Koehler v. Dodge

• Decision Date: 03 February 1891
• Citation: 47 N.W. 913,31 Neb. 328
• Parties: GUSTAVE KOEHLER, APPELLANT, v. F. C. DODGE ET AL., APPELLEES
• Court: Nebraska Supreme Court

47 N.W. 913

31 Neb. 328

GUSTAVE KOEHLER, APPELLANT, v. F. C. DODGE ET AL., APPELLEES

Supreme Court of Nebraska

February 3, 1891

APPEAL from the district court for Hall county. Heard below before TIFFANY, J., and HARRISON, J.

AFFIRMED.

O. A Abbott, for appellant:

The parol agreement did not taint the original notes with usury. (Butterfield v. Kidder, 25 Mass. 512; Allen v Turnham, 3 So. Rep., 854; Richards v. Kountze, 4 Neb. 206; Dell v. Oppenheimer, 9 Id., 454; Bank v. Wagner, 9 Pet. [U. S.], 378; Bushby v Finn, 1 Ohio St. 410; Hotel Co. v. Wade, 7 Otto [U. S.], 13. Knowledge of an officer of a corporation is not notice to the latter, unless acquired in the prosecution of its business. (Wickersham v. Zinc Co., 18 Kan. 481; A. State Bank v. Savery, 82 N.Y. 291; Washington Bank v. Lewis, 22 Pick. [Mass.], 24; Fulton Bank v. Canal Co., 4 Paige Ch. [N. Y.], 127.

Thummel & Platt, contra:

To enforce the usury penalty against a purchaser, it is not necessary to prove that he had full and certain knowledge of the defense. (Cone v. Baldwin, 12 Pick. [Mass.], 545; Goddard v. Lyman, 14 Id., 268; Packwood v. Gridey, 39 Ill. 388; Wade, Notice, 44; Haescig v. Brown, 34 Mich. 503; Bank v. Scott, 10 Neb. 86; Olmsted v. Security Co., 11 Id., 492; Cheney v. Cooper, 14 Id., 416; Evans v. De Roe, 15 Id., 631; Nelson v. Hurford, 11 Id., 465; Knox v. Williams, 39 N. E. Rep., 786; Lincoln Natl. Bank v. Davis, 25 Neb. 377.) A director acting as in this case comes fully under the rule of notice. (Smith v. Livingston, 111 Mass. 342; Lincoln Natl. Bank v. Davis, 25 Neb. 377; Suit v. Woodhall, 113 Mass. 391; Bank of U. S. v. Davis, 2 Hill [N. Y.], 451.)

OPINION

NORVAL, J.

This suit was brought by the appellant in the district court of Hall county to foreclose a chattel mortgage given to secure two promissory notes, each in the sum of $ 8,310.45, bearing date October 29, 1884, and drawing ten per cent from date. The notes were executed by Freeman C. Dodge, and were payable to William A. Hagge, the cashier of the State Central Bank of Grand Island, for the use and benefit of that bank.

It is alleged by the plaintiff that the defendants, at the time of the execution of the notes and mortgage, were partners doing business under the style and firm name of F. C. Dodge; that the notes and mortgage were given for the use and benefit of said firm, and that the plaintiff is an innocent holder for value.

The defendants contend that the notes were given in renewal of four other notes given to the State Central Bank, which were tainted with the vice of usury, and that the plaintiff purchased the notes in suit after maturity and was chargeable with notice of the consideration for which they were given.

The district court court made the following findings of facts:

"First--That the defendants Freeman C. Dodge and Edmund B. Abbott were partners doing business under the style and firm name of F. C. Dodge, as alleged in plaintiff's petition, and that the notes and mortgage sued on were made by the defendant Freeman C. Dodge for the use and benefit of said firm.

"Second--The court further find that the plaintiff, Gustave Koehler, was at the time of the commencement of this suit the lawful owner and holder of said notes and entitled to a beneficial interest in said mortgage; that default has been made in the condition of said mortgage, and that the plaintiff is entitled to an order of sale of the mortgaged property.

"Third--And the court do further find that the notes described in said mortgage were executed and delivered to said William A. Hagge for the use and benefit of the State Central Bank of Nebraska, of which bank he was, at the date of said notes, cashier.

"Fourth--The court do further find that one of the notes described in said mortgage and marked 'Ex. A,' was, on the 5th day of February, A. D. 1885, sold, indorsed, assigned, transferred, and delivered to the United States National Bank of Omaha, Nebraska, as collateral security for a loan made to the State Central Bank of Nebraska, or to William A. Hagge and Henry A. Koenig, who were then the sole owners of the stock in the State Central Bank. That the assignment, transfer, sale, and delivery was made before the maturity of said note, and without any knowledge or notice to said United States National Bank of any defense thereto, and was received by the said United States National Bank of Omaha, Nebraska, as collateral security as aforesaid in the ordinary course of its business, and for value; that prior to the purchase of 'Ex. A' by the plaintiff herein, it had been returned to the Citizens National Bank, or Koenig and Hagge.

"Fifth--The court do further find that the other note described in said mortgage, and marked 'Ex. B,' was by the State Central, Bank of Nebraska sold, assigned, indorsed, transferred, and delivered to the Citizens National Bank of Grand Island, Nebraska, in the ordinary course of the business of said State Central Bank of Nebraska, and that the Citizens National Bank of Grand Island, Nebraska, purchased the same on the 16th day of December, 1884, and before the maturity thereof, but with notice of the equities of the defendant.

"Sixth--The court do further find that Henry A. Koenig was president of the State Central Bank of Nebraska, at the time said notes and each of them were made. That William A. Hagge was its cashier at the same time, and the court do further find that said Henry A. Koenig was, upon the organization of the Citizens National Bank of Grand Island, Nebraska, duly elected president vice president thereof, and that said William A. Hagge was duly elected vice president thereof; that they have held said offices respectively since the organization of said last named bank. That they, and each of them, at the time of the transfer of the note marked 'Exhibit B' had full knowledge of the consideration for which said note 'Exhibit B,' was given. That said knowledge was acquired by them while employed as president and cashier of the said State Central Bank of Nebraska.

"Seventh--The court do further find that said notes and each of them were purchased by the said plaintiff, after the maturity thereof, and that he paid therefor a valuable consideration and their full market value, and that he purchased or obtained 'Exhibit B' from the Citizens National Bank of Grand Island, Nebraska, and 'Exhibit A' from the Citizens National Bank, or of Henry A. Koenig and William A. Hagge.

"Eighth--And the court do further find that at the time of the purchase thereof he was chargeable with full notice of the consideration for which said notes and each of them were given.

"Ninth--The court do further find that the said notes 'Exhibits A and B' referred to in said mortgage, and each of them, were given in renewal of four several promissory notes described as follows, to-wit: Three notes dated September 21, 1881, one for $ 3,000 due in thirty (30) days, one for $ 3,000 due in sixty (60) days, and one for $ 6,000 due in ninety (90) days thereafter, which said three several notes each bore interest upon their face at the rate of ten per centum per annum, payable monthly until paid, and each of said three notes were known and numbered as 5088, 5089, 5090, and one other note dated February 7, 1882, for $ 6,000, which said last mentioned note was No. 5351, and was payable on demand with interest from date at the rate of ten per centum per annum, on which last mentioned note there was paid on the 24th day of June, 1882, the sum of $ 4,000, as principal.

"Tenth--The court do further find that at the time of the execution and delivery of the said four notes above referred to as Nos. 5088, 5089, 5090, and 5351 there was a mutual understanding and agreement between the defendants and the State Central Bank of Nebraska, to which said notes were payable, that the defendants should pay interest thereon from the date thereof at the rate of eighteen per centum per annum, instead of ten per centum per annum, as expressed on the face of said notes.

"Eleventh--The court do further find that the defendants, after the execution and delivery of said four notes last above mentioned, paid interest thereon at the rate of eighteen per centum per annum on the amount due thereon from the date of said notes respectively up to the 21st day of January, 1883, and the court finds the amount of said payments so made at the rate of eighteen per centum per annum to be the sum of $ 3,498.

"Twelfth--The court do further find that the notes described in the mortgage and marked Exhibits A and B were given in renewal of the notes numbered 5088, 5089, 5090, and 5351, with interest thereon at the rate of ten per centum per annum from the 21st day of June, 1883, up to the 29th day of October, 1884, the day of the date thereof, and that by mistake of the parties drawing said notes and mortgage the same were made for a larger amount than the unpaid principal of said four notes, with interest thereon, the amount of such error being the sum of $ 140.90."

A decree of foreclosure was entered for the sum of $ 10,502, and the costs of suit were taxed against the plaintiff. The case is brought here by the plaintiff on appeal.

It appears from the tenth finding that at the time of the making of the four notes which were renewed by the notes in suit it was agreed between the defendants and the payee that the makers should pay interest thereon from their date at the rate of eighteen per cent, instead of ten per cent as expressed on their face. It is argued by counsel that the parol contemporaneous agreement to pay a usurious rate of interest did not taint the notes with usury. It is doubtless true that when a person borrows money and gives his note therefor, specifying a lawful rate of interest, a verbal...