent misrepresentation, placed their signatures to negotiable instruments, which have fallen into the hands of innocent purchasers. There is a very respectable line of authorities holding that, in the absence of negligence, the maker of such an instrument is protected. Whitney v. Snyder, 2 Lans. 477; Walker v. Ebert, 29 Wis. 196;Anderson v. Walter, 34 Mich. 113; Bank v. Lierman, 5 Neb. 247; Puffer v. Smith, 57 Ill. 527. See, as bearing somewhat on the question, Bank v. Zeims (Iowa) 61 N. W. 483. This case is thought to be distinguishable from those because of the fact that in this there was an intent to give a promissory note. In this respect, also, there is something of a conflict of authority, but it is not so marked. The rule is many times stated that there is a distinction between cases in which a party, through fraudulent misrepresentations, signs an instrument which he intends to be a negotiable promissory note, and where, through such misrepresentation, he signs what he does not intend to be such an instrument; and much is claimed in this case because defendant intended to give a note. See Whitney v. Snyder, supra. The case of Douglass v. Matting, 29 Iowa, 498, is cited by appellee as explanatory of Chapman v. Rose, 56 N. Y. 137. The latter case announces the rule that before one whose name is fraudulently obtained to a note, upon misrepresentations that the instrument is something else, can be held, it must appear that it was not the result of negligence on the part of the signer. It will be well to notice in this connection that in Douglass v. Matting the rule of the case is announced on the theory of the culpable carelessness of the maker of the instrument. It is there said: “Now, it would be manifestly unjust to permit the maker, while admitting the genuineness of his signature, to defeat the note, on the ground that, through his own culpable carelessness while dealing with a stranger, he signed the note without reading it, or attempting to ascertain its true contents.” Hopkins v. Insurance Co., 57 Iowa, 203, 10 N. W. 605, is a case between the parties to a note, as was also McCormack v. Molburg, 43 Iowa, 561, and hence they are not as directly in point as other cases. In Bank v. Steffes, 54 Iowa, 214, 6 N. W. 267, a note was given for a greater amount than agreed upon, through a fraud of the payee, and it was assigned before maturity. The issues did not involve the question of negligence in its execution. It is there said that it was incumbent on the maker to show freedom from negligence. It is then said that it is not certain that he could be allowed to set up fraud as against the plaintiff (an innocent holder) even by...