Rea v. McDonald

• Decision Date: 10 May 1897
• Docket Number: Nos. 10,323 - (19).,s. 10,323 - (19).
• Citation: 68 Minn. 187
• Parties: JOHN P. REA v. JOHN S. McDONALD and Another.<SMALL><SUP>1</SUP></SMALL>
• Court: Minnesota Supreme Court

68 Minn. 187

JOHN P. REA v. JOHN S. McDONALD and Another.¹

Nos. 10,323 - (19).

Supreme Court of Minnesota.

May 10, 1897.

Appeal by defendants from an order of the district court for Hennepin county, Belden, J., denying their motion for a new trial. Affirmed.

James O. Pierce, for appellants.

Louis A. Reed, for respondent.

COLLINS, J.

Plaintiff, as receiver of the Bank of New England, an insolvent banking corporation, brought this action upon a promissory note executed and delivered by defendants, of date April 12, 1893, for the sum of $5,000, payable to the order of such bank four months after date. The note was given in renewal of one for the same amount of date December 12, 1892, payable to the same party or order April 12, 1893. The facts were that one Blethen, president of the bank, was indebted to a New York bank in the sum of $5,000 upon a note which matured December 9, 1892, and, as collateral, had deposited 20 bonds of a certain stock company. December 6th, as president of the Bank of New England, he wrote to the New York bank, directing that it charge the amount of his note to the account of his own bank, and send the note to him with the collateral. December 9th he was advised by the cashier of the New York bank that his request had been complied with, and the note and bonds forwarded to him. December 12th at the request of Blethen, defendants executed and delivered to him the note bearing that date.

At the same time, and as part of the same transaction, Blethen and the defendants entered into a written agreement, known on the trial as "Exhibit 2." In that agreement the delivery of the note by defendants, and that its giving was without any immediate consideration to them, was recited, and, further, that Blethen was the recipient of the proceeds thereof, and, as a substitute for a consideration, desiring to protect and secure defendants from liability or loss, entered into the agreement in question, the gist of which was that he had simultaneously delivered to defendant Bushnell, for the benefit of both makers of the note, 12 of the bonds of the stock company before mentioned, and was to take up the note at maturity and return it, canceled, to such makers. Should he fail so to do, and should the makers of the note be compelled to pay it, the bonds at once became their property, with full right and power to sell the same, without notice, to the best of their ability; giving credit to Blethen for the net proceeds; holding the balance of the claim against him, with power to obtain judgment therefor, with attending costs. Should Blethen pay the note, the bonds were to be returned to him.

From the evidence it appeared that Blethen delivered the note to the Bank of New England on December 14th, for upon that day, according to its books, he received credit on his deposit account for the amount thereof, less a discount, and that upon the same day he was debited, as drawn out, the amount which had been charged up in the New York bank on account of his note to that institution. It was also shown from the books of the Bank of New England that, independent of this transaction, Blethen had from $50 to $781 on deposit to his credit each day from December 10th to December 17th. As before stated, the paper in suit was a renewal of the original note, obtained after it matured, and not without considerable effort on the part of Blethen. The court found that it was made for Blethen's accommodation, with the intention and understanding that he should procure it to be discounted at the payee bank for his own personal benefit, and that it was so discounted in the regular course of business. On the findings, judgment was ordered against defendants.

The finding that defendants executed the note for...