Merchants' Nat. Bank of Grand Forks v. Sullivan

• Decision Date: 21 January 1896
• Citation: 65 N.W. 924,63 Minn. 468
• Parties: MERCHANTS' NAT. BANK OF GRAND FORKS v. SULLIVAN.
• Court: Minnesota Supreme Court

63 Minn. 468

65 N.W. 924

MERCHANTS' NAT. BANK OF GRAND FORKS

v.SULLIVAN.

Supreme Court of Minnesota.

Jan. 21, 1896.

(Syllabus by the Court.)

1. Plaintiff bank is indorsee before maturity of the negotiable promissory notes in suit. Held, conceding that they were received by it in the due course of business for a valuable consideration, still, on the evidence, the trial court was justified in finding that plaintiff had notice that they were given for a gambling debt; that its failure to inquire as to the consideration of the notes amounted to bad faith; and that it was not an innocent purchaser.

2. Held, the evidence sustains the judgment.

Appeal from district court, Polk county; Frank Ives, Judge.

Action by the Merchants' National Bank of Grand Forks against James E. Sullivan. Judgment for defendant, and plaintiff appeals. Affirmed.

A. A. Miller and F. H. McDermont, for appellant.

R. J. Montague and Cochrane & Feetham, for respondent.

CANTY, J.

This is an action on two promissory notes made by defendant to the order of Doheny & Lyons, and indorsed to plaintiff before maturity. The defense is that the notes were given for money lost by defendant in gambling in wheat options in the “bucket shop” run by the payees; that there was no other consideration for the notes; and that all of these facts were well known to plaintiff when it purchased the notes. On the trial before the court, without a jury, the court found for the defendant on this defense, and, from the judgment entered thereon, plaintiff appeals. It appears indisputably from the evidence that the only consideration for the notes in question was the purchase of options, and the losses of the defendant while gambling in options in the bucket shop of which W. J. Doheny was the manager, and that he was the owner of the business, or else it was owned by a firm composed of the wife of Doheny and one Lyons, or by all of them. It also appears that one Wybrant was for a time connected with the business, either as assistant manager, capper, or part owner, or in all of these capacities. The notes were indorsed to the bank before maturity, as collateral security for a note of W. J. Doheny held by it.

Notwithstanding the various assignments of error, the only point urged by appellant is that the bank was an innocent purchaser of the notes. The bucket shop in question was carried on at Grand Forks, N. D. The plaintiff carried on a banking business in the same city. Doheny and Wybrant both resided there, and defendant, apparently a farmer, who raised wheat himself, resided about a mile and a quarter from Grand Forks, on the Minnesota side of the river. The two notes in question were dated June 30, 1893, payable to the order of Doheny & Lyons; were due in 90 days from date; and were for $500 each. The cashier of the bank testified that M. J. Doheny had been owing the bank for some time, and that some time in July of that year he came to the bank, Wybrant accompanying him, and indorsed each of the notes, “Pay to H. P. Wybrant or order. Doheny & Lyons.” Then Wybrant indorsed the notes in blank, and they were delivered to the cashier as such collateral security for Doheny's individual note as then renewed. On cross-examination the cashier further testified: “I knew at that time that W. J. Doheny was in the grain commission business. I do not know what you call it, but presume it was called a ‘bucket shop.’ The business was called the ‘Grand Forks Commission Company.’ I presume that it was generally known around town that both Doheny and Wybrant were operating in wheat options. It was not known to me of...