Luverne State Bank v. Dailey

• Decision Date: 05 November 1924
• Citation: 51 N.D. 688,200 N.W. 793
• Parties: LUVERNE STATE BANK v. DAILEY et al.
• Court: North Dakota Supreme Court

51 N.D. 688

200 N.W. 793

LUVERNE STATE BANK

v.DAILEY et al.

Supreme Court of North Dakota.

Nov. 5, 1924.

Syllabus by the Court.

In an action upon promissory notes, where it appeared that the appealing defendant had signed the notes as an accommodation maker for the cashier of the plaintiff or for his comaker, an instruction directing the jury to find for the defendant, if they should find the note was given for the purpose of accommodation of the payee bank, is held to be prejudicially erroneous.

Appeal from District Court, Barnes County; M. J. Englert, Judge.

Action by the Luverne State Bank, a corporation, against E. H. Dailey and another. From judgment for defendants and order denying its motion for a new trial, plaintiff appeals. Reversed and new trial granted.Divet, Holt, Frame & Thorp, and D. R. Divet, all of Fargo, for appellant.

A. P. Paulson, of Valley City, for respondents.

BIRDZELL, J.

This is an appeal from a judgment and from an order denying the plaintiff's motion for a new trial. The action is upon two promissory notes, one for $2,000 and the other for $1,500; the plaintiff bank is payee, and the defendants are the makers. The notes were given as renewals or notes that had been previously given in the following circumstances: The defendant E. H. Dailey had been negotiating for or had purchased a store at Glenfield. He did not have the amount of money necessary to finance the purchase, and steps were taken to obtain assistance from the defendant McQueen, a farmer living in the vicinity of Luverne with whom there had been some previous talk relating to financial assistance to Dailey. Dailey's brother-in-law, one Cheshire, was cashier of the plaintiff bank where the defendant McQueen transacted considerable business. Dailey signed two notes, one for $2,000 and one for $1,500, covering the purchase price of the store and a partial payment on a dwelling house at Glenfield. He left these notes at the bank and Cheshire took them out to McQueen's place, where, after a conference lasting about an hour, McQueen signed them. Later, when the notes matured, Dailey signed the renewal notes and left them at the bank and McQueen came there and signed them. Subsequently, Dailey was discharged in bankruptcy, and McQueen defends the suit brought on the notes by setting up the accommodation character of the instruments. The trial resulted in a verdict and judgment for the defendant. The trial court later overruled the plaintiff's motion for a new trial. On appeal, the appellant challenges the sufficiency of the evidence to justify the verdict, and also assigns error in the giving of the following instruction:

“The burden is on the defendant in this case to satisfy you by fair preponderance of the evidence that such an agreement was made and had between the defendant and Mr. Cheshire, the cashier of the bank, to the effect that Mr. Cheshire represented to the defendant that, if he would sign the note, he, Mr. Cheshire, would see to it that the defendant would never have to pay the same, and that the defendant would in no way be liable thereon, and that the note was signed by Mr. McQueen for the purpose of accommodation of the bank and without any consideration therefor. Now, should you find from the evidence in this case, that the defendant has satisfied you by fair preponderance of the evidence that such representations were made, and that the note was signed on such conditions and upon those promises, then the defendant would not be liable.”

The defendant's evidence with reference to the character of the transaction went in substantially without objection. He says that Cheshire stated, in substance:

“If you will sign those notes, I will guarantee you will not have anything to pay. I will not run, let him run any debt to the wholesale house, nor let him run any debt to the bank of Glenfield, and this man he is buying the business of, in the fall, if he has any accounts that is good, he will pay the cash for them.”

He further testified as follows:

“Q. Did he (Cheshire) say anything to you about Mr. Dailey's having you sign the note? A. No, sir; he didn't.

Q. Did you make any agreement with Dailey to sign the notes at all? A. Never made any deal with Dailey to sign the notes at all.

Q. But you didn't understand you were to be held on those notes? A. No, sir.

Q. What did you suppose you signed them for? A. For accommodation to Mr. Cheshire, to make it look good for the bank.

Q. Did he state that to you? A. Yes.

Q. You knew that Mr. Dailey was going to get the money out of the bank on these notes, didn't you? A. Well, I suppose he did; yes. * * *

Q. What did you understand by making it look good for the bank? A. Mr. Cheshire wanted to make it, because they was brother-in-laws-when the directors come to him, so it would look O. K. to the directors.

Q. So it would look O. K. to the directors? A. Yes.

Q. Say anything about the examiner? A. Didn't say anything about the examiner. The idea was that these notes would look better with the additional name.

Q. In other words, he was deceiving the directors with this note? A. I don't know about that.

Q. What did you intend? A. I didn't go into that deal with him.

Q. What did you intend by signing this note? A. I signed it for Mr. Cheshire's accommodation; nobody else.

Q. On his statement, it was to make it look good to the directors? A. Yes, sir; for the bank.

Q. You were willing, if this note with your name on it, would make it look to the directors? A. I was willing if he thought so.

Q. You thought if he could deceive the directors with this note, you were willing? A. Well, it was up to him. * * *

Q. What do you mean, it was up to Cheshire? A. Well, he asked me to sign those notes.

Q. Answer the question. What do you mean when you say it was up to him? A. I could not answer-that is a question I could not answer.

Q. What did you mean when you said it? A. It was a question I could not answer. It was up to him, if he thought it would look good for the bank. That is the way I meant it.

Q. If he thought it would look good for the bank to show your name on it, you were willing he should do it? A. I done it for the accommodation of...