Landauer v. Sioux Falls Imp. Co.
| Decision Date | 05 October 1897 |
| Citation | 72 N.W. 467,10 S.D. 205 |
| Parties | LANDAUER Plaintiff and appellant, v. SIOUX FALLS IMP. CO. et al., Defendant and respondent. |
| Court | South Dakota Supreme Court |
Appeal from Circuit Court, Minnehaha County, SD
Affirmed
T. B. McMartin, Cratty Bros.,
Gray, MacLaren, Jarvis & Cleveland
Attorneys for appellant.
Davis, Lyon & Gates
Attorneys for respondents.
Opinion filed Oct. 5, 1897
This action upon a promissory note negotiable in form, for $5,000, executed by, made payable to, and bearing the blank indorsement of the defendant corporation, together with the guaranty of its co-defendants, resulted in a judgment for the defendants, from which. and from an order overruling a motion for a new trial, plaintiff appeals. It is shown by the evidence that, when executed and indorsed, the note was placed in escrow with D. M. Hillis, to be delivered to A. F. Smith only upon condition that the latter should deliver for the defendant corporation, at Sioux Falls, certain machinery, assignments of patents, and other property; and, notwithstanding Smith failed to perform any of these conditions, the note was delivered to him, in violation of the express contract of the parties, without authority, and without any consideration. Plaintiff claims to be a bona fide holder, or in the language of the statute, “an indorsee in due course.” Comp. Laws, § 4487. As an entire failure of consideration and an unauthorized delivery of the note to Smith are shown, plaintiff cannot recover unless he is an indorsee in due course. Id. §§ 4486, 4488. Plaintiff was not sworn, and the only evidence touching his connection with the paper was its production at the trial, and the deposition of Joseph Spiro, of Pontiac, Ill., who testified in substance; that he purchased the note before it became due, of a stranger by the name of Beattie through the agency of Albert Schoenbeck, a real estate dealer in Chicago (after inquiring of two Sioux Falls banks regarding the standing of the maker and guarantors), for $4,050, in currency, and without having learned anything prejudicial or detrimental to the note, or any thing against its character in any way.
Respondents contend that, as the makers’ corporate seal is affixed to the note, it is not negotiable; citing Heffleman v. Pennington County,(1892). This position is untenable. The Civil Code declares that “all distinctions between sealed and unsealed instruments are abolished,” Comp. Laws. Sec. 3549. The Code of Civil Procedure provides that the period within which an action on a sealed instrument can be commenced is 20 years. Id. Sec. 4849. These apparently inconsistent provisions were incorporated in the revision of 1877. The several Codes then adopted are deemed to have been passed on the same day, and as parts of the same statute. If the provisions of one Code conflict or contravene the provisions of another, the provisions of each must prevail as to all matters and questions arising thereunder out of the same subject matter. Rev. Codes 1877, p. 900; State v. Smith,(1896). The only point decided in Heffleman v. Pennington Co. is that county warrants with the county seal attached are sealed instruments, within the meaning of the statute of limitations; and the court expressly restricts the effect of its decision to that one question. Effect must be given to the Civil Code, and the law in this jurisdiction should be stated thus: “There are no distinctions between sealed and unsealed instruments except as to the statute of limitations.”
No opinion is expressed concerning the defendant corporation’s power under its charter to purchase the property contracted for. when its note was issued. As the question does not appear to have been considered by the court below. it would be both unfair and unsatisfactory to dispose of it upon a record thus prepared.
Concerning the guaranty written upon the back of the note introduced in evidence, which shows a heavy pen mark drawn across the word “We” and the pronoun “I” inserted. thereby changing a joint instrument to a joint and several obligation , the evidence was conflicting as to the time the alteration was effected; and, in view of all the circumstances, it was not error to charge the jury that the appearance of the instrument was sufficient to put a purchaser upon inquiry, and appellant has no cause to complain of the following instruction:
“Therefore, if, after you consider this evidence, you believe, by a preponderance of the evidence. that the guaranty, at the time it was signed by Mr. Ward, Hayward Watson and the other guarantors, read ‘we guarantee,’ etc., and that the word ‘we’ was subsequently erased, and inserted in its place without their knowledge or consent, then the court instructs that you shall find for these defendants, the guarantors, in this action.”
A different question was presented in the recent case of Foley-Wadsworth Imp. Co. v. Solomon,(1897). As the alteration in the guaranty then under consideration did not enlarge the liability of the makers thereof, or in any manner tend to excite suspicion, we entertained the presumption that the alteration was made prior to or contemporaneously with the execution and delivery of the instrument, and held that it was error to exclude the same from the consideration of the jury. “A typical instance of a suspicious alteration is where an instrument coming from the custody of one claiming under it shows an interlineation or erasure enlarging the rights of the propounders.” 2 Am. & Eng. Enc. Law (2d Ed.) 278.
As the court admitted the paper in evidence, and placed upon defendants the burden of proof by instructing the jury, in substance, that the guaranty could not be avoided unless it was found from a preponderance of evidence that an alteration of the instrument was effected without their knowledge or consent, after the execution thereof, the further charge that the alteration was sufficient to put subsequent purchasers upon inquiry could not, in any view of the circumstances of this case, be regarded as fatally erroneous. Moreover, the delivery of this fraudulently procured instrument was unlawfully made or obtained by plaintiff’s assignor or some preceding holder, under circumstances unrevealed; and it will not do for us to say, as a matter of law. that the trial court was not justified in...
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