Northern Savings Bank, a Corp. v. Kelly
| Decision Date | 13 October 1915 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Cass County; Pollock, J.
Reversed.
Case remanded.
Flynn & Traynor, for appellant.
There was no proof of the indorsement of the note involved in this case. The mere making of the indorsement by the so-called president of the payee is no proof at all. There was no proof that he was president, or that he had authority to make the indorsement, by which, coupled with a so-called delivery, the said note was transferred. There are no presumptions in favor of either of these acts. 3 Enc. Ev. 625.
If Hatcher were president, there is no presumption that he had authority to indorse and transfer the note. 1 Dan. Neg. Inst §§ 388, 394; Bank of United States v Dandridge, 12 Wheat. 70, 6 L. ed. 555; Stoddard v. Lyon 18 S.D. 207, 99 N.W. 1116.
The mere possession of a promissory note, transferred by indorsement, does not avoid the necessity of proving the indorsement. Rev. Codes 1905, §§ 6361, 6493, Comp Laws 1913, §§ 6944, 7075; Smith v. Courant Co. 23 N.D. 297, 137 N.W. 781; Vickery v. Burton, 6 N.D. 245, 69 N.W. 193; Massachusetts Loan & T. Co. v. Twichell, 7 N.D. 440, 75 N.W. 786; Kerr v. Anderson, 16 N.D. 36, 111 N.W. 614.
If a negotiable instrument is transferred without indorsement, the transferee takes it subject to all the defenses that might be urged against it in the hands of the payee. Rev. Codes 1905, § 6351, Comp. Laws 1913, § 6934; Vickery v. Burton, 6 N.D. 245, 69 N.W. 193; Massachusetts Loan & T. Co. v. Twichell, 7 N.D. 440, 75 N.W. 786.
In construing a pleading to determine its effect, its allegations shall be liberally construed with a view of substantial justice between the parties. Rev. Codes 1905, §§ 6357, 6869, Comp. Laws 1913, §§ 6940, 7458; Walters v. Rock, 18 N.D. 45, 115 N.W. 511; Waldner v. Bowden State Bank, 13 N.D. 604, 102 N.W. 169, 3 Ann. Cas. 847.
The defendant had the right to show all the facts, conditions, and circumstances under which the note was signed and delivered, as well as those pertaining to its negotiation and transfer, so as to show fraud in both instances. This being accomplished, the burden of proof then shifted to plaintiff, to show that it purchased the note in good faith, in due course, and without notice of defects. Vickery v. Burton, 6 N.D. 245, 69 N.W. 193; First Nat. Bank v. Flath, 10 N.D. 281, 86 N.W. 867; Kerr v. Anderson, 16 N.D. 36, 111 N.W. 614; Walters v. Rock, 18 N.D. 52, 115 N.W. 511; American Nat. Bank v. Lundy, 21 N.D. 167, 129 N.W. 99; Citizens' State Bank v. Garceau, 22 N.D. 576, 134 N.W. 882; Knowlton v. Schultz, 6 N.D. 417, 71 N.W. 550; Tamlyn v. Peterson, 15 N.D. 488, 107 N.W. 1081.
This is not a case of varying a writing, but of vitiating it. Putnam v. Prouty, 24 N.D. 517, 140 N.W. 93; Rev. Codes 1905, §§ 5351, 5352, Comp. Laws 1913, §§ 5907, 5908.
Parol proof of the conditions, agreements, and circumstances surrounding the making and delivery of a note is competent. Burke v. Dulaney, 153 U.S. 228, 38 L. ed. 698, 14 S.Ct. 816; Rev. Codes 1905, § 5346, Comp. Laws 1913, § 5902; First Nat. Bank v. Flath, 10 N.D. 281, 86 N.W. 867; Citizens' State Bank v. Garceau, 22 N.D. 576, 134 N.W. 882; 6 Enc. Ev. 16; Mendenhall v. Ulrich, 94 Minn. 100, 101 N.W. 1057; 20 Cyc. 112; Rochford v. Barrett, 22 S.D. 83, 115 N.W. 522; Kirby v. Berguin, 15 S.D. 444, 90 N.W. 857; Red River Valley Nat. Bank v. Barnes, 8 N.D. 432, 79 N.W. 880; Prairie School Twp. v. Haseleu, 3 N.D. 340, 55 N.W. 938; Juilliard v. Chaffee, 92 N.Y. 535; Skaaraas v. Finnegan, 31 Minn. 48, 16 N.W. 457; Grand Forks Lumber & Coal Co. v. Tourtelot, 7 N.D. 587, 75 N.W. 901.
A director of a corporation, and the one in whose sole charge all of the files and records had been for a long time, is competent to testify as to who were subscribers to the stock of the corporation, and especially whether or not certain subscriptions to stock had been made. 3 Enc. Ev. 617; Jones, Ev. § 212.
Arthur W. Fowler, for respondent.
Evidence of the president of a corporation that he made the indorsement of the note in suit in the name of the corporation is sufficient proof of an indorsement. But, in this case, the answer admits the indorsement. Coffin v. Smith, 26 S.D. 536, 128 N.W. 805; Farmers' Bank v. Riedlinger, 27 N.D. 318, 146 N.W. 556.
Defendant is estopped to deny that Hatcher was president, or to deny his authority to indorse. Rev. Codes 1905, §§ 6324, 6362, Comp. Laws 1913, §§ 6907, 6945; Grover v. Muralt, 23 N.D. 576, 137 N.W. 830; Bank of United States v. Dandridge, 12 Wheat. 64, 6 L. ed. 552; National Folding Box & Paper Co. v. American Paper Pail & Box Co. 55 F. 488.
Persons acting publicly as officers of a corporation will be presumed rightfully in office, so far as regards other persons. Hall v. Carey, 5 Ga. 239; Selma & T. R. Co. v. Tipton, 5 Ala. 787, 39 Am. Dec. 344; Narragansett Bank v. Atlantic Silk Co. 3 Met. 282; Hilliard v. Goold, 34 N.H. 230, 66 Am. Dec. 765; Rev. Codes 1905, §§ 6336, 6347, 6361, Comp. Laws 1913, §§ 6919, 7030, 7043; Kerr v. Anderson, 16 N.D. 36, 111 N.W. 614; Farmers' Bank v. Riedlinger, 27 N.D. 318, 146 N.W. 556; Shepard v. Hanson, 9 N.D. 251, 83 N.W. 20; Dan. Neg. Inst. § 812; Drinkall v. Movius State Bank, 11 N.D. 10, 57 L.R.A. 341, 95 Am. St. Rep. 693, 88 N.W. 724.
Prima facie every holder of a negotiable instrument is deemed a holder in due course, both under the law merchant and the statutes of this state. Rev. Codes 1899, § 59, chap. 100, Civ. Code; 2 Randolph, Com. Paper, § 730; Million v. Ohnsorg, 10 Mo.App. 432; 8 Cyc. 227, 233; Rev. Codes 1905, § 6336, Comp. Laws 1913, § 6919; Grover v. Muralt, 23 N.D. 576, 137 N.W. 830; Ravicz v. Nichells, 9 N.D. 536, 84 N.W. 353.
The mere allegation of fraud in the exception of the note throws no burden upon the plaintiff. Vickery v. Burton, 6 N.D. 245, 69 N.W. 193, and cases cited; State ex rel. Dorgan v. Fisk, 15 N.D. 224, 107 N.W. 191; Palmer v. Smedley, 18 How. Pr. 321; Sayer v. Harker, 113 Iowa 584, 85 N.W. 786; Smith v. Parker, 148 Ind. 127, 45 N.E. 770; Cerney v. Paxton & G. Co. 78 Neb. 134, 10 L.R.A.(N.S.) 640, 110 N.W. 882; Maclaren v. Kramar, 26 N.D. 244, 50 L.R.A.(N.S.) 714, 144 N.W. 90.
Parol evidence is not admissible to show that the subscription was made upon a condition not expressed in the instrument. 10 Cyc. 391, and cases; 3 Enc. Ev. 622, and cases; Putnam v. Prouty, 24 N.D. 517, 140 N.W. 93; Johnson v. Kindred State Bank, 12 N.D. 336, 96 N.W. 588; American Nat. Bank v. Lundy, 21 N.D. 167, 129 N.W. 99; Aden v. Daub, 146 N.C. 10, 59 S.E. 162; Crilly v. Gallice, 78 C. C. A. 525, 148 F. 835.
Counsel, after the rulings of the court to the effect that he was not using the best evidence, made no offer of proof to lay any foundation for secondary evidence, or to show that the witness was or could be testifying from his own knowledge. Madson v. Rutten, 16 N.D. 281, 13 L.R.A.(N.S.) 554, 113 N.W. 872; Bristol & S. Co. v. Skapple, 17 N.D. 272, 115 N.W. 841.
A party to an action who is in default cannot be called for cross-examination under the statute. There must have been issue joined. Suter v. Page, 64 Minn. 444, 67 N.W. 67.
This litigation arises over a certain promissory note given by the defendant under the following circumstances: In the spring of 1912 two daily papers were published at Fargo,--the Forum and the Courier-News. From the correspondence we infer that the Forum was Republican and that the Courier-News almost, if not quite, Democratic. From the same sources we infer that the parties to this action are of the Democratic faith. About the 8th of March, 1912, one O. M. Hatcher approached the defendant for a subscription to a new company to be known as the Courier-Forum Publishing Company which was to buy both of the aforesaid newspapers. Upon that date, Mr. Kelly subscribed for ten shares par value, $ 100 each, giving therefor his note in words and figures, as follows:
Fargo, North Dakota, March 8, 1912.
On December 1, 1912, for value received, I promise to pay to the order of the Courier-Forum Publishing Company one thousand and no/100 dollars ($ 1,000), with interest from date until paid at the rate of 7 per cent annum, payable annually. Principal and interest payable at payee's office at Fargo, North Dakota.
(Signed) Joseph M. Kelly,
Devils Lake, North Dakota.
Postoffice.
At the time of the signing of the note, O. M. Hatcher gave to Mr. Kelly a writing in the following language:
March 8, 1912.
It is agreed that this subscription is conditional upon the securing of subscriptions from J. P. Lamb, John Bruegger, W. E. Purcell, S. J. Doyle, John Fried, George Duis, M. F. Murphy, John Cashal, F. A. Wilson, Frank Lish, or other prominent Democrats to the extent of not less than $ 15,000 to the preferred stock of the Courier-Forum Publishing Company of Fargo.
(Signed) O. M. Hatcher
for Courier-Forum Publishing Company.
March 20, 1912, George Hollister wrote a letter upon the stationery of the Northern Trust Company to the following effect:
Fargo, North Dakota, Mar. 20, 1912.
Joseph M. Kelly, Esq.,
Devils Lake, N.D.
Dear Sir:--
We have to-day bought your note of $ 1,000, given to the Courier-Forum Publishing Company. We would prefer to have this note upon one of our blanks for reasons that I will explain to you the next time I see you. I inclose you such blank and ask that you sign the same and return to us, on receipt of which the note given the newspaper will be canceled and mailed to you.
I have just returned from a six weeks' vacation--got home in time to vote yesterday--but I solemnly swear that I did not vote for La Follette.
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