E. S. Woodworth & Company v. Carroll
| Decision Date | 12 July 1907 |
| Docket Number | 15,260 - (157) [2] |
| Citation | 112 N.W. 1054,104 Minn. 65 |
| Parties | E. S. WOODWORTH & COMPANY v. WALTER N. CARROLL |
| Court | Minnesota Supreme Court |
April 18, 1908, On Reargument
Action in the district court for Hennepin county to recover $6,126 upon a promissory note. The defenses set up in the answer are stated in the opinion. The case was tried before John Day Smith, J., who directed the jury to return a verdict in favor of plaintiff for $7,367.86. From an order denying a motion for a new trial, defendant appealed. Affirmed.
Notice to Corporation.
A corporation is not charged with notice of facts because of knowledge on the part of an officer or agent, where the officer or agent is dealing with the corporation in his own interest, or where for any other reason his interest is adverse to that of the corporation, so that communication of the knowledge by him cannot be presumed.
Holder of Note for Valuable Consideration.
The creditor of the maker of a negotiable note payable in futuro to the order of a third person, who accepts that note accompanied by collateral security and indorsed by the payee in payment of a pre-existing debt payable in praesenti, is a holder for a valuable consideration.
Evidence of Good Faith.
The evidence in this case shows plaintiff to have been a bona fide holder for value before maturity of a promissory note executed by defendant and by its payee indorsed to him.
Counterclaim Barred by Limitation.
Plaintiff, a corporation, refused to allow defendant, a stockholder, to purchase his proper proportion of an issue of new stock. More than six years afterwards defendant asserted his cause of action, based on that refusal, as a counterclaim to an action by plaintiff on his promissory note. Held, the counterclaim was barred by the statute of limitations (section 4076, R.L. 1905).
Wilson & Mercer, for appellant.
Cobb & Wheelwright, for respondent.
The plaintiff and respondent, a corporation, sought judgment for the principal and interest due on a promissory note dated September 16, 1901, payable to the order of E. S. Woodworth one day after date, for the sum of $6,126, which prior to maturity had been transferred by indorsement to plaintiff. The answer of defendant and appellant for a first defense alleged facts intended to show that as between the maker and payee the note arose out of friendly transactions and did not create a legal obligation, and that the plaintiff was not an innocent purchaser for value before maturity.
For a second defense the defendant alleged "that in the year 1895 he became a purchaser of capital stock of the plaintiff of the par value of $10,000, while the said plaintiff had but an authorized capital stock of $50,000, with only $40,000, par value thereof, outside of plaintiff's stock outstanding; that defendant paid for his said stock the sum of $10,000; that * * * while defendant so held and owned said stock the said plaintiff duly increased its capital stock to the sum of $100,000 par value; that at the time it made its said increase of capital stock plaintiff was entitled to one-fifth of the increase thereof over and above the said $50,000 upon the payment by him therefor at par value to said plaintiff; that he was then able and willing to pay for the said stock in his proportion thereof, and offered to do so at the par value, and demanded that plaintiff allow him to receive the same and pay therefor; that plaintiff did not either issue said additional stock to defendant or allow him to pay therefor, but thereafter refused the same, and sold the said stock to other parties, and that at the time defendant demanded the same at the time of the increase of said stock the said stock was paying actual dividends upon the basis of the old stock at the rate of twenty per cent. per annum; that the said stock to which defendant was entitled was then worth and of the value of $200 per share, or $20,000 for the amount of such increase which defendant was then entitled to receive; that, after selling the said stock so belonging to defendant, plaintiff held the proceeds thereof in trust for this defendant, and still holds the same, although the defendant duly demanded the same, and all thereof, from plaintiff, on or about the 20th day of June, 1906, to defendant's injury and damage in the sum of $10,000, with lawful interest thereon."
For a first counterclaim the answer asserted the said claim for damages set forth in the second defense; for a second counterclaim, a loan by defendant to plaintiff of $500. The defendant prayed judgment in the sum of $10,726.08, with interest.
The reply put the defenses and counterclaims in issue, and pleaded the bar of the statute of limitations as to the first counterclaim.
At the close of the trial before a jury the court granted plaintiff's motion to direct a verdict for the amount prayed for. Subsequently $500 was deducted from the verdict by agreement. This appeal was taken from the order denying defendant's motion for a new trial.
The first question presented by the assignments of error is whether the facts showed plaintiff to be an innocent purchaser for value before maturity. The note fell due one day after date. It was delivered by defendant to plaintiff on the day of its date, and entered on the books of the company on the next day. It did not become past due until after that day. The trial court, therefore, properly held plaintiff to be a purchaser before maturity.
With respect to the purchase in regular course of business without notice, defendant insists the dealings between him and Woodworth which led to the execution of the note show that it was made as a matter of accommodation purely without consideration, that it was delivered on conditions which have never been fulfilled, and that the knowledge of Woodworth the president of the plaintiff company, was notice to and knowledge by it of these facts. The record, however, conclusively establishes that the transactions referred to consisted of a series of trades on the stock exchange conducted by Woodworth in defendant's name for joint profit, through the plaintiff; that these trades were entered on the books in defendant's name; that Woodworth paid to it money to make good losses, and indorsed this note to it in part payment of such losses. He thereby became liable to the company for that note. The doctrine that a principal is chargeable with notice of facts known to his agent is based on the ground that it is the duty of the agent to communicate his knowledge to the principal, and that it is to be presumed that he has performed this duty. Ordinarily this presumption is conclusive. The reason of the rule ceases, however, where the agent is...
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