E.P. Wilbur Trust Co. v. Fahrendorf

• Citation: 64 S.D. 124,265 N.W. 1
• Decision Date: 05 February 1936
• Docket Number: No. 7829.,7829.
• Parties: E.P. WILBUR TRUST CO. v. FAHRENDORF et al.
• Court: Supreme Court of South Dakota

64 S.D. 124
265 N.W. 1

E.P. WILBUR TRUST CO.
v.
FAHRENDORF et al.

No. 7829.

Supreme Court of South Dakota.

February 5, 1936.

Appeal from Circuit Court, Brown County; Howard Babcock, Judge.

Action by the E. P. Wilbur Trust Company against G. B. Fahrendorf and another. From an adverse judgment, plaintiff appeals.

Affirmed.

Mason & Thurow, of Aberdeen, for appellant.

Churchill & Benson, of Huron, for respondents.

RULDOLPH, Judge.

Plaintiff brought this action to recover upon a certain note made, executed, and delivered by one W. H. Schafer, and indorsed by the defendants. The case was tried to a jury, and verdict and judgment were rendered in favor of defendants. Plaintiff has appealed from the judgment only.

[1] Plaintiff moved for a directed verdict which was denied, and after the verdict for judgment notwithstanding the verdict, which was also denied. These motions and their denial permit us to consider the sufficiency of the evidence to support the verdict upon this appeal from the judgment. Warwick v. Bliss, 45 S.D. 388, 187 N.W. 715;Hoidal v. Runchey, 55 S.D. 171, 225 N.W. 299. The principal defense to the note was that it was induced to be given under an agreement, on the part of the payee, not to prosecute Schafer for an alleged embezzlement. The assignment of error raises two questions regarding the sufficiency of the evidence: First, it is alleged that the evidence is insufficient to support the verdict because there is “no evidence that at the time the said contract was entered into any prosecution was pending or any crime had been committed which could have been compounded in the transaction in which the note in suit was taken”; second, it is alleged the evidence is insufficient to support the verdict because “it was clearly proven by uncontroverted evidence that the plaintiff is a holder in due course in the note sued upon.”

[2] We take up first the question of whether it is necessary to prove that a

[265 N.W. 2]

crime had actually been committed in order to sustain the defense. It is the position of the appellant that in order to invalidate the note upon the grounds of the pleaded defense, the defendant must establish either that a prosecution against Schafer had been begun and dismissed upon the giving of the note; or, second, in the absence of prosecution actually begun, the defendant must prove that Schafer had in fact committed a felony, and the further agreement not to prosecute. There is no contention here that the evidence is insufficient to support a finding by the jury that there was in fact an agreement not to prosecute, which induced the giving of the note. The only contention is that, without proof of a felony having actually been committed, or without proof of prosecution actually having been begun, the agreement not to prosecute, which induced the giving of the note, in itself is insufficient to invalidate the note. The very contention raised by the appellant in this case was before the New York Court of Appeals in the case of Union Exchange National Bank of New York v. Joseph, 231 N.Y. 250, 131 N.E. 905, 906, 17 A.L.R. 323. We quote at length from the opinion in the New York case:

“The contract is not helped by the suggestion that, for all that appears, Bloch may have been innocent. That issue, beyond doubt, would be irrelevant if prosecution had begun. Gorham v. Keyes, 137 Mass. 583, 584;Steuben County Bank v. Mathewson, 5 Hill, 249. We are asked to hold otherwise where prosecution is merely threatened. Some cases do, indeed, give effect to that distinction. The prosecution, once...