Pennoyer v. Dubois State Bank

• Decision Date: 28 September 1926
• Docket Number: 1249
• Citation: 249 P. 795,35 Wyo. 319
• Parties: PENNOYER v. DUBOIS STATE BANK [*]
• Court: Wyoming Supreme Court

249 P. 795

35 Wyo. 319

PENNOYER v. DUBOIS STATE BANK ^[*]

No. 1249

Supreme Court of Wyoming

September 28, 1926

ERROR to District Court, Fremont County; ROBERT R. ROSE, Judge.

Action by the Dubois State Bank against George A. Pennoyer. Judgment for plaintiff, and defendant brings error.

Affirmed.

Ray E Lee and D. A. Preston, for plaintiff in error.

The corporate existence of defendant was not proven; the existence of private corporations will not be noticed judicially; Mahan v. Wyopa Co., 27 Wyo. 17; Adams Express Co. v. Hill, 43 Ind. 157. The question was put in issue by general denial; there was no evidence that Ray and Jones had authority to represent the loan company; a forged agreement is inoperative; 3956 C. S. The burden was on plaintiff below to prove the endorsements and also authority of those making them; Cady v. Land Co., 201 P. 179; McKnight v. Parsons, (Ia.) 113 N.W. 858. Authority to endorse paper for a corporation must be shown by charter or by-laws; 14 a C. J. 452; Seaman v Canal Assn. 29 Wyo. 391. Defendant in error had the burden of proving authority of agents to make the endorsements; Davis v. Co., 15 S.E. 547; Holdsworth v. Co., (Wyo.) 146 P. 603; Bank v Bank, (Wyo.) 160 P. 1171. The court erred in refusing plaintiff permission to prove fraud; Butterworth v. Beach, 215 P. 1085; Glendo Bank v. Abbott, (Wyo.) 216 P. 700; Iowa Bank v. Carter, 123 N.W. 237. Notice of infirmity of the instrument, or defect of title, before full payment renders the payer a holder in due course only to the extent of amount theretofore paid; Callahan v. Land Co., 215 P. 831; Albany Bank v. Ice Co., 86 N.Y.S. 773. Delivery of the notes, and issuance of certificate of deposit, was not payment of purchase price of notes to payee; Bank v. Green, 103 N.W. 96; Thompson v. Bank, 150 U.S. 231; Davis v. Ward, 41 P. 1010. Defendant in error was not a holder in due course; Land Co. v. Morgan, (Calif.) 30 P. 1102; Bank v. Kelgord, 135 N.W. 548; Sherrill v. Co., 19 S.E. 365. Estoppel, not being pleaded, does not apply; Bates P. & P. 1580. Unauthorized endorsements cannot be ratified without new consideration; Workman v. Wright, 33 O. S. 405; Clark v. Peabody, 22 Me. 500. Even if facts established ratification, it did not cut off intervening rights of plaintiff in error; 2 Page Contracts, 1529; Pollock v. Cohn, 32 O. S. 514; Read v. Buffum, 21 P. 555; Henry v. Heeb, (Ind.) 16 N.E. 606; Shinew v. Bank, (Ohio) 95 N.E. 881; Bank v. Wentzel, (Pa.) 24 A. 1087; 3956 C. S.; Alexander v. Hazelrigg, 97 S.W. 353; Union Co. v. Buckman, 88 P. 708. Authority to sell stock is not even presumptive evidence of authority to endorse notes; 14a C. J. 452; Holdsworth v. Co., 23 Wyo. 52; Bank v. Bank, 24 Wyo. 423; Hatch Bro. Co. v. Black, 25 Wyo. 109.

John Dillon, for defendant in error.

Plaintiff in error comes within the provisions of Section 3956 C. S., as to forgery or want of authority to endorse; the bank was a bona fide holder; Roy and Jones had authority to endorse; maker of a note cannot object if payee does not; 1 Joyce Defs. 261. We concede the rule as to nullification by forgery; 3 R. C. L. 1001, 1106; Express Co. v. Bank, 181 N.W. 701. Clearly the title passed to defendant in error; no particular form of agency appointment is required to authorize an agent to sign for his principal; 3952 C. S. The point as to failure of proof, as to a corporate existence of defendant in error, is without merit; 14 C. J. 166; 7 R. C. L. 700. A certificate of deposit given for a note makes the holder of the note a holder for value; 1 Joyce Defs. 893. Defendant in error is holder for value; 3956 C. S.

KIMBALL, Justice. POTTER, Ch. J., and BLUME, J., concur.

OPINION

KIMBALL, Justice.

This is an action by the Dubois State Bank as endorsee against the defendant as maker of two promissory notes. Trial was had without a jury and judgment was in favor of the plaintiff. The defendant brings the case here on error.

The notes were dated July 21, 1920, signed by defendant and payable 6 months after date to Wyoming Livestock Loan Company. They were given in payment for capital stock of Wyoming Livestock Loan Company. The defendant bought the stock at the solicitation of G. O. Roy and A. K. Jones, to whom the notes were delivered. On July 22, 1920, the plaintiff purchased the notes, receiving them from Roy and Jones, who endorsed them, "Wyoming Livestock Loan Company, by G. O. Roy, A. K. Jones." The plaintiff gave for the notes its negotiable certificates of deposit payable to the order of the Wyoming Livestock Loan Company, for the full amount of the notes.

The plaintiff's petition was in the usual form, and included the allegation that the plaintiff was a corporation. Defendant demurred to the petition on the ground that it did not state facts sufficient to constitute a cause of action, and when the demurrer was overruled, filed an answer, the allegations of which may be summarized as follows: (1) a general denial; (2) that the endorsement of the notes by Roy and Jones was not authorized by the payee; (3) that defendant was induced to buy the stock and make the notes by false representations made to him by Roy and Jones, and (4) that plaintiff took the notes with knowledge that they had been obtained by fraud, and was not a holder in due course.

The plaintiff did not prove the allegation that it was a corporation. The defendant contends that that allegation was material to plaintiff's cause of action, and was put in issue by the general denial. The general, and what we consider the better, rule is to the contrary. 14 C. J. 163; 14a C. J. 824; Brady v. The National Supply Co., 64 Ohio St. 267; 60 N.E. 218, 83 Am. St. Rep. 753; Brady v. Palmer, 19 Ohio C.C. 687; Dietrichs v. Railroad Co., 13 Neb. 43; 13 N.W. 13; Fletcher v. Co-operative Publishing Co., 58 Neb. 511; 78 N.W. 1070; Northwestern H. & S. Co. v. Winnett, 67 Mont. 545, 216 P. 568. The appropriate syllabi of Brady v. The National Supply Co., supra, are as follows:

"Where a corporation commences an action, it need not aver in its petition that it is a corporation; and if such averment is made, it will be held to be immaterial and mere surplusage, and a general denial to a petition containing such averment will not impose upon the plaintiff the burden of proving on the trial that it is such corporation."

"To raise the issue of nul tiel corporation, the defendant must specially plead in his answer that the plaintiff is not a corporation. Smith v. Weed Sewing Machine Co., 26 Ohio St. 562, approved and followed."

We think the opinion in Mahan v. Wyopa Company, 27 Wyo. 17, 189 P. 633, relied upon by defendant, contains nothing opposed to this view. It was said in that case that the court does not take judicial notice of what corporations are or are not organized under the laws of this state. We do not take judicial notice of the fact that the plaintiff is a corporation, but hold that the allegation of that fact, when questioned only as in this case, need not be proved.

It is contended by defendant that the evidence was insufficient to show that Roy and Jones had authority from Wyoming Livestock Loan Company to endorse and transfer the notes to the plaintiff. Section 3956, Wyo. C. S. 1920, N. I. L. Sec. 23, provides:

"Where a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto can be acquired through or under such signature, unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority."

It may be conceded that plaintiff failed to prove express authority to Roy and Jones to negotiate the notes. But their authority could be established as in other cases of agency. Wyo. C. S. 1920, Sec. 3952, N. I. L. Sec. 19. The evidence to show authority may be briefly stated. A letter, dated July 6, 1920, from Wyoming Livestock Loan Company to plaintiff's cashier refers to Messrs. Roy and Jones as "our representatives." This letter does not show the extent of the authority of Roy and Jones, but when it was shown that they exchanged the notes in question for certificates of deposit payable to Wyoming Livestock Loan Company, and, as shall be presently explained, that the certificates of deposit were received and negotiated by that company, the court was justified in finding that Roy and Jones were agents for the payee with authority to negotiate the notes. The only interest the defendant has in questioning the authority of Roy and Jones is to protect himself against a payment to the wrong person. Farmers etc. Bank v. Whitehead, 105 S.C. 100, 89 S.E. 657. That is the purpose of section 23, supra, of the Negotiable Instruments Law, as applicable to this case. As it is clear that the payee could not question the transfer to the plaintiff, the defendant is fully protected. Manchester v. Parsons, 75 W.Va. 793; 84 S.E. 885; Wegener v. Emmetsburg Nat. Bank, 195 Iowa 1267, 193 N.W. 627, 631; Citizens State Bank v. Skeffington, (N. D.) 50 N.D. 494, 196 N.W. 953, 959; Lebo State Bank v. Booth, 111 Kan. 222, 206 P. 743.

Because of the manner in which the trial was conducted, it must be assumed that the notes were obtained from defendant by fraud and the title of the payee was defective. The burden of proof, therefore, was on the plaintiff to show that it was a holder in due course. Glendo State Bank v. Abbott, 30 Wyo. 98, 216 P. 700, 34 A. L. R. 294. The plaintiff proved that when, on July 22, 1920, it became the holder of the notes it had no knowledge of the fraud. There was no evidence to prove the contrary. The defendant, indeed, admitted that, when first...