Idaho Falls Nat. Bank v. Ford

• Decision Date: 16 July 1928
• Docket Number: 4877
• Parties: THE IDAHO FALLS NATIONAL BANK, a Corporation, Appellant, v. E. V. FORD, Respondent
• Court: Idaho Supreme Court

269 P. 100

46 Idaho 492

THE IDAHO FALLS NATIONAL BANK, a Corporation, Appellant, v. E. V. FORD, Respondent

No. 4877

Supreme Court of Idaho

July 16, 1928

APPEAL AND ERROR-ASSIGNMENT OF ERRORS-SUFFICIENCY-CONFLICT OF EVIDENCE-BANKS AND BANKING-KNOWLEDGE OF CASHIER-NOTICE TO BANK.

1. Verdict of jury, returned on conflicting evidence, must be accepted by the supreme court as a conclusive determination.

2. Where bank cashier was present during transaction resulting in execution of notes to third person, which were subsequently transferred to bank, and was representing bank in such transaction, by direction and authority of discount committee, bank was charged with notice of facts of which cashier then had knowledge, and cannot be holder in due course of notes.

3. General assignments to effect that verdict and judgment are against law and evidence are, under the rules of supreme court, wholly insufficient.

APPEAL from the District Court of the Ninth Judicial District, for Bonneville County. Hon. George W. Edgington, Judge.

Action on promissory notes. Judgment for defendant. Affirmed.

Judgment affirmed, with costs to respondent.

O. A Johannesen, for Appellant.

Representations and warranties of the condition of personal property in which it has no interest is beyond the inherent powers of cashier of a banking institution, is against public, policy, and ultra vires. And the alleged guaranty in the case at bar is beyond the power of the bank, ultra vires, and is an illegal contract, being against public policy, and, being verbal, is within the statute of frauds. (First Nat. Bank v Monroe, 135 Ga. 614, 69 N.E. 123, 32 L. R. A., N. S 550; Rickers Nat. Bank v. Stone, 21 Okla. 833, 97 P. 577; Merchants' Bank v. Baird, 160 F. 642, 90 C. C. A. 338; Storer v. Heitfeld, 19 Idaho 170, 113 P. 80; Harris v. Frank, 81 Cal. 280, 22 P. 856; Border Nat. Bank v. American Nat. Bank, 282 F. 73; Barron v. McKinnon, 179 F. 759; Mine & Smelter Supply Co. v. Stockgrowers' Bank, 173 F. 859.)

In equity case, verdict is only advisory and will not be sustained, unless the court, from examination of the evidence, is satisfied of its correctness. (Duffy v. Metropolitan Life Ins. Co., 94 Me. 414, 47 A. 905; Derby v. Derby, 101 Ill.App. 154; Keltner v. Bundy, 40 Idaho 402, 233 P. 516; Quayle v. Ream, 15 Idaho 666, 99 P. 707; Goldstone v. Rustemeyer, 21 Idaho 703, 123 P. 635; Spencer v. John, 33 Idaho 717, 197 P. 827.)

Knowledge of facts or promises made in a contract does not prevent bank from being holder in due course, and notice of the breach of such promises and warranties must be given to the bank before the purchase of the notes. (Splivalo v. Patton, 38 Cal. 138, 99 Am. Dec. 358; McKnight v. Parsons, 136 Iowa 390, 125 Am. St. 265, 113 N.W. 858, 22 L. R. A., N. S., 718; 3 R. C. L., secs. 104, 105; Siegel, Cooper & Co. v. Chicago Trust & Savings Bank, 131 Ill. 569, 23 N.E. 417, 7 L. R. A. 537; Burdell v. Nereson, 28 Idaho 129, 152 P. 576; McPherrin v. Tittle, 36 Okla. 510, 129 P. 721, 44 L. R. A., N. S., 395.)

Notice to agent or to president of corporation, unless he has been empowered by the directors to receive the same, is not notice to the corporation. (First Nat. Bank v. Christopher, 40 N.J.L. 435, 29 Am. Rep. 262; Washington Nat. Bank v. Pierce, 6 Wash. 491, 36 Am. St. 174, 33 P. 972; Merchants' Nat. Bank v. Lovitt, 114 Mo. 519, 35 Am. St. 770, 21 S.W. 825.)

E. M. Holden, for Respondent.

The appellant is responsible for the wrongful acts of its cashier, even though the cashier had acted merely within the apparent scope of his authority. (3 R. C. L., sec. 86, p. 456.)

A verdict on substantially conflicting evidence will not be disturbed. (Mahaffey v. Carlson, 39 Idaho 162, 228 P. 793; Haydon v. Branson, 33 Idaho 368, 195 P. 545.)

BAKER, Commissioner. Varian, Brinck, CC., Wm. E. Lee, C. J., Givens, Taylor and T. Bailey Lee, JJ., concurring. Budge, J., dissents.

OPINION

BAKER, Commissioner.--

Plaintiff sued to recover judgment upon two promissory notes executed by defendant in favor of W. A. Bishop & Company and by it transferred to plaintiff.

The defense, pleaded in detail, was that the notes were given as part of the purchase price of a 22-40 tractor purchased by defendant from the plaintiff and the Bishop Company by reason of his reliance upon certain false "representations guaranties and warranties" made by Homer, cashier and agent of the plaintiff, and by one Ernst, now deceased, officer and agent of the Bishop Company. Defendant by cross-complaint alleged that by reason of the fraud practiced upon him he had elected to rescind the bargain, offered to return everything he had received and claimed damages in the sum of $ 2,200, representing the value of a smaller tractor given as part of the purchase price, the amount of one note he had paid and the amount expended for labor and repairs upon the tractor purchased. The Bishop Company was not served or represented.

From a judgment rendered on verdict in favor of the defendant on the complaint and in favor of plaintiff on the cross-complaint, plaintiff alone has appealed.

The sufficiency of the allegations of the cross-complaint to entitle defendant to rescind was not raised in the trial court. The pleadings were not attacked; the material evidence tending to support the positions of the parties was received without objection and the sufficiency of such evidence was not questioned by motion for nonsuit or directed verdict or for new trial. The plaintiff did not urge in the trial court and does not urge here that defendant by his conduct and delay had lost his right to rescind or had affirmed the bargain though procured by fraud. Apparently the substantial issues considered in the trial court were whether the defendant was defrauded and whether plaintiff was answerable for representations made by its cashier.

The evidence, so far as material to any issue here presented, discloses that plaintiff was a creditor of the Bishop Company and held as security warehouse receipts covering machinery stored by the company, including the tractor sold to the defendant. The Bishop Company was permitted to sell machinery which was released by the bank when the purchase price was paid into the bank or approved notes were delivered and indorsed.

Before the notes in question were executed, the matter of the release of the 22-40 tractor and its sale to the defendant was presented to the bank and its approval of notes to be taken was sought. Later, Homer, the cashier of plaintiff, at the request of the discount committee, went with Ernst, of the Bishop Company, to the home of the defendant to investigate his financial condition, procure...