Murphy v. Gumaer

• Decision Date: 09 January 1899
• Citation: 55 P. 951,12 Colo.App. 472
• Parties: MURPHY v. GUMAER.
• Court: Colorado Court of Appeals

55 P. 951

12 Colo.App. 472

MURPHY v. GUMAER.

Court of Appeals of Colorado

January 9, 1899

Appeal from district court, Arapahoe county.

Action by Daniel Murphy, as receiver of the Needles National Bank against Augustus R. Gumaer. From a judgment for defendant plaintiff appeals. Reversed.

Cranston, Pitkin & Moore, for appellant.

Patterson, Richardson & Hawkins, for appellee.

BISSELL J.

Gumaer as the maker of five several demand promissory notes, dated the 15th and 20th of July, 1893, four for the sum of $2,500 and one for the sum of $2,000, payable to the order of the Needles National Bank, Isaac E. Blake, the Gladiator Mining Company, the Needles Reduction Company, and the Nevada Southern Railway, was sued by the appellant, Murphy, as receiver of the Needles National Bank, which had acquired and held the notes prior to the time it went into liquidation and passed under the control of the comptroller of the currency. It was recited on the face of the notes that they were given for value, payable at the Needles National Bank to the several payees, with interest at 10 per cent. When sued, the defendant, by answer, admitted the incorporation of the bank, and then proceeded to deny the appointment of the receiver, the giving of the notes for value, the demand for payment, and, as a second defense, averred that neither the bank nor anybody else paid any consideration for the notes, and set up somewhat at length the real basis of his defense, which may be stated, in legal form, as one based on the fact that the paper was accommodation paper, given without consideration, and that the bank never acquired a title as a bona fide holder for value. The defense generally rested on allegations to the point that one Isaac E. Blake was a stockholder in, manager of, and agent for the Needles National Bank, and that he requested Gumaer to sign the notes for the bank's accommodation, agreeing with him that the bank would not hold him liable on the notes. There was a further allegation that the bank had full information that the notes were not to be collected from Gumaer, and took the paper with this understanding and agreement. This is substantially the defense pleaded to each one of the notes. It will be observed that there was no allegation, otherwise than by the general averment stated, that Blake was in fact the manager and agent of the bank, or clothed by its officers or board of directors with authority to act for it in the premises. While, as a matter of pleading, this might, under some circumstances, be a very serious consideration, it possesses very little significance in the light of the evidence which practically disposes of the question. It must already be very apparent to the professional mind that the issue was a very simple one, and that what is material and competent evidence to support the issue is very clearly defined and pointed out by the authorities, and the burden which the law imposes on one who pleads the defense of accommodation paper is well settled. Notwithstanding this fact, a large mass of incompetent testimony crept into the record; and the issue was submitted to the jury by instructions clearly variant from, not only the general current of authorities, but the law as established by the supreme court of the state.

When the cause came to trial, the plaintiff produced the paper establishing his appointment as the receiver of the bank, and then offered proof that the notes were discounted by the bank prior to maturity, and rested. There were some other facts brought out by the cross-examination of one of the plaintiff's witnesses, which will be subsequently adverted to, which bear materially on the question of the character of the bank's holding. Disregarding this evidence for the present, it is quite clear, when the plaintiff showed that the bank acquired the notes before maturity, in the usual course of business, and as receiver he was entitled to sue, he had made out a case, because it is true that the possession of the notes furnished a presumption of title; and, when it transpired that the original notes had been discounted by the bank before maturity, its title and right to sue were fully established. When the defendant assumed the burden which he undertook by his plea that the paper was accommodation paper, he offered considerable testimony. The defendant, Gumaer, testified to the fact that the original notes were given, at the request of I.E. Blake, as accommodation paper, and that he received no consideration at the time he signed the paper, either from Blake or from the bank, or from any of the payees named. In the course of Gumaer's examination, he was questioned respecting the conversations he had with Blake at the time the notes were given. This matter, however, will be better presented, and the facts stated, when we discuss the question of the admissibility of this question, which is one of the errors assigned. The defendant then offered the president of the bank, Gove, who gave testimony respecting the circumstances under which the original notes passed into the custody of the institution. Originally Gove was cashier, from December, 1892, to the summer of 1893, when he became president, which position he occupied for about a year. The bank failed in December, 1894, though his relations to it ceased in the September preceding. It appeared that he was an executive officer of the bank during all the time he was connected with it, was one of the members of the board of directors, and, with the other gentlemen occupying a similar position, had control and direction of the bank's affairs. He established the relations of one Greenlee to the bank; showing that he was cashier, and stating the extent of his authority. During the course of his examination by the defendant there were handed to him a large number of exhibits, which are numbered in the abstract and the record from 13 to 71, inclusive. Most of these letters were written by Gove to Blake long after the discount of the Gumaer notes. Some of them were written by Gove to Manly, some to one Mason, and others by Greenlee to Blake. The letters are on almost every conceivable subject; relating to the affairs of the bank, and of the corporations with which Blake was intimately concerned, either as promoter or operator, or both, the private affairs of Blake and the bank, the situation and character of Blake's indebtedness to the institution, and many other matters of similar import and description. The letters were objected to, and admitted over the plaintiff's exception. It would be manifestly impossible, within the limits of an opinion, to refer to each one of the exhibits, state what it contains, and demonstrate the incompetency of the testimony. While we are quite of the opinion that, so far as we have been able to discover, none of these exhibits were properly admitted in support of the issue, because they were written long after the acquisition of title to the paper, and, so far as we can see, in no manner tended to prove that Blake was the bank's agent for the purpose of procuring this paper from Gumaer, and had no reference whatever to this particular transaction, we do not intend to directly decide that no one of them might not be admissible on the subsequent trial; preferring rather to state the rules of evidence by which the trial must be governed, leaving the court on the subsequent hearing to determine, in the light of the law as we shall express it, when each exhibit is presented, whether it, or any part of it, is properly admissible in evidence. While Gove was on the stand he also produced, at the plaintiff's request, the statements of the bank's accounts which had been furnished to Mr. Blake by the president, Gove. Just why this statement thus furnished was regarded as admissible, we cannot discover. Its admission was undoubtedly harmless, and we are not able to see that it could in any way be prejudicial; yet it was in no wise relevant to the matters in dispute, and did not tend to support the defense pleaded; nor, so far as we can see from this record, did it in any wise tend to establish a pivotal fact, which, under the circumstances of the case, it was incumbent on the defendant to prove, to wit, that Blake was the bank's agent. About this we shall have more to say hereafter. We now come to a statement of what the record shows about the circumstances under which the bank acquired title to this paper. The original notes, which were duplicates of those offered in evidence, ran for a definite period, and came into the possession of the bank prior to their maturity. According to the evidence given by Manly and Gove, the notes, after execution, were sent to the bank, and placed to the credit of the various companies named as payees, or to Blake's individual account. The bank was instructed as to what accounts they should be credited to, and the officers of the bank advised the signer that the proper credits were made. The president and the other members of the discount committee passed on them in the ordinary course of business pursued in discounting paper. They were treated like all other notes accepted by the bank. When they had passed the discount committee, the amount of the notes, less the interest, was placed to the credit of Blake and the companies, which parties were thereupon and thereafter permitted by the bank to draw checks on the credits thus made; and the checks drawn on these accounts containing these credits were paid as drawn. The bank extended a further credit to all the companies and to Blake on account of these notes, and to the full face value thereof. Gove testifies that he had no knowledge, and, so far as he knew, the bank had no knowledge, that Blake had made any representations to Gumaer that the notes were...