John K. & Catherine S. Mullen Benev. Corporation v. School Dist. No. 17-H of Big Horn County
| Decision Date | 10 April 1935 |
| Docket Number | 7354. |
| Citation | 43 P.2d 902,99 Mont. 388 |
| Parties | JOHN K. & CATHERINE S. MULLEN BENEV. CORPORATION v. SCHOOL DIST. NO. 17-H OF BIG HORN COUNTY, MONT. |
| Court | Montana Supreme Court |
Rehearing Denied May 3, 1935.
Appeal from District Court, Big Horn County, Thirteenth District Robert C. Stong, Judge.
Action by the John K. & Catherine S. Mullen Benevolent Corporation against School District No. 17-H of Big Horn County, Montana a public corporation. From a judgment in favor of defendant plaintiff appeals.
Reversed and remanded, with direction.
M. J. Lamb and G. C. Cisel, both of Billings, for appellant.
C. C. Guinn, of Hardin, for respondent.
Plaintiff corporation brought this action in the district court of Big Horn county to recover $1,650 with interest, which sum is alleged to be due to plaintiff from the defendant school district, on fifty-five interest coupons for $30 each.
It appears that on January 15, 1921, the defendant school district issued seventy-five bonds for $1,000 each, bearing interest at the rate of 6 per cent. per annum, payable on the 15th days of January and July in each year, as evidenced by interest coupon notes attached to and made a part of the bonds. The coupons were made payable at the office of the county treasurer of Big Horn county, or at the banking house of Kountze Brothers in New York City, hereinafter called the bank. The bonds were payable to "bearer," and were sold and delivered to Kountze Brothers. Thereafter the bank sold and disposed of the bonds to some third party. The evidence discloses that they were purchased by J. K. Mullen from Bosworth, Chanute & Co., in Denver, Colo., in March, 1921, and were transferred to the plaintiff corporation on March 30, 1929. It appears that the money to pay the coupons was always sent by the county treasurer to the bank. This was the practice which was followed from the time when the bonds were issued.
From the time it became the owner of the bonds, plaintiff always deposited the interest coupons, when due, in the First National Bank of Denver. That bank then forwarded them to the bank in New York for payment, and in this manner all the coupons which fell due prior to July 15, 1931, were paid.
On May 23, 1931, the county treasurer, according to his custom, transmitted enough money to the bank to pay the interest coupons which were to become due July 15, 1931. Plaintiff deposited its coupons with the First National Bank of Denver on October 6, 1931; thereafter that bank proceeded to present them to the New York bank for payment. This presentment was not made until after October 13, 1931, upon which date that bank had become bankrupt. The coupons were returned to the Denver bank with the advice that, Kountze Brothers having closed its doors, no presentation of the interest coupons could be made. The Denver bank then transmitted them to the county treasurer of Big Horn county for payment, but they were returned without payment. Plaintiff then instituted this action.
The county treasurer testified that he transmitted the interest due on the bonds in question to Kountze Brothers on May 23, 1931; that he had no notice prior to July 15, 1931, that the interest was to be paid to any other than the New York bank; that it did not return the money to him; and that he did not know what disposition was made of the remittance forwarded by him.
The cause was submitted to the court sitting without a jury. The court found generally in favor of the defendant and against plaintiff. From the judgment entered thereon plaintiff appeals.
The controlling question presented for our solution is whether the transmittal of the money by the county treasurer to the New York bank constituted a payment of the interest coupons so as to bar plaintiff from recovery in this action. Plaintiff contends that it did not, because "(1) the school district having seen fit to make the bonds payable at the banking house of Kountze Brothers at New York City, did thereby make that banking house its agent and was responsible for any dereliction or defalcation of its agent; (2) the interest coupons being negotiable instruments and having all the attributes of commercial paper, the plaintiff was not required to present them to Kountze Brothers for payment on July 15, 1931, the due date, or at any particular time, and cannot be required to suffer the loss resulting from the failure of Kountze Brothers to pay the interest coupon notes."
It will be noted that the coupons in question are payable to bearer and possess all the qualities and incidents of commercial paper. Title to such paper passes by delivery. See Kalman v. Treasure County, 84 Mont. 285, 275 P. 743, 746. In the case cited this court, in discussing a similar situation, used the following pertinent language: To the same effect is United States National Bank v. Shupak, 54 Mont. 542, 172 P. 324. This rule is supported by the great weight of authority everywhere. See Baldwin v. Adkerson, 156 Va. 447, 158 S.E. 864; Peurifoy v. Boswell, 162 S.C. 107, 160 S.E. 156; In re Interborough Consolidated Corporation (C. C. A.) 288 F. 334, 32 A. L. R. 932; Cheney v. Libby, 134 U.S. 68, 10 S.Ct. 498, 33 L.Ed. 818; also, 8 C.J. 605, 606; and annotation upon subject in 2 A. L. R. 1381, wherein a long list of cases from numerous jurisdictions is to be found.
Defendant, however, contends that this rule is not applicable in the instant case, for the reason that plaintiff, by virtue of a long course of dealing, made Kountze Brothers its agent. There is respectable authority supporting the proposition that in certain instances there may be an exception to the general rule, viz., that through a course of dealing plaintiff might be deemed to have constituted Kountze Brothers its agent for the purpose of receiving payment on the coupons. See First National Bank v. Hessell, 133 Wash. 643, 234 P. 662; Galligan v. Schapiro, 82 Colo. 423, 260 P. 519; Wagner v. Spaeth, 36 Wyo. 279, 254 P. 123; Ross v. Johnson, 171 Wash. 658, 19 P.2d 101; Fowle v. Outcalt, 64 Kan. 352, 67 P. 889. The rule is well stated in 8 C.J. 598, as follows:
A careful study of the record in this case fails to disclose anything establishing, or tending to establish, that plaintiff had made the New York bank its agent or had recognized it as such. The facts are quite to the contrary. While it is true that Kountze Brothers' bank was the original purchaser of the bonds from the district, there is nothing to show that it held them for any length of time. It is affirmatively disclosed that it did not sell the bonds with the coupons attached to the plaintiff, but the bonds passed through the hands of at least two intermediate holders. There was never any direct dealing of any kind between plaintiff and Kountze Brothers, except the fact of the transmittal of coupons to it for payment. This cannot be construed as constituting Kountze Brothers the agent of plaintiff, because the district, in the first instance, had made that bank the place of presentment and payment, so that the mere presentation of the coupons there was only equivalent to presenting them direct to the county treasurer. In all of the cases wherein an exception to the general rule has been recognized, there was something to show an independent relation between the holder of the paper and the alleged agent. Here, the only relation of agency shown is between the district and Kountze Broth...
To continue reading
Request your trial
-
Sunbird Aviation, Inc. v. Anderson
...primarily liable on a negotiable promissory instrument is indebted in that amount to the payee. John K. Etc. Benev. Corp. v. School District No. 17-H (1935), 99 Mont. 388, 43 P.2d 902. Therefore, Sunbird is entitled to collection of the debt owed by Anderson on the promissory note and the i......