Richardson v. Cheshire

Citation193 Iowa 930,188 N.W. 146
Decision Date09 May 1922
Docket NumberNo. 34404.,34404.
PartiesRICHARDSON v. CHESHIRE.
CourtUnited States State Supreme Court of Iowa

OPINION TEXT STARTS HERE

Appeal from District Court, Jones County; F. O. Ellison, Judge.

Action upon two promissory notes. The defendant pleaded fraud in the transaction out of which the notes grew and averred that the plaintiff was not a holder in due course in that he had notice of the fraud and in that revenue stamps were not affixed on the note at the time of his alleged purchase. Plaintiff in reply denied all notice of the defenses to the note; denied that there was any defect in the notes for want of revenue stamps; and pleaded an estoppel against the defendant, in that prior to the purchase thereof he had advised the defendant of his purpose and had inquired of the defendant whether he claimed any defense to the notes, and was assured by the defendant that the notes were O. K. and would be paid at maturity. There was a trial to a jury and a verdict for the plaintiff. From a judgment on the verdict, the defendant has appealed. Affirmed.E. N. Farber, of Marshalltown, and Geo. C. Gorman, of Anamosa, for appellant.

E. E. Reed and Doxsee & Doxsee, all of Monticello, for appellee.

EVANS, J.

The record is somewhat complicated in its details. Thirty-six errors are presented by appellant for our consideration. These are capable of some condensation in that our conclusion as to one becomes decisive of many.

The transaction out of which the notes grew was a land contract whereby the defendant Cheshire purchased from Daniel Hayes Company a certain tract of land in California. Incidental to such purchase a second contract was entered into, whereby the Hayes Company agreed to improve and cultivate the tract in question and to produce crops thereon at a cost to the defendant of $40 per acre for 180 acres. The notes were given pursuant to the second contract. The contracts were executed in December, 1918. The notes were executed January 14, 1919, and were to fall due in April, 1920. They were strictly negotiable in form, which form was as follows:

+-----------------------------------------+
                ¦“$3,600.00.¦Anamosa, Iowa, Jan. 14, 1919.¦
                +-----------------------------------------+
                

On or before April 1, 1920, after date, I promise to pay to the order of myself, at Anamosa, Iowa, three thousand six hundred dollars, for value received, with interest at the rate of six per cent. per annum from date.

Frank P. Cheshire,

+--------------------------------------+
                ¦[72¢ Stamps.]¦Address, Anamosa, Iowa.”¦
                +--------------------------------------+
                

Each was duly indorsed by the maker and delivered. In such form they were negotiable by delivery. On January 27, 1919, they were sold to the plaintiff and duly delivered. The plaintiff was the cashier of the Monticello State Bank at Monticello, Jones county. The defendant resided at or near Anamosa in the same county and was a director of the Citizens' Bank of Anamosa. Before purchasing the notes the plaintiff wrote to Helberg, the cashier of said Citizens' Bank, requesting him to inquire of the defendant, Cheshire, as to the validity of the notes and advising him of his purpose to buy the same. Helberg made the inquiry and advised the plaintiff the result of his inquiry, which was in substance that the notes were O. K. and would be paid when due. Subsequently the consideration of the notes failed, in that the Hayes Company never improved the land. The fraud pleaded by the defendant was, in substance, that the Hayes Company never intended to perform the contract when it entered into it, and that it knew that it could not do so and that it had knowingly made false promises for the purpose of deceiving the defendant; that it had promised to use the proceeds of defendant's notes for no other purpose than the improvement of the land and that it did not in fact thus use such proceeds; that, on the contrary, it dissipated the same and went into bankruptcy in February, 1920. Defendant pleaded, also, that the transfer of the notes by the Hayes Company to the plaintiff was colorable only and without any consideration; that the plaintiff never paid anything therefor; that the transfer was made pursuant to a scheme to pass the notes into the hands of a pretended innocent purchaser and in effect that plaintiff was a party to the scheme. As to this latter feature of the pleading there is no support to any extent in the evidence.

With the foregoing outline of the evidence before us, we proceed to a consideration of the errors relied on for reversal.

[1][2] I. One feature of the record presents a conflict in the evidence as to whether revenue stamps had been affixed to the notes prior to the time of the purchase thereof by the plaintiff. Many of the assignments of error are based upon this feature of the record, the contention for the appellant being that there was defect on the face of the paper in that regard whereby the notes were rendered nonnegotiable, and that the plaintiff was charged thereby with notice of infirmity in the note. The issue made by the conflicting evidence was submitted to the jury, which must have found in favor of plaintiff thereon. Errors are assigned both upon the instructions given and upon the rulings on the evidence pertaining thereto. The case was tried on the theory of the rule stated in Lutton v. Baker, 187 Iowa, 753, 174 N. W. 599, 6 A. L. R. 1696. It is sufficient to say at this point that we have recently receded from the position announced in that case as to the effect of such an omission upon the negotiability of a note, and the cited case is overruled in that regard. The effect of such holding is to follow the great weight of authority that such an omission is not conclusive upon the negotiability of the note. Farmers' State Bank v. Neel (Iowa) 187 N. W. 555. If therefore the claim of error were sustained to any extent upon this feature of the record, such error could not be deemed prejudicial, and we shall give no further consideration herein to that subject.

II. Many of the specific assignments of error are so closely related and interwoven in their references to the record that it will be quite as convenient for us to consider them in group. For that purpose we shall first indicate various features of the record upon which the several specific assignments are based:

(1) In his answer the defendant not only charged fraud in the inception of the transaction, but alleged further that the false representations were repeated by the Hayes Company several months later and after the purchase by the plaintiff; that the said Hayes Company had promised to use the proceeds of the defendant's notes in the improvement of defendant's land and not otherwise and had failed to perform such promise; that in February, 1920, the Hayes Company went into bankruptcy. In the course of the trial the above allegations were stricken from his answer upon motion and the evidence offered in support thereof was rejected.

(2) The defendant and his brother as witnesses testified to a certain conversation had in October, 1919, with one Rogers, who was said to be the vice president of the Hayes Company and its attorney. By their testimony they represented Rogers as saying that the company had been unable to perform its contract with the defendant for want of funds and for lack of financial ability. This evidence was received in the first instance under objection and was later stricken on motion.

(3) Helberg was a witness for the plaintiff and testified to his conversation with Cheshire when he made inquiry concerning the notes on behalf of plaintiff. The defendant testified to the same conversation. His version thereof differed slightly but not materially from that of Helberg. In that connection he proposed also to testify to a prior conversation which he had had with Helberg upon the subject of the consideration for the notes. The time of such conversation was prior to the plaintiff's connection with the subject-matter and prior to the time of plaintiff's request to Helberg to make inquiry. This proposed testimony was rejected. The foregoing features of the record are the storm center of the appeal.

In the consideration of these it is to be borne in mind that the only ground upon which the defendant could stand before the jury was that he had proven the fraud of the Hayes Company in the inception of the transaction and that the plaintiff had failed to show himself a holder in due course as a purchaser in good faith. No other issue was available to him as against the plaintiff. Evidence that did not bear upon this issue was not material; and evidence of subsequent conduct on the part of the Hayes Company, unless it tended to prove the original fraud, was not competent.

[3][4] The plaintiff was not chargeable with knowledge of false representations, if any, made by the Hayes Company long after his acquisition of the notes. Evidence to such effect was therefore inadmissible as against him for that reason if for no other. The most that can be said for such evidence is that it might under some circumstances have become available to the defendant as impeaching evidence. But there was nothing in the record which furnished a foundation for such impeachment. Such subsequent false representations could not have been an influence in inducing the defendant to sign the notes in suit. The alleged promise of the Hayes Company to use the proceeds of the sale of the defendant's notes exclusively for the improvement of the defendant's land implies a mutual understanding or expectation that the notes were to be negotiated to a purchaser. The...

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3 cases
  • State v. Wynne
    • United States
    • Missouri Supreme Court
    • 5 Septiembre 1944
    ...157; 22 C.J. 92; Ellis v. State, 138 Wis. 513, 20 L.R.A. (N.S.) 444; Mandelbaum v. Goodyear Rubber Co., 6 F.2d 818; Richardson v. Cheshire, 193 Iowa 930, 188 N.W. 146; Ryan v. Cooper, 201 Iowa 220, 205 N.W. Coghill v. Boring, 15 Cal. 213; In re Brigham's Estate, 128 N.W. 1054; Jones on Evid......
  • State v. Wynne, 38548.
    • United States
    • Missouri Supreme Court
    • 5 Septiembre 1944
    ...v. State, 138 Wis. 513, 20 L.R.A. (N.S.) 444; Mandelbaum v. Goodyear Rubber Co., 6 F. (2d) 818; Richardson v. Cheshire, 193 Iowa, 930, 188 N.W. 146; Ryan v. Cooper, 201 Iowa, 220, 205 N.W. 302; Coghill v. Boring, 15 Cal. 213; In re Brigham's Estate, 128 N.W. 1054; Jones on Evidence (2 Ed.),......
  • Richardson v. Cheshire
    • United States
    • Iowa Supreme Court
    • 9 Mayo 1922

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