Hobbie v. Zaepffel

• Decision Date: 13 May 1885
• Citation: 23 N.W. 514,17 Neb. 536
• Parties: GEORGE C. HOBBIE, APPELLEE, v. JOSEPH G. ZAEPFFEL ET AL., APPELLANTS
• Court: Nebraska Supreme Court

23 N.W. 514

17 Neb. 536

GEORGE C. HOBBIE, APPELLEE, v. JOSEPH G. ZAEPFFEL ET AL., APPELLANTS

Supreme Court of Nebraska

May 13, 1885

APPEAL from Washington county. Heard below before WAKELEY, J.

Judgment of the district court reversed and cause dismissed.

W. J Connell, for appellants.

Congdon Clarkson & Hunt, for appellee.

OPINION

COBB CH. J.

The first proposition which presents itself for consideration in this case is: Was the consideration for the note upon which this action was brought a legal and valid one as between the makers and the payee?

The consideration for the giving of the said note, with other notes, was expressed in the following written contract, which was introduced in evidence at the trial and preserved in the bill of exceptions, to-wit:

"For and in consideration of four thousand dollars in notes, secured by mortgages, given by J. Zaepffel, I hereby sell and assign to him an undivided half of my interest in the New Red Cloud tradership.

"It is understood between us that said notes are to be sold by C. L. Bristol, for a sum not less than two thousand dollars, for means with which to carry on the Indian trading business at New Red Cloud; and that said notes are an joint debt, and are to be paid out of the profits of the business as soon as the stock of goods is paid for; and that all the profits of such business are to be applied to the liquidation of said notes as fast as received, except for necessary individual expenses of ourselves.

"It is further agreed and understood that C. L. Bristol is to give his time and attention, without charge or salary, to the business, and also, that with consent of J. W. Paddock, if there is sufficient business, that J. Zaepffel shall be employed at a reasonable salary, to be paid out of the profits of the business; that after the stock of goods is paid for, and the notes aforesaid are paid, the profits shall continue to be divided equally between us (C. L. Bristol giving his services without charge) during the term of the present license, and also during the term of any subsequent license.

"It is further agreed that if at any time J. Zaepffel may think his interests require it he shall have the right to take personal control of the business until such time as the notes aforesaid are paid.

"Witness our hands this 12th day of April, 1878.

"[SIGNED.]

C. L. BRISTOL,

"J. G. ZAEPFFEL."

If at the date of this contract the said C. L. Bristol was the holder of a license from the government of the United States to trade with the Indians at the New Red Cloud agency, as was evidently claimed by him, or elsewhere in the Indian country, then the consideration which he was to give and Zaepffel was to receive for the said note was a one-half interest in the franchise rights and privileges contemplated by such license.

Section 2129 of the Revised Statutes of the United States provides as follows: "No person shall be permitted to trade with any of the Indians in the Indian country without a license therefor from a superintendent of Indian affairs, or Indian agent, or subagent, which license shall be issued for a term of not exceeding two years for the tribes east of the Mississippi, and not exceeding three years for the tribes west of that river."

Section 2133 provides that, "Any person other than an Indian, who shall attempt to reside in the Indian country as a trader, or to introduce goods, or to trade therein, without such license, shall forfeit all merchandise offered for sale to the Indians, or found in his possession, and shall moreover be liable to a penalty of five hundred dollars."

It will thus be seen that a license to reside in the Indian country as a trader, and to trade with the Indians, is a personal privilege of a high official character; so that if C. L. Bristol was the holder of such a license he possessed no right to sell it, either in whole or in part, and a pretended or simulated sale thereof would convey no right or franchise whatever to the purchaser.

After due consideration, I am unable to agree to the distinction sought to be made by counsel between the case at bar and that of Gould & Kennard v. Kendall & Smith, 15 Neb. 549, 19 N.W. 483. The contract above quoted provides, "That, with the consent of J. W. Paddock, if there is sufficient business, that J. Zaepffel shall be employed at a reasonable salary, to be paid out of the profits of the business." While not fully expressed, this clause evidently means that Zaepffel shall be employed at the site of the trade. And again, "That if at any time J. Zaepffel may think his interests require it he shall have the right to take personal control of the business." Both of these provisions clearly contemplate the introduction of an unlicensed and unauthorized trader into the Indian country, and a clear violation not only of the public policy of the government of the United States but of the letter of the statute above cited.

But, while the evidence might be and I think should have been made fuller and clearer on that point, yet I think it fairly deducible from the whole evidence that Bristol had no license to trade with the Indians at New Red Cloud agency, or elsewhere. So that whatever view may be taken of the lawfulness or policy of upholding a sale of an interest in an Indian trader's license in a case where the vendor has one to sell, I do not think that it can be seriously claimed that the sale of such license by a party who had none will constitute a consideration for a promissory note.

Having seen to my own satisfaction, at least, that there was no legal and valid consideration for the note in its inception, and that it was void in the hands of the payee, the next question demanding our attention is, whether such facts and the invalidity of the consideration of the note can be inquired into in the present action.

The plaintiff, in and by his petition in the action, as well as by his reply to the answer of the defendants, claims to hold the note sued on as a bona fide holder for value paid therefor, before its maturity, without notice of any infirmity or want of consideration, and in the usual course of business. If it appears from the evidence that the above claim on the part of the plaintiff is true, then he is undoubtedly entitled to recover, notwithstanding the want of consideration for the note as between the original parties. In other words, if the plaintiff is a bona fide holder of the note for a valuable consideration at or before it became due, in the usual course of business, without notice of any infirmity therein, the want of consideration for the note between the maker and payee cannot be availed of as a defense to this action.

The evidence leaves no room for doubt that the plaintiff received and became the endorser of the note before maturity, and for a valuable consideration. But did he receive it without notice of the want of consideration for its execution between the makers and the payee? C. L. Bristol, whose deposition was read on the trial and is preserved in the bill of exceptions, testified as follows: "I had several conversations with plaintiff, George C. Hobbie, in reference to his taking an interest with me in the New Red Cloud Indian tradership; at last he told me that he would be the responsible party and did not feel like taking the risk but would like to make some money out of it if he could. It was finally proposed that he make a loan of two thousand dollars, for which he should receive four thousand dollars at the end of two years. This he was willing to do, but feared it could not be done legally. He was to have had security for such loan on the property of Joseph Zaepffel and wife.

"Then he (Hobbie) offered to loan two thousand dollars for two years, on condition that Zaepffel and wife should convey to him by absolute deed their Washington county farm, with the understanding that upon payment to him (Hobbie) of four thousand dollars he would reconvey said farm. This proposition Zaepffel refused to accept. The next proposition was that Zaepffel and wife should make two notes to me (C. L. Bristol) of two thousand dollars each, one of which was to be secured by a chattel mortgage on the property of Joseph G. Zaepffel, the other to be secured by a mortgage on Mrs. Zaepffel's farm in Washington county.

"These notes were to be endorsed by me to Hobbie, and sold to him (Hobbie) for the sum of two thousand dollars, and the securities to be duly assigned to him. Hobbie, Zaepffel, and myself were together when this matter was all talked over, and the agreement was finally made to consummate the loan in accordance with the above proposition. Hobbie knew that the only consideration to be received by Zaepffel and wife was a partnership with me in the New Red Cloud Indian tradership. He also knew that the appointment to that tradership was in the name of J. W. Paddock, and the interest I was to have was a partnership interest.

"The notes and mortgages were dated April 12, 1878.

"The notes were endorsed and the mortgages assigned immediately to Hobbie in presence of Zaepffel. * * * Hobbie and he (Hobbie) paid for the notes (amounting to four thousand dollars) two thousand dollars and no more. This whole transaction was had in accordance with the last above named proposition, and for the purpose of avoiding legal difficulties, and to enable him (Hobbie) to receive the four thousand dollars on the loan of two thousand dollars."

The defendant, Joseph G. Zaepffel, was sworn as a witness in his own behalf, and testified as follows:

Q. You are one of the defendants in this case, are you not?

A. Yes, sir.

Q. And the other defendant is your wife?

A. Yes, sir.

Q. Do you know the plaintiff, George C. Hobbie?

A. I do.

Q. How long have you known...