National Bank of Commerce of Pierre v. Feeney
| Decision Date | 06 April 1897 |
| Citation | 70 N.W. 874,9 S.D. 550 |
| Parties | NATIONAL BANK OF COMMERCE OF PIERRE v. FEENEY. |
| Court | South Dakota Supreme Court |
Appeal from circuit court, Hughes county; Loring E. Gaffy, Judge.
Action by the National Bank of Commerce of Pierre against Michael Feeney. From a judgment in favor of plaintiff, defendant appeals. Modified.
Wilson L. Shunk, for appellant. John A. Holmes, for respondent.
This was an action in claim and delivery. A verdict was directed for the plaintiff, and the defendant appeals. The action was based upon a chattel mortgage executed to Clough, Ledwick & Co., to secure the payment of two promissory notes executed to the same firm by the defendant, and which notes and chattel mortgage were transferred to this plaintiff before their maturity for value. The notes having matured, and being unpaid, the plaintiff sought by this action to obtain possession of the mortgaged property, for the purpose of subjecting the same to the payment of the notes. The plaintiff, at the time of commencing the action, on January 28, 1895, made the usual affidavit, and, by indorsement thereon, required the sheriff to take the property therein described from the defendant, and deliver it to the plaintiff. The sheriff, under this order, took a part of the described property, and returned the affidavit and order to the circuit court on February 28th. On April 1st the plaintiff made an affidavit, showing that the sheriff had not seized all the property described in the affidavit; and the court thereupon made an order permitting the sheriff to withdraw the papers from the files of the court. Under this order, the sheriff withdrew the original affidavit and order, and proceeded to take the balance of the property described therein. The defendant then moved the court to vacate and set aside his order and the subsequent seizure of the balance of the property. This motion was denied, and the court's ruling in denying the motion is assigned as error.
The defendant insists that the sheriff, having seized part of the property, and made his return, had no authority to make the subsequent seizure under the original affidavit and order that, to authorize such subsequent seizure, there must have been a new affidavit and order. We are of the opinion that the proceedings were regular, and that the court ruled correctly in denying the defendant's motion. The original order required the sheriff to take all the property described in the affidavit, and until he had so taken all the property so described in the affidavit, or had made such a search therefor as to enable him to certify that the portions of the property not taken could not be found, he was not authorized to return the papers to the court. By section 4983, Comp Laws, the sheriff is required to file the notice and affidavit within 20 days after taking the property therein described. He must take the property, and then make his return to the court. The sheriff, in his original return, certifies that he took certain property described in his return, but makes no return as to the balance of the property described in the affidavit, and no reason is stated in his return why he did not take all the property described in the affidavit. His return was therefore prematurely made, and the court very properly permitted him to withdraw the papers, in order that he might perform the duty imposed upon him by law. In our opinion, no new affidavit and order were necessary to authorize the sheriff to complete his service, and to do what he was required to do by his original affidavit and order. The defendant, in his answer, admitted the execution of the notes and mortgage set out in the complaint, and, after certain denials, set out, "by way of set-off and counterclaim," a defense, based upon a breach of warranty as to certain sheep, for the purchase of which the notes and chattel mortgage described in the complaint were given. As will have been noticed, the notes and mortgage were executed to Clough, Ledwick & Co., from whom the sheep were purchased, and who had made the alleged warranty or representations set out in the defendant's answer. To this so-called "set-off and counterclaim" the plaintiff made no reply. Upon the case being called for trial, the defendant moved the court for judgment upon his counterclaim, on the ground that, there being no reply, the same was admitted. The plaintiff thereupon moved the court to strike out the said purported counterclaim, for the reason that, if it states any counterclaim, it was one existing between the defendant and plaintiff's assignors, Clough, Ledwick & Co., and could not be pleaded in this action. The court denied both motions. The defendant now contends that his motion should have been granted. But this contention is not tenable. If the facts stated in the so-called "counterclaim" constitute a counterclaim, it could only be pleaded as against Clough, Ledwick & Co., as the plaintiff had made no warranty, and was not liable upon any warranty made by its assignors, Clough, Ledwick & Co., not being parties to the action, the counterclaim was improperly interposed in this action (section 4915, Comp. Laws); and it did not state facts sufficient to constitute a counterclaim as against this plaintiff, and required no reply. The court was therefore clearly right in denying defendant's motion for judgment.
Treating the so-called "counterclaim" as a defense, which is the most favorable view that can be taken of it for the defendant, it could only be available to the defendant if the notes were taken by the plaintiff with actual notice of the defenses to the same, or the notes were nonnegotiable, and hence were received subject to any defenses against them. The defendant contends the notes were nonnegotiable for the following reasons: (1) Because they provided for the payment of reasonable attorney's fees in case the notes should be collected by action; (2) because it was stipulated that, if the notes were paid before maturity, a discount of 12 per cent. was to be made. The first contention is disposed of by the decision in Chandler v. Kennedy (S. D.) 65 N.W. 439, in which this court held a provision for attorney's fees is void, and does not affect the negotiability of the note. The second contention is not tenable, for the reason that the so-called "stipulation" does not appear in or upon the face of the note, and was not offered in evidence by either party. The notes are set out in full in the complaint, but do not contain the purported stipulation, and their execution in the words and figures as set out is admitted in the answer.
The defendant further contends that, if the notes were negotiable, the plaintiff took them subject to any defenses for the reason that one Adolph Ewert, who was one of the firm of Clough, Ledwick & Co., was also cashier of the plaintiff bank at the time the notes were transferred to the bank; that Ewert as a member of the firm, was charged with knowledge of all defenses to the notes, and, as cashier of the bank, his knowledge as a copartner was chargeable to the bank. That he was a member of the firm of Clough, Ledwick & Co., and also cashier of the bank, is not disputed; but it was shown by undisputed evidence that, in discounting the notes, Ewert acted for his firm, and did not act as the cashier of the bank. The bank, in discounting the notes, acted entirely through its discount committee, of which Mr. Ewert was not a member. The plaintiff therefore contends that, under such a state of facts, the knowledge of the cashier is not imputed to the bank, and that the case does not come within the rule laid down in Bank v. Kellogg, 4 S. D. 312, 56 N.W. 1071; Stebbins v. Lardner, 2 S. D. 127, 48 N.W. 847; Farmers' & Traders' Bank v. Kimball Milling Co., 1 S. D. 388, 47 N.W. 402. The authorities recognize a marked distinction between cases where a cashier not only acts for himself, but also as such cashier, and cases where the person, though cashier, acts for himself only, or for a firm of which he is a member, and the corporation is represented in the transaction by other officers. In the latter cases the knowledge of the cashier is not imputed to the bank. The law upon this subject is thus stated in the late case of Bank v. Lovitt, 114 Mo....
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