Minneapolis Threshing Machine Company v. Gilruth
| Decision Date | 30 July 1909 |
| Docket Number | 16,148 - (53) |
| Parties | MINNEAPOLIS THRESHING MACHINE COMPANY v. W. O. GILRUTH and Others |
| Court | Minnesota Supreme Court |
Action against W. O. Gilruth, C. M. Anderson, John McKenzie, the Lincoln County State Bank and the First National Bank of Lake Benton, in the district court for Lincoln county to recover $497.70 for the conversion of two promissory notes indorsed by the payees, Anderson & Swenson, to the plaintiff. In their separate answer defendants McKenzie and the First National Bank of Lake Benton alleged a sale of the notes to that bank by the payees. At the time of the trial the words of the original indorsements: "Pay to the order of the Minneapolis T. M. Co." had been crossed out with red ink. The case was tried before Olsen, J., who directed a verdict in favor of plaintiff for $611.93. From an order setting aside the verdict and granting a new trial as to defendant the First National Bank of Lake Benton, plaintiff appealed. Reversed and remanded with direction to reinstate the verdict.
Purchaser of Note Put on Inquiry -- Evidence.
Possession by the payee of a promissory note indorsed to a third party may constitute prima facie evidence of title in the payee, in the absence of circumstances reasonably tending to show otherwise; but where the name of the indorsee has been erased, and the evidence is conclusive that the erasure was a forgery, and the claim of ownership by the payee is open to question, then it is the duty of prospective purchasers to make reasonable inquiry concerning the title.
Held under the evidence and offer of proof, it conclusively appears that appellant was the owner of the notes in suit and was entitled to recover.
J. N. Johnson and V. B. Seward, for appellant.
Fish & McKenzie, for respondents.
Anderson & Swenson who were appellant's agents for the sale of machinery in Lincoln county, became indebted to appellant, and indorsed and delivered to appellant two certain promissory notes, one for $300 and the other for $150, which were executed by certain farmers in that locality to Anderson & Swenson. At the time of the delivery of the notes to appellant's agent, they were indorsed as follows:
After the notes had been so indorsed and delivered, Mr. Hickey, appellant's agent, gave them to Anderson for the purpose of securing the cash on them from the Ivanhoe National Bank and to send a draft for the amount to the company. Anderson testified that he took the notes to the bank and told Mr. Gilruth, the cashier, that Hickey wanted the cash for the notes, and that Gilruth asked him to leave them there until he could see what could be done. According to Anderson's testimony the indorsement remained on the back of the notes just as executed by him at the time he delivered them to the company. Gilruth, on the other hand, testified that at the time the notes were delivered to him the words "Pay to the order of the Minneapolis T.M. Company" were crossed out in red ink, and he claimed that Anderson presented the notes as his own, and that, noticing the erasure in red ink, he asked Anderson about it, to which he replied that the machine company had proposed to take these notes, but later on had made some kind of a settlement and turned the notes over to him, and that there would be no misunderstanding as to the notes being his (Anderson's) own property. The notes were delivered to Gilruth about August 2, 1902, and were retained in his possession until August, 1903.
At that time the First National Bank of Lake Benton, claiming to own the notes, called on Gilruth and demanded them, whereupon he delivered them to the cashier of the Lake Benton bank, which bank retained them and collected the proceeds. This action was brought against the Lake Benton bank by the machine company to recover the amount of the proceeds. A verdict was returned for appellant for the full...
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