Iowa Nat. Bank v. Carter
| Decision Date | 23 November 1909 |
| Citation | 123 N.W. 237,144 Iowa 715 |
| Parties | IOWA NATIONAL BANK, Appellant, v. W. U. CARTER, Appellee |
| Court | Iowa Supreme Court |
Appeal from Polk District Court.--HON. HUGH BRENNAN, Judge.
SUIT in equity upon three certain promissory notes made by defendant to the Port Huron Machinery Company, Limited, or order, and by it assigned or indorsed to plaintiff, and to foreclose a certain chattel mortgage made to secure said notes. Defendant pleaded that the notes were delivered without authority, and contrary to an agreement between the parties or their representatives; that the notes were given in consideration of the sale of a shredder by the Port Huron Company to defendant, which shredder was sold with a warranty, and which warranty was not made good; that the notes and mortgage were and are without any consideration, and are therefore void. It was also alleged that plaintiff is not a good-faith holder of the notes for value, and that it, in fact, had notice of all defenses thereto. Upon these and perhaps some minor issues the case was tried to the court, resulting in a decree dismissing plaintiff's petition, and plaintiff appeals.--Affirmed.
Decree affirmed.
Dunshee & Haines, for appellant.
Yoss & Wallace and Thos. J. Guthrie, for appellee.
Upon most of the material issues in the case there is a sharp conflict in the testimony. It is conceded, however, that the notes and mortgage in suit represent the purchase price of a corn husker and shredder sold by the Port Huron Machinery Company, a jobbing institution in the city of Des Moines handling mainly the manufactured products of the Port Huron Engine & Thresher Company of Port Huron, Mich. The sale was made to defendant, Carter, during the year 1906, and the property was shipped to the purchaser at North English, in Iowa County. By the terms of the contract defendant was to execute notes and mortgages upon, the arrival of the machine. There was an express warranty of the machine and it was provided that, if the purchaser was not satisfied a test was to be had, local farmers to be selected according to the terms of the contract as judges. A refusal to submit to the test was to be accepted as a waiver of the warranties. Defendant refused to execute the notes and mortgage when the machine arrived, claiming that he had the right to, or would, insist upon trying it before executing the notes and security. This was acceded to by the jobbing company upon condition that Carter would execute the notes and securities and deposit them in a bank at North English, to be delivered to the company after the machine had been tested to the satisfaction of Carter, and whenever he might order their delivery. We now quote the following statement from appellant's brief:
Carter therefore executed the notes and mortgage and left them in the North English Bank, and took the machine and tried it. After a day or two, he complained to the jobber that the machine was not satisfactory, and they sent their expert down from Des Moines. The Des Moines expert failed to satisfy him, whereupon Mr. Carter sent a registered letter to the manufacturer in Michigan, in accordance with the terms of the warranty, demanding a competitive test. The manufacturer sent its expert to hold the test, but upon arrival the parties failed to agree, and the test was never held. The reasons for the failure to have the test are disputed. Mr. Carter, however, ordered the bank to deliver the notes over to Mr. West, who is the manager of the jobbing company in Des Moines, and the notes were delivered to West, and taken to Des Moines, and turned over to the bank. Carter claims, as will appear more fully hereafter, that the notes were delivered on condition that they were not to be put in circulation, but were to be returned if the machine did not later on prove satisfactory. The three notes were by their terms to mature in one, two and three years after date, and, not being salable, were deposited with the bank as collateral security for a big loan which the jobbing company had from the Iowa National Bank.
Plaintiff bank claims that a year later, and when one of the notes was about to mature, it was withdrawn from the collateral account and discounted by it. As originally written, the notes were executed November 19, 1906, and matured January 1, 1907, 1908 and 1909, respectively. As they were not executed according to contract, but pursuant to a modified agreement, the dates of maturity were changed to January 1, 1908, 1909 and 1910, respectively, and interest was to run after October 1, 1907, instead of from date. This was due, so appellee Carter claims, to an agreement made in the late fall or early winter of 1906, after the machine company had failed to make the machine work, to the effect that the machine company was to receive the notes so changed from the North English bank, hold and not transfer them;
And that at the commencement of the 1907 corn shredding season the machine company was to send its agents to North English and make said machine operate, and that in case it did not, or could not, then it was to deliver back to Mr. Carter the three notes; that the notes were turned over to said company, and, that in violation of said agreement and in breach of faith, the said machine company transferred the same to the appellant, if at all; that the agents of the machine company never afterwards appeared to place said machine in operation, and that said machine never did or was thereafter operated, and was worthless to appellee, and the consideration of said notes wholly failed.
Appellee also claims that the notes, if transferred to plaintiff at all, were given it as collateral security for a pre-existing debt of the machinery company; that the bank, even if a purchaser of any of them, is not a good-faith holder; and that the notes are not negotiable for the reason that in virtue of a provision in the chattel mortgage which was executed as a part of the transaction the time and amount of payment were uncertain. Upon the issues and claims thus stated the case was tried to the court, resulting in a finding that plaintiff is not a bona fide holder of the notes, and that the equities were with the defendant, and a decree was entered dismissing plaintiff's petition.
The appeal calls for a determination of certain issues of fact which are in dispute, and for a statement of the law applicable to the facts so found. It is not necessary, as we view it, to go into all the matters argued by counsel, for the way seems clear for a disposition of the controversy upon well-settled rules of law. That there was a warranty of the machine is conceded, and it is also agreed that the dates fixed for the maturity of the notes and the time when interest was to begin were changed and altered by writing said dates and times over the ones originally given; thus creating an apparent alteration of the notes. That this change was made pursuant to some sort of an agreement can not well be questioned. There is a dispute as to what this agreement really was. Appellee says that, as the machinery company had failed to make the machine work to his satisfaction during the year 1906, it was agreed that the date of the maturity of the notes should be changed as well as the time when the interest should begin to run, that the agent of the machine company was to take the notes from the North English bank to Des Moines, and deliver them to his company, there to be held by it and not transferred; and that its agents should return during the corn-shredding season of the year 1907, and make the machine work satisfactorily or agreeably to the warranties, and upon failure to do so, was to return the notes and the mortgage made to secure the same. He further claims that, in violation of this agreement, the machine company immediately deposited the notes with plaintiff as collateral security for a pre-existing debt, and that it never returned to try and make the machine work or put it in condition to meet the warranties. Further, it is contended that the machine in its then condition was wholly worthless, and of no value for the purpose for which it was purchased.
Appellant presents a very different version of the affair. The agent of the...
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