National Bank of the Republic v. Beckstead
| Decision Date | 25 October 1926 |
| Docket Number | 4409 |
| Citation | 68 Utah 421,250 P. 1033 |
| Court | Utah Supreme Court |
| Parties | NATIONAL BANK OF THE REPUBLIC v. BECKSTEAD |
Appeal from District Court, Third District, Salt Lake County; L. B Wight, Judge.
Action by the National Bank of the Republic against I. N. Beckstead. Judgment for defendant, and plaintiff appeals.
REVERSED and remanded, with directions.
Pierce Critchlow & Marr and Joel Nibley, all of Salt Lake City, for appellant.
Willey & Willey, of Salt Lake City for respondent.
STRAUP, J., being disqualified, did not participate.
The plaintiff, a national bank, brought this action to recover judgment on a negotiable instrument as the indorsee of such instrument. The complaint is in the usual form in an action by a holder who obtained the instrument before due, in due course. The note was made payable to the Pioneer Sugar Company, and by it indorsed to one Woolley, who exchanged it to the plaintiff for other notes held by the plaintiff. A copy of the note is made a part of the complaint.
The defendant in his answer to the complaint admitted the signing of the note, but denied its delivery and indorsement, and for want of information, also denied that the Pioneer Sugar Company had sold and indorsed the note to the plaintiff. As affirmative defenses the defendant also averred that the note was signed by him upon certain conditions which were set forth in certain contracts to which reference will be hereinafter made. The alleged conditions are fully set forth in the answer, however. The defendant also alleged failure of consideration, setting forth the facts in detail, and also averred that the note in question had not been delivered to the payee thereof. He further averred that plaintiff was not a holder in due course and that it took the note with notice of its infirmities, all of which are fully set forth.
The plaintiff filed a reply in which it denied the averments of the affirmative defenses and pleaded the facts concerning its purchase of the note, and alleged that it purchased the same in good faith, and that it is a holder in due course before due for value.
Upon substantially the foregoing issues the case was tried to a jury, which returned a verdict for the defendant. Judgment was duly entered upon the verdict, from which appellant appeals.
The writer feels constrained to state at this point that, in view that the defendant implicitly relies on the decision in National Bank of the Republic v. Price, 65 Utah 57, 234 P. 231, and in further view of some expressions and statements contained in the opinion in that case, it will be necessary to state the facts more fully and to review the authorities at much greater length than it ordinarily would be necessary to do.
The plaintiff proved the indorsement by the original payee and introduced the note in evidence. It was then stipulated that $ 25 is a reasonable attorney's fee, and the plaintiff rested.
The defendant, in support of the averments in his answer, then introduced his evidence, which, in substance, is as follows: The defendant testified that he signed a certain stock subscription agreement, which agreement was introduced in evidence, the material parts of which are that the subscription agreement was entered into between the Pioneer Sugar Company and the defendant; that the defendant subscribed for six shares of the capital stock of the company, for which he gave his note for $ 600, payable on or before January, 1926; that it was mutually agreed between the parties to the agreement that the defendant agreed to "plant and deliver not less than six acres of sugar beets to the company during each of the years 1921, 1922, 1923, 1924, and 1925," and that the company would accept said beets "in accordance with the terms and conditions of that certain sugar beet contract made in duplicate by and between the parties hereto of the date of August 7, 1920." The company was therein authorized to make certain deductions not material here. It was further agreed that the defendant would not during the years aforesaid plant beets for any other person, firm, or corporation. The contract then provides:
It was further provided that Halloran-Judge Trust Company is appointed trustee and that the contracts and the note and stock shall be deposited and held in trust by the trustee "pending the fulfillment of the conditions herein stated, and that upon the failure of the said conditions that the said trustee is to return the said note to the purchaser [the defendant herein] on demand, and upon the performance of the conditions the trustee is to deliver the stock to the purchaser and the company will regain possession of the note." The foregoing agreement was duly signed on the 7th day of August, 1920, by the company and by the defendant. The defendant further testified that thereafter, on February 1, 1921, the $ 600 note first given by him and mentioned in the foregoing agreement was returned to him, and that he signed five notes for $ 120 each on that day. The defendant then introduced in evidence another agreement entered into between him and the company dated August 7, 1920, in which it was in substance provided:
"That for the purpose of securing a sugar factory in Salt Lake county to be operated upon the co-operative principle and with the express understanding that this agreement is one of a series substantially identical in terms and intended to be circulated for subscription concurrently herewith in any or all of the counties of Salt Lake, Davis, Tooele or Utah, and expressly agreeing that all such agreements shall be deemed as one contract for the purpose of binding all the respective subscribers hereto to aid and assist in the establishment of a co-operative sugar company in Salt Lake county, and, in consideration of the mutual promises and obligations of the signers of the agreements herein designated, each of said signers undertaking to produce sugar beets under the terms and conditions imposed herein because of the personal benefit expected to be derived from sugar beet production under the co-operative plan and which benefits cannot be realized without the support of all the signers, the grower agrees to grow in each of the years 1921, 1922, 1923, 1924 and 1925, from seed supplied under the direction of the company not less than 6 * * * acres of sugar beets, to be grown on lands under the control of the grower that are best suited to beet production, and to sell and deliver the entire crop therefrom to the company, its successors or assigns, and the company, its successors or assigns, agree to buy and pay for said sugar beets upon all and singular the terms and conditions herein set forth."
It is then provided what the beet grower shall do in producing beets and what the company shall do. The time and place for the delivery of beets is then stated, and when payments for beets shall be made. It is then provided that the company agrees to erect suitable dumps and unloading stations for beets. The right to purchase sugar in certain quantities by the grower is then provided for, and that the cost of the sugar is to be deducted from the price paid for the beets. It is then provided:
That agreement was also signed by the company and the defendant. The defendant testified that he produced six acres of beets in the year 1921; that no dumps for unloading beets were furnished by the company that year, and that he sold his beets to the Utah-Idaho Sugar Company; that he did not receive any stock from the company, and never demanded any, and that he never was furnished any sugar for his family use. On cross-examination he further in effect testified that the agreement was that the company should acquire a sugar factory and should purchase the beets from the subscribers for stock and pay for them upon a graduated or sliding scale in accordance with the price that the company should receive for sugar. He then was asked this question: "The particular thing that you expected to achieve by the establishment of the Pioneer Sugar Company was the participation in the profits--payment on a sliding scale rather than on a flat rate per ton for beets, wasn't it, Mr. Beckstead?" He answered: He also said that he received payment for his beets from other sources upon a sliding scale, but he thought that he did not receive "exactly the same" that he was to receive from the company. He then identified and...
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