Pollard v. Tobin
| Decision Date | 07 March 1933 |
| Citation | 247 N.W. 453,211 Wis. 405 |
| Parties | POLLARD v. TOBIN ET AL. |
| Court | Wisconsin Supreme Court |
OPINION TEXT STARTS HERE
Appeal from a judgment of the Circuit Court for Milwaukee County; Walter Schinz, Circuit Judge.
Action by Seth W. Pollard, trustee under a trust deed, against Elizabeth Tobin and others, wherein the Marshall & Ilsley Bank filed a cross-complaint. From a judgment dismissing the cross-complaint, cross-complainant appeals.--[By Editorial Staff.]
Reversed, with directions.
Foreclosure by cross-complaint of a trust deed executed to secure bonds claimed by the maker to be subject to the defenses of no consideration and fraudulent negotiation because nonnegotiable, and because, if negotiable, the cross-complainant is not a holder in due course. From a judgment dismissing the cross-complaint on the merits, the bondholder appeals.
The plaintiff as trustee sued to foreclose a trust deed executed by Harry J. Tobin, now deceased, and his wife, to secure an issue of bonds executed by the Tobins in 1931. Judgment of foreclosure was entered. This judgment is not involved in the appeal. The contest arises on a cross-complaint of the Marshall & Ilsley Bank, hereinafter referred to as the bank, which holds $5,000 par value of an issue of bonds secured by a trust deed executed by the Tobins to refund the former issue, and asks foreclosure of the second trust deed to satisfy the bonds which it holds. The issue was of $32,500, but none of the bonds were negotiated except those held by the bank, and all those not negotiated to the bank are surrendered by the trustee in bankruptcy of Hackett, Hoff & Thiermann, Inc., hereinafter referred to as the Hackett Corporation, who was the trustee named in the second trust deed. Mrs. Tobin in her own right and as executrix of the will of her deceased husband defends on the ground that the second bond issue was without consideration and negotiated by the trustee without authority. The evidentiary facts are not in dispute. When the first bond issue was about to fall due, the Hackett Corporation agreed to loan Tobin $32,500, and the bonds and trust deed were executed by the Tobins as evidence of and to secure this proposed loan. The bonds were delivered by Tobin to the Hackett Corporation for negotiation. The Tobins agreed with the Hackett Corporation to procure a class A rating from the Securities Division of the Railroad Commission of Wisconsin. An application for such rating was presented to the commission and denied, and no permit was ever granted by the commission for the sale of the bonds. The Hackett Corporation had procured loans of the bank and had bonds deposited with the bank as collateral security for its loan. It took $5,000 par value of the second bond issue to the bank, and with the consent of the bank, substituted them for other bonds of like par value. The bonds are payable to bearer. They contain a reference to the trust deed executedto secure them which is set out in the body of the opinion.
The evidence showed that Thiermann, one of the principal officers of the Hackett Corporation, committed suicide some time before the bonds were received as collateral by the bank, and that prior to the time of the substitution of the bonds the bank had inquired of the bank carrying the corporation's principal checking account whether this affected the solvency of the company, and had been assured that it did not, but had in fact improved it, by reason of insurance on Thiermann's life, and that the corporation was solvent. The bank had for a long time carried an active loan account of the corporation and a checking account in connection, but no transactions in these accounts had recently occurred. The corporation was a going concern at the time the bank accepted the bonds. By the terms of the bonds, there was then no default in payment of principal or interest. No inquiry or investigation concerning the bonds was made at the time of their receipt. The bonds for which they were substituted were class A bonds, worth as near their face as any bonds secured by real estate, were not in default, and were collectible. The bank did not discover the facts respecting the bonds in suit until two weeks after their receipt, when, on learning the Hackett Corporation was in some difficulty, it was investigating all the bonds held as collateral. The Hackett Corporation resigned as trustee under the trust deed, and no successor has been appointed. By reason of there being no trustee, the bank has declared its bonds due and payable by reason of default in payment of interest. On trial, the court held the bonds nonnegotiable, found that the bank “is not a holder in due course without notice,” denied foreclosure of the trust deed, and adjudged that the bonds be delivered up for cancellation.
William E. Hanecy, Upham, Black, Russell & Richardson, and Clark M. Robertson, all of Milwaukee, for appellant.
John H. Schlintz and Clarence P. Nett, both of Milwaukee, for defendants respondents.
The bank claims (1) that the bonds are negotiable, and (2) that under the evidence they are holders thereof in due course and entitled to enforce them against the maker.
1. The bonds are payable to bearer, and each is an unconditional promise to pay a sum certain in money, unless the provision below quoted renders the amount uncertain. Section 116.02, Stats. The provision, the clauses of which are numbered for convenience, is as follows: “(1)...
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Marine Nat Exchange Bank of Milwaukee, Wis v. Kaltzimmers Mfg Co
...makes the promise of payment conditional. An identical provision was considered by the Supreme Court of Wisconsin in Pollard v. Tobin, 211 Wis. 405, 247 N.W. 453, 456. The ruling of the court was that negotiability was not impaired. Cf. Enoch v. Brandon, 249 N.Y. 263, 164 N.E. 45; Siebenhau......
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Continental Nat. Bank of Fort Worth v. Conner
...Nat. Bank & Trust Co., 171 Tenn. 383, 103 S.W.2d 579, and cases cited; Enoch v. Brandon, 249 N.Y. 263, 164 N.E. 45; Pollard v. Tobin, 211 Wis. 405, 247 N.W. 453; Paepcke v. Paine, We accordingly conclude that the pledged note in suit was a negotiable instrument and therefore enforceable aga......
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Oster v. Buildings Dev. Co.
...form and secured by a trust deed containing similar provisions were held negotiable by this court in the recent case of Pollard v. Tobin, 211 Wis. 405, 247 N. W. 453. With this as a major premise, plaintiffs insist that, under section 116.56 of the Negotiable Instrument Law, the right of th......
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Hanauer v. Republic Bldg. Co.
...merely containing a reference to the trust deed, similar to that contained in the bonds dealt with by this court in Pollard v. Tobin, 211 Wis. 405, 247 N. W. 453. An examination of the trust deed discloses no limitation upon the right of the bondholders to sue at law upon the bonds or coupo......