Merchants' Nat. Bank of Ocala v. Citizens' State Bank of Council Bluffs

• Decision Date: 31 January 1895
• Citation: 93 Iowa 650,61 N.W. 1065
• Parties: MERCHANTS' NAT. BANK OF OCALA, FLA., v. CITIZENS' STATE BANK OF COUNCIL BLUFFS.
• Court: Iowa Supreme Court

93 Iowa 650

61 N.W. 1065

MERCHANTS' NAT. BANK OF OCALA, FLA.,

v.CITIZENS' STATE BANK OF COUNCIL BLUFFS.

Supreme Court of Iowa.

Jan. 31, 1895.

Appeal from district court, Pottawattamie county; A. B. Thornell, Judge.

Action at law on an alleged guaranty of a draft. At the conclusion of the evidence for the plaintiff, the court sustained a motion to direct the jury to return a verdict for the defendant. A verdict was returned as directed, and upon it a judgment in favor of the defendant for costs was rendered. The plaintiff appeals. Affirmed.Wright & Baldwin, for appellant.

Flickinger Bros., for appellee.

ROBINSON, J.

In December, 1889, B. Arentz was engaged at Ocala, Fla., in the business of buying and selling oranges, and O. W. Butts was in the wholesale fruit and commission business in Council Bluffs, Iowa. Butts had ordered of Arentz a car load of oranges, which was shipped from Ocala to Council Bluffs, the bill of lading being taken in the name of Arentz. He drew a draft on Butts for $560, the price of the oranges, payable to the plaintiff, a banking association organized under acts of congress, and doing business at Ocala, Fla., at 30 days after sight. Before the plaintiff took the draft, it required a guaranty of payment by a bank in Council Bluffs. Arentz notified Butts of the demand, and he induced the cashier of the defendant, a corporation of this state, to sign and send to the plaintiff a telegram, of which the following is a copy: “Council Bluffs, Iowa, Dec. 11, 1889. To Merchants' National Bank, Ocala, Fla.: Will guaranty Butts' draft for car oranges from B. Arentz. Citizens' State Bank. Chas. R. Hannan, Cashier.” When the telegram was received, the plaintiff purchased the draft, taking the bill of lading, which was attached to it, and forwarded them for collection. The oranges arrived in Council Bluffs in bad order, and Butts refused to receive them, and refused to accept the draft. The defendant refused to pay the draft. Arentz is insolvent, and this action is brought against the bank on its guaranty. The answer of the defendant alleges that the guaranty was of the solvency and ability to pay of Butts; that the oranges were never delivered to him, and that he never accepted the draft, nor became a party to it; that the defendant is a corporation, and had no power to enter into a contract to guaranty the payment of a draft; and that there was no consideration for the guaranty. In a reply, the plaintiff alleged that it was usual and customary for the defendant and for banks, where it was doing business, to make such guaranties; that, at the time the one in question was made, an arrangement had been entered into between the defendant and Butts by which he was to hold the defendant harmless on the guaranty, and that it had money and other property in its possession which belonged to him, of a value exceeding its possible liability on the guaranty; that, by reason of these facts, the defendant is estopped to assert that the guaranty was executed without authority and without consideration. The appellant contends that the guaranty was authorized by the articles of incorporation of the defendant; that, if it...