Selma Savings Bank v. Harlan
| Citation | 149 N.W. 882,167 Iowa 673 |
| Decision Date | 15 December 1914 |
| Docket Number | 29776 |
| Parties | SELMA SAVINGS BANK v. MARK T. HARLAN, Deft., H. A. HINKLE, Surety, Appellants |
| Court | United States State Supreme Court of Iowa |
Appeal from Van Buren District Court.--HON. D. M. ANDERSON, Judge.
ACTION on a promissory note to which the defendant Hinkle only interposed a defense. Verdict was directed as prayed, and judgment entered thereon. H. A. Hinkle appeals.
Reversed.
Walker & McBeth, for appellant.
J. C Calhoun, for appellee.
The action is on a note for $ 545, dated August 20, 1912, and payable six months thereafter. M. T. Harlan signed as principal and H. A. Hinkle as surety. Its purpose was to take up three notes previously executed, one of which, at least was signed by both of them. One of the defenses interposed by Hinkle was that the note never took effect. He testified that they went to the bank, where he said to the cashier:
That Mark (Harlan) was to give me an assignment, signed by him and wife, to go on the note for $ 545; this assignment to cover their interest in the A. W. Harlan estate. . . . When I signed the note, I gave it and the assignment to Schlotter (the cashier), together with instructions that, when Mark and his wife acknowledged this assignment and sign a note to me for this amount, then my note to the bank was to become effective.
The estate of Harlan's grandfather, A. W. Harlan, consisted of two hundred acres of land and $ 2,000, and his claim was to one-fourth interest therein. The cashier admitted that the assignment was left with the bank for execution, and a note was to be procured from Harlan and wife, but denied that anything was said concerning this being a condition to the note sued on taking effect, and Harlan gave like testimony, and also that the old notes were not surrendered by the bank to him until after the note to Hinkle and assignment had been signed by him and he had attached his wife's name thereto without her consent. He acknowledged the assignment for himself, and undertook to do so for his wife; the vice president of the bank, who was a justice of the peace, certifying that the acknowledgment was of "Winnie Harlan, represented by M. T. Harlan." Subsequently she may have orally ratified what her husband did, but the jury could well have found this to have been after this suit had been begun, and also after she and her husband had conveyed his interest in the estate to another, though, as he testified, "with the exception of $ 500," and he could not recall whether the exception was inserted in the deed. She testified to the conveyance of the whole interest to Baldwin:
Q. What part of it? A. Except this. Q. Did you except this? A. No; that was to be paid first of all. Q. Did you in the assignment to Baldwin except the interest Hinkle had in it? A. That I can't say.
It is plain from this recital that the evidence raised the issue of whether the note was to take effect only on the contingency of the bank first procuring the execution of the note by Harlan and wife and the acknowledgment of the assignment by them. As the jury might well have found, they had obtained the signature of the wife to neither; nor had she ratified her husband's action with reference thereto prior to the beginning of this action and the conveyance of the property included therein to another. There was no evidence of any exception in such conveyance, and if there was an oral exception, the evidence fails to show the nature of it, and whether it was such as to save the first claim to the interest covered by the assignment.
Moreover, if Mrs. Harlan orally ratified the action of her husband, this would not render the acknowledgment such that recording the assignment would have constituted constructive notice of any inchoate interest in the property described therein acquired through the assignment from her. The subsequent ratification, if any, then, did not fully cure the bank's failure to perform the condition precedent to the note becoming effective, and this issue should have been submitted to the jury. That a promissory note may be delivered on condition, the observance of which is essential to its validity between the original parties thereto, is recognized by section 3060-a16, Code Supplement, providing that in such case "the delivery may be shown to have been conditional or for a special purpose only and not for the purpose of transferring property in the instrument," and is in harmony with the decisions of this and other courts. Ware v. Smith, 62 Iowa 159, 17 N.W. 459; Johnston v. Cole, 102 Iowa 109, 71 N.W. 195; Niblock v. Sprague, 200 N.Y. 390 (93 N.E. 1105). If the agreement was as testified by Hinkle, there was never any authorized delivery of the note, and it never became binding on the defendant. He is not contending that the contract which the note expresses was changed; his claim is that such contract was never entered into at all, for that the contingency upon which the note was to be deemed delivered never occurred. Parol evidence of the condition was admissible; for it was not an attempt to vary or contradict the written instrument. Higgins v. Ridgway, 153 N.Y. 130 (47 N.E. 32).
But it is said the cashier was without authority to surrender the old notes without payment. If so, doubtless recovery thereon may yet be had. In any event, surrendering the old notes would not obviate the condition on which the new note was to take effect. As he acted for the bank in taking the latter, it, in bringing action thereon, necessarily ratified whatever contract the cashier made in procuring it. Eadie, Guilford & Co. v. Ashbaugh, 44 Iowa 519; Farrar v. Peterson, 52 Iowa 420, 3 N.W. 457; State Bank v. Kelly, 109 Iowa 544, 80 N.W. 520. There was error in withdrawing this issue from the jury.
II....
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