Landauer v. Sioux Falls Imp. Co.

• Court: Supreme Court of South Dakota
• Writing for the Court: FULLER
• Citation: 10 S.D. 205,72 N.W. 467
• Decision Date: 05 October 1897
• Parties: LANDAUER v. SIOUX FALLS IMP. CO. et al.

10 S.D. 205
72 N.W. 467

LANDAUER
v.
SIOUX FALLS IMP. CO. et al.

Supreme Court of South Dakota.

Oct. 5, 1897.

Appeal from circuit court, Minnehaha county; Joseph W. Jones, Judge.

Action by Herman Landauer against the Sioux Falls Improvement Company and others. From a judgment for defendants, and from an order overruling a motion for a new trial, plaintiff appeals. Affirmed.

Haney, J., dissenting.

[72 N.W. 467]

T. B. McMartin (Cratty Bros., Gray, MacLaren, Jarvis & Cleveland, of counsel), for appellant. Davis, Lyon & Gates, for respondents.

FULLER, J.

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

[72 N.W. 468]

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 anything 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 Co., 3 S. D. 162, 52 N. W. 851. This position is untenable. The Civil Code declares that “all distinctions between sealed and unsealed instruments are abolished.” Comp. Laws, § 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. § 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 (S. D.) 67 N. W. 619. 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 (Comp. Laws, § 3575), 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...