Scandinavian Am. Bank v. Appleton

• Decision Date: 18 April 1911
• Citation: 63 Wash. 203,115 P. 109
• Court: Washington Supreme Court
• Parties: SCANDINAVIAN AMERICAN BANK v. APPLETON.

115 P. 109

63 Wash. 203

SCANDINAVIAN AMERICAN BANK v. APPLETON.

Supreme Court of Washington

April 18, 1911

Department 2. Appeal from Superior Court, King County; Boyd J. Tallman Judge.

Action by the Scandinavian American Bank against John F. Appleton. Judgment for defendant, and plaintiff appeals. Reversed and remanded, with directions to enter judgment in favor of plaintiff.

Roberts, Battle, Hulbert & Tennant, for appellant.

Douglas Lane & Douglas, for respondent.

CROW J.

The notes of the respondent for $1,000 each, dated January 23 1909, due in four and five months, were executed and delivered to the Electric Transportation Company in payment of a stock subscription. On May 7, 1909, they were assigned to appellant as collateral security for the $5,000 note of the transportation company. The transaction in which these notes were thus assigned is the one mentioned in our opinion in Scandinavian American Bank v. Johnston (No 9,861) 115 P. 102, filed on this date. That opinion fully discloses the facts. About the only difference between respondent's position and that of Johnston is that respondent's notes pledged as collateral were executed in the preceding January.

This cause having been tried without a jury is now before us for trial de novo. Without repeating the facts which appear in the Johnston Case, we will simply state that, upon the evidence now before us, substantially the same as in the Johnston Case, we cannot approve the finding of the trial judge that the appellant bank was not a bona fide holder of respondent's notes for value, in due course.

Respondent in this action contends that the principal $5,000 note was collectible; that his collateral notes were fraudulently obtained; and that the bank should be compelled to first proceed against the principal note. In support of this position respondent cities Prentice Bank v. Zane, 2 Grat. (Va.) 262; Hulett v. Marine Bank, 143 Mich. 219, 106 N.W. 879, 4 L. R. A. (N. S.) 1042; and Citizens' Bank v. Bank of Waddy, 126 Ky. 169, 103 S.W. 249, 11 L. R. A. (N. S.) 598, 128 Am. St. Rep. 282. The evidence in this action discloses the fact that the indorsers on the principal note, shown to be financially responsible, had subscribed and paid for their stock in the transportation company, and that the appellant, Appleton, to the extent of $2,000, and Johnston, to the extent of $3,000, had not paid their stock subscription, except by giving their notes. If they could now be released from liability thereon, they would be relieved from paying for their stock, and the indorsing stockholders, who have already paid their subscriptions in full, would in addition thereto have to pay the principal note. Whether this circumstance had any controlling influence over the bank in making its election to first proceed on the collateral notes does not appear. The evidence does show that the only responsible parties on the principal note are...