Manufacturers' Nat. Bank of Racine v. Newell

• Decision Date: 27 March 1888
• Citation: 37 N.W. 420,71 Wis. 309
• Parties: MANUFACTURERS' NAT. BANK OF RACINE v. NEWELL ET AL.
• Court: Wisconsin Supreme Court

71 Wis. 309

37 N.W. 420

MANUFACTURERS' NAT. BANK OF RACINE

v.NEWELL ET AL.

Supreme Court of Wisconsin.

March 27, 1888.

Appeal from circuit court, St. Croix county.

Action on a promissory note discounted by plaintiff and appellant, Manufacturers' National Bank of Racine. August 25, 1884, the J. I. Case Threshing-Machine Company, a corporation doing business at Racine, by its agent, sold to the defendant P. F. Newell, at Hammond, St. Croix county, a separator and steam-engine for threshing grain; that at the same time, and in part consideration therefor, a note bearing that date, purporting to be executed by the said P. F. Newell and his brother, M. J. Newell, was made, wherein they promised to pay on or before November 15, 1885, to J. I. Case Threshing-Machine Company or bearer $800 at the bank of New Richmond, with interest at 7 per cent. per annum from that date until paid. This action was commenced December 12, 1885, to recover the amount of the note, which the complaint alleged to have been duly sold, assigned, and transferred to the plaintiff, a banking corporation at Racine, by said company for a valuable consideration, before the same became due. The defendant M. J. Newell separately answered, and denied that he ever signed, executed, or delivered the note. The defendant Peter F. Newell separately answered, and admitted that he executed, signed, and delivered the note. He also alleged, in effect, that he purchased the separator and steam-engine, at the agreed price of $1,400, upon a warranty, upon which he relied, as to its good quality and efficiency; and that the machine was worthless, and that he had in consequence suffered loss greater in amount than such price of the machine; and that the plaintiff took and received the note with fair notice, and a knowledge of such breach, and all the facts therein stated. After the close of the testimony, the court directed a verdict in favor of the defendants, which was returned accordingly. From the judgment entered thereon the plaintiff brings this appeal.Baker & Smith, for appellant.

L. P. Wetherby and R. H. Start, for respondents.

CASSODAY, J., ( after stating the facts.)

The name of M. J. Newell was signed to the note in question by his brother Peter F., in the presence of the agent of the threshing-machine company, but apparently without any authority, express or implied. The most that is claimed is that when Peter F., some months afterwards, told him he had so signed his name, he made no response. There is no claim that M. J. Newell was in business with his brother, nor that he had any interest in the purchase, nor that such agent was induced to believe, or had any expectation of holding him liable in any other capacity than as mere surety, solely by virtue of his name being signed as stated. Upon these admitted facts, it is evident that if the defense made by Peter F. Newell, as principal defendant, is available to him, then it is equally available to M. J. Newell, and the direction of the verdict was justifiable. For the purposes of this case, it must be assumed that had the action been brought by the company, instead of the bank, the defense to the note made by Peter F. Newell, under the breach of the warranty on the purchase of the machines, would have been a complete and perfect bar to any recovery. The only question for consideration, therefore, is whether it appears conclusively, from the undisputed evidence, that the plaintiff was not a bona fide purchaser of the note in suit for value before maturity? If it was not such bona fide purchaser, then the court was justified in directing a verdict in favor of both defendants; otherwise, the judgment must be reversed. The testimony on this point is undisputed. It consists of the depositions of B. B. Northrup and J. I. Case, taken on the part of the plaintiff, and offered and read in evidence by the defentants. These depositions, as far as material here, are to the effect that during the times in question Northrup was cashier, and Case president, of the plaintiff bank; that during the same times Case was director and president, and Northrup a directer, of the company; that during the same times M. B. Erskine was a stockholder and director in the company, and also in the bank; that during the same times the Baker estate was a stockholder in the company, and also in the bank, and was represented by Northrup, as trustee thereof; that during the same times Charles E. Erskine was a stockholder, director, and treasurer of the company, and also a stockholder in the bank; that during the same times the bank had a capital stock of $250,000, of which $79,000 were owned by stockholders of the company, and of that amount Case owned $33,000; that during the same times the company did its banking businessat the bank, and the bank was in the habit of collecting, and also discounting, notes taken by the company for machinery manufactured and sold by it; that October 8, 1885, Charles E. Erskine, as such treasurer of the company, took said note to the bank to be discounted, and for that purpose left the same with Northrup, as such cashier, who received the same, and stamped it as “Bills Discounted,” and credited the amount thereof, including the interest thereon to that date, in the then current account of the company with the bank; that on that day there stood to the credit of the company on the books of the bank in that account a balance of $42,095.55; that October 9, 1885, there stood to the credit of the company on the books of the bank in that account a balance of $52,614.47; that December 9, 1885, there stood to the credit of the company on the books of the bank in that account a balance of $147,911.86; that December 12, 1885, there stood to the credit of the company, on the books of the bank, in that account a balance of $141,676.65; that Case had no personal knowledge of the note in suit, nor of any of the circumstances under which it was given, nor of either of the defendants, until long after the commencement of this action; that Northrup had no personal knowledge nor information concerning the sale and...