LeWis v. W. Stock Remedy Co. of Burlington
| Decision Date | 06 July 1920 |
| Docket Number | No. 32586.,32586. |
| Parties | LEWIS ET AL. v. WESTERN STOCK REMEDY CO. OF BURLINGTON ET AL. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Clarke County; Thomas L. Maxwell, Judge.
Action in replevin to recover a note of $632.50, executed by plaintiffs to defendant stock remedy company. The plaintiffs claim that there was fraud in the inception of the note. The defendant Burlington bank claims that the note was taken by it from the stock remedy company, in due course, before maturity, in good faith, and without notice of any defect or defense. The stock remedy company answered, denying the fraud, but took no part in the trial. Simmons & Co. filed a disclaimer. The Burlington bank had sent the note to Simmons & Co., of Osceola, for collection, and the note was there replevined. Trial to a jury, verdict for plaintiffs awarding possession of the note to them, and judgment against the Burlington bank for costs. The bank and the remedy company have appealed. Notice of appeal was served by them upon Simmons & Co., as well as plaintiff. Affirmed.Temple & Temple, of Osceola, for appellants.
O. M. Slaymaker, of Osceola, for appellees.
The note was given for five tons of stock food. A day or two afterwards plaintiffs considered that they had made an improvident purchase, and had bought more of the food than they were prepared to handle, and undertook to countermand the order. The appellants contend that the note had then passed beyond the control of the remedy company, and the evidence tends to show that it was not able to redeem; the company is now not able to meet its obligations. The four main points relied upon are that the alleged fraud, or false representations, were mere expressions of opinion; whether the agents of the remedy company, by deception, concealed the true character of the instrument, and falsely led plaintiffs to believe they were signing simply an agency contract, and not a promissory note, and whether defendants were negligent in signing; that there was not sufficient evidence to take the case to the jury on the question as to notice to the Burlington bank of equities; and that the trial court erred in the instructions in placing the burden of proof upon the defendant bank to show good faith. Appellees urge that the instructions were not properly excepted to. Plaintiffs' evidence as to the alleged false representations is not denied. The only evidence introduced on behalf of the defendants was that of the officers of the bank, to the effect that they had no notice, and that they purchased, or rather took the note as collateral, in good faith.
[1] 1. The fraud alleged and testified to by plaintiffs, is substantially as follows: That said remedy would cure hogs which were diseased with hog cholera, and keep them free from worms and other diseases; that said company had an agent at Van Wert, Iowa, who had been selling said remedy, but was unable to continue the business, because he was otherwise engaged in other business; that said agents desired to appoint the plaintiffs as the agents of the said company to sell and handle said remedy, and that said company would supply said remedy to supply said agents, and that said agents might return such of such remedy as they could not sell; that said agents represented to the plaintiffs that they would not ask the plaintiffs to purchase said remedy, or to obligate themselves to pay the same, and that they only desired them to execute such papers as would constitute an agency contract; that the plaintiffs relied on said representations as being true, but that they were all in fact false and untrue; that at said time said agents prepared certain papers which they said were contracts creating said agency, and by artifice, tricks, and devices prevented the plaintiffs from reading the same, and said agents falsely and fraudulently read said papers to the plaintiffs in such a way that they appeared to be papers intended only as contracts relating to said agency; that by their fraud and devices said agents concealed from the plaintiffs the fact that one of said papers to which they attached their signatures was a promissory note, and the plaintiffs at no time knew that either or any of said papers was a promissory note, or any other obligation on the part of the plaintiffs to purchase or agree to pay for said remedy. In McDonald v. Smith, 139 Mich. 211, 216, 102 N. W. 668-670, the Supreme Court of Michigan held:
The trial court instructed in reference to the alleged artifice or deception in securing the signatures, and in regard to negligent signing without reading. We do not understand appellants to complain of such instructions. We think there was evidence to go to the jury on the question of fraud.
[2][3][4][5][6] 2. We shall relate some of the circumstances bearing on the question as to the alleged defects in the note, and as to whether defendant bank was a good-faith purchaser for value, without notice; that is whether they so took the note in question as collateral, and as to whether defendant bank had notice of facts to put it upon inquiry. The place of business of the remedy company was at Burlington, and the bank had other dealings with it, and knew the character of its business. The remedy company was indebted to the bank, at the time of the transaction in question, about $4,000. The remedy company gave a note for $1,000 June 3, 1916, and at that time put up the note in suit, with other notes and contracts, as collateral to the $1,000 note; this was a short time after the date of the note, which was May 18, 1916. Soon after the note was given, plaintiffs say that they learned that it was claimed that they had given their note. Soon thereafter plaintiffs, by counsel, notified the Burlington banks, including defendant, that the note was fraudulent; but this bank claimed it had purchased the note before they received such notice. The plaintiffs lived in Clarke county, some 160 miles from Burlington; none of the officers of the bank were acquainted with them; the plaintiffs are young farmers, one of them 23 years of age; they owned no real estate, but were renters, of good personal standing; they had but little property above exemptions; the facts in regard to their property and financial standing were made known to the bank in a report furnished to them, but they claim this report was after they had taken the note. The original note was made out and signed with an indelible pencil. It was originally signed like this:
F. R. & H. H. Lewis.
Harold H. Lewis.
As it now appears, the two H's appear with two or three lines drawn through them, but the H's are plainly observable, so that the signatures now appear:
F. R. & Lewis.
Harold H. Lewis.
In other words, if the two H's are not considered as a part of the signature, the signature would read:
F. R. & Lewis.
Harold H. Lewis.
The plaintiffs both testify that, when the note left their hands, there were no lines through the two H's, and that they did not consent to or know of such change. No other witness who was present at the time of the signing testifies, and as we understand the record the plaintiffs' testimony at this point is not disputed. The note is indorsed in blank, “Western Stock Remedy Co.”
The court instructed, among other things, and in brief substantially:
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