Intermountain Ass'n of Credit Men v. Pierce

• Decision Date: 29 November 1926
• Citation: 251 P. 615,43 Idaho 279
• Parties: INTERMOUNTAIN ASSOCIATION OF CREDIT MEN, a Corporation, Appellant, v. A. J. PIERCE, Respondent
• Court: Idaho Supreme Court

251 P. 615

43 Idaho 279

INTERMOUNTAIN ASSOCIATION OF CREDIT MEN, a Corporation, Appellant, v. A. J. PIERCE, Respondent

Supreme Court of Idaho

November 29, 1926

BILLS AND NOTES-PROCUREMENT OF SIGNATURE BY MISREPRESENTATION-PRINCIPAL AND AGENT-MOTIONS FOR DIRECTED VERDICT-DEFENSE OF FRAUD NOT ESTOPPED.

1. Evidence, in action on note, held to present question for jury as to whether payee's agent and manager had secured signature of signer by misrepresentations.

2. Signer of note held entitled to rely on statements of agent and manager of payee company inducing signature and not required to investigate to ascertain whether he was being deceived.

3. Principal could not accept notes secured by agent and attempt to collect them without being bound by representations of agent made in securing their execution.

4. Motion by each side for directed verdict, one because of insufficiency of evidence to sustain defense of fraud and the other for failure of plaintiff to prove corporate existence held not to preclude submitting evidence of general defense to jury.

5. Signer of note cannot be estopped to interpose defense of fraud on theory that payee was thereby prevented from taking further action to collect account.

6. Whether or not payee gave consideration for notes after their execution was not material, if fraud existed in securing notes.

APPEAL from the District Court of the Fifth Judicial District, for Bannock County. Hon. R. M. Terrell, Judge.

Action on four promissory notes. Judgment for defendant. Affirmed.

Judgment affirmed, with costs to respondent.

B. W Davis, for Appellant.

The answer did not state facts sufficient to constitute a defense and proof was not admissible thereunder. (Brown v Bledsoe, 1 Idaho 746; Meadow Valley Land & Investment Co. v. Manerud, 81 Ore. 303, 159 P. 559.)

If the party claiming fraud has an equal opportunity to know the facts, or if as a prudent man he might readily or easily ascertain the facts concerning the fraud he cannot claim fraud unless he shows that he was induced by the representations to refrain from making any investigation as a prudent man, or that he was prevented from relying upon the facts known by himself. (Gilligan v. Gilligan, 94 Neb. 437, 143 N.W. 457; Jones v. Degge, 84 Va. 685, 5 S.E. 799; 12 R. C. L., sec. 123, p. 371; People's Bank of Minn. v. Reid, 86 Kan. 245, 120 P. 339; Augusta Motor Sales Co. v. King, 33 Ga.App. 433, 126 S.E. 866; Marksberry v. First Nat. Bank, 194 Ky. 401, 239 S.W. 461; Bank of Valley City v. Lee, 43 N.D. 503, 175 N.W. 575; Peden v. Birkle, 27 Colo. App. 323, 148 P. 913; Lincoln Trust Co. v. Spangler, 121 Wash. 267, 209 P. 521; Lebanon Nat. Bank v. Long, 220 Pa. 556, 69 A. 133.)

Merrill & Merrill, for Respondent.

Before a party can be relieved of the payment of a note on the ground of fraud he must allege and prove that the representations were made by one with authority; that they were material; that they were false and known to be false; that they were made under such circumstances that the person to whom they were made had a right to rely upon them; that he did rely upon them, and was damaged. (Kemmerer v. Pollard, 15 Idaho 34, 96 P. 206; Pocatello Security Trust Co. v. Henry, 35 Idaho 321, 206 P. 175, 27 A. L. R. 337.)

It is not necessary to allege and prove that an independent investigation was made or that such investigation was prevented by fraud of the other party. (Watson v. Molden, 10 Idaho 570, 79 P. 503.)

If the trial court denies both motions and submits the cause to the jury, then the verdict of the jury has the same effect as if no motions had been made. (McClure v. Wilson, 109 Wash. 166, 186 P. 302, 18 A. L. R. 1421; Banfield v. Crispen, 111 Ore. 388, 226 P. 235.)

TAYLOR, J. Wm. E. Lee, C. J., and Budge and Givens, JJ., concur.

OPINION

TAYLOR, J.

The Intermountain Association of Credit Men, a corporation, brought this action to recover judgment upon four promissory notes aggregating $ 969.14, signed by the defendant, A. J. Pierce, with one C. E. Topliff, payable to Smith-Faus Drug Company, and assigned to plaintiff for collection. It is conceded that the notes were subject to any defense which could be made against the original payee.

The defendant admitted signing the notes, but pleaded as an affirmative defense that his signature was secured by false and fraudulent representations made by the Smith-Faus Drug Company through its agent and manager, one Kephart.

At the close of the evidence, each side made a motion for a directed verdict, but upon different phases of the case. Plaintiff moved upon the ground that the evidence was wholly insufficient to sustain the defense of fraud, and defendant upon the ground that plaintiff had wholly failed to prove its corporate existence and compliance with the law as to foreign corporations doing business in Idaho, its existence and compliance having been denied. Both motions were denied, the cause submitted to the jury, and a verdict rendered in favor of defendant. This appeal is from the judgment and an order denying a motion for new trial.

Appellant contends that the answer did not state facts sufficient to constitute a defense, that the evidence was insufficient to justify the verdict, and that the verdict was against the law, and specifies as error: (1) The introduction of any evidence on behalf of the defendant over objection as to the sufficiency of the answer; (2) error in denying a directed verdict; (3) error in denying a motion for new trial; (4) error in submitting the case to the jury at all after motion for directed verdict by each side; (5) error in not properly instructing the jury; (6) error in the admission of certain evidence over objections.

The answer, among other things, alleged that Topliff and one Perkins had been in partnership and become indebted to the Smith-Faus Drug Company; that Topliff was about to buy out his partner, and that he as well as Kephart represented to the defendant that if he would sign these notes, the business could be operated at a profit by Topliff, and especially that Kephart represented that these notes would liquidate the indebtedness of Topliff and place the business upon a cash basis; that the indebtedness of Topliff would not exceed $ 1,000, and that these notes would liquidate Topliff's indebtedness, and place him upon a cash basis; and that the business could be conducted at a profit and pay these notes. The answer contained ample allegations of the other elements of falsity and fraud, and reliance of defendant thereon.

The defendant testified that after Topliff had related these alleged statements of fact and others at length to him, he required that Kephart verify them. The three met, and while defendant did not testify to having related all of Topliff's statements to Kephart, he testified that--

"I said to Mr. Topliff and Mr....