Mead v. Pettigrew

• Decision Date: 13 April 1899
• Citation: 78 N.W. 945,11 S.D. 529
• Parties: MEAD v. PETTIGREW.
• Court: South Dakota Supreme Court

78 N.W. 945

11 S.D. 529

MEAD v. PETTIGREW.

Supreme Court of South Dakota

April 13, 1899

Appeal from circuit court, Hughes county; Loring E. Gaffy, Judge.

Action by Corwin D. Mead, assignee of the First Bank of Ft. Pierre against Frederick W. Pettigrew, on a promissory note. Judgment for plaintiff, and defendant appeals. Modified.

Joseph Donahue (Dillon & Sutherland, of counsel), for appellant. Horner & Stewart, for respondent.

HANEY J.

Plaintiff states his cause of action as follows: "(1) That the First National Bank of Ft. Pierre, South Dakota, was on January 9, 1894, and for a long time prior thereto, and until October 1, 1894, a corporation organized and existing under the laws of the United States of America. (2) That the First Bank of Ft. Pierre, South Dakota, was during all of the times hereinafter mentioned a corporation organized and existing under the laws of the state of South Dakota. (3) That on January 9, 1894, at Ft. Pierre, South Dakota, the defendant F. W. Pettigrew, by his promissory note, promised to pay to the order of the First National Bank of Ft. Pierre, South Dakota, one thousand dollars on January 9, 1895, after date with interest thereon at the rate of 6 per cent. per annum from maturity until paid. (4) That on or about the 1st day of October, 1894, the said First National Bank of Ft. Pierre South Dakota, sold and delivered said note to the First Bank of Ft. Pierre, South Dakota, for a valuable consideration; that thereafter, and before the maturity of said promissory note, and on or about the 12th day of December, 1894, the said First Bank of Ft. Pierre, South Dakota, made an assignment of all its property, for a valuable consideration, for the benefit of its creditors, to this plaintiff, and among the property so assigned was the promissory note described in paragraph 3 of this complaint. (5) That this plaintiff is the owner and holder of said note, and that the defendant has not paid the same, nor any part thereof, and the same is due." The only denial in the answer is stated thus: "That he [the defendant] denies each and every material allegation in said complaint, except as hereinafter specifically admitted." The authorities are conflicting concerning the effect of the word "material," when used as above. 1 Enc. Pl. & Prac. 782; Dole v. Burleigh, 1 Dak. 227, 46 N.W. 692. We think the denial is bad, and that every material fact alleged in the complaint must, for the purposes of this action, be taken as true. Comp. Laws, § 4933.

The affirmative defenses and evidence will be considered in connection with the ruling of the court upon plaintiff's motion to direct a verdict in his favor, which was granted. In October, 1894, the assets of the First National Bank of Ft. Pierre were transferred to the First Bank of Ft. Pierre. At that time Eugene Steere was president of the former bank and had been such officer for about four years. Mr. Steere, testifying as a witness for defendant, states that the First National Bank went out of existence October 1, 1894, when the First Bank came into existence; that the stockholders of each were practically the same; that he was promoter and organizer of the First Bank; and that he had full knowledge in regard to the notes and liabilities derived from the former corporation. Concerning the note in suit, he says: "I first saw it when it was drawn, January 9, 1894. At the time the bank was started, in 1890, we had to have five directors in the bank, and we could have only three directors who had money enough as directors, as they each had to have $1,000 stock in the bank. So I got George Mathieson, and I have forgotten who the other was, now, but I think it was Mr. Kleiner, to act as directors; and I took their notes, and issued them stock of $1,000, and put in the money myself, so they could act as directors, and still hold stock in the bank. Afterwards, I think, Mr. Kleiner went to Washington, and I got Mr. Pettigrew to take his place under the same. I took Mr. Pettigrew's note, and issued him the stock, and put in the money myself in the first place, and kept it for several years, until this final note was taken,--I think, about that time. Mr. Pettigrew was connected with the bank. He was connected as director of the bank, and the bank held his note, and he held his stock. During this period dividends were declared by the bank, but none received by defendant. He did not receive any money, but he received stock of the bank. The stock was issued to balance the note. The stock was issued for the note. When defendant gave me this note, I had this agreement, that he would not be called upon to pay it. I was president of the First Bank of Ft. Pierre from the time of its organization until the time of the assignment. I carried Mr. Pettigrew's note which represented the stock for about three years, and the bank carried it for the rest of the time. I carried the $1,000...