Sidles Co. v. Pioneer Valley Sav. Bank

• Decision Date: 06 April 1943
• Docket Number: 46102.
• Citation: 8 N.W.2d 794,233 Iowa 1057
• Parties: SIDLES CO. v. PIONEER VALLEY SAV. BANK.
• Court: Iowa Supreme Court

8 N.W.2d 794

233 Iowa 1057

SIDLES CO. v. PIONEER VALLEY SAV. BANK.

No. 46102.

Supreme Court of Iowa

April 6, 1943

Sifford & Wadden, of Sioux City, for appellant.

W V. Steuteville and Kindig, Faville, Kindig & Beebe, all of Sioux City, for appellee.

BLISS Justice.

There are two questions for determination, as we view the case and the rights of the parties. First, did a cause of action by the plaintiff as the drawer of a check upon the Continental National Bank, of Lincoln, Nebraska, under the circumstances stated, lie against the defendant for the recovery of the amount of the check collected from the drawee and interest thereon? Second, should there be recovery against the defendant for the money paid out by plaintiff for attorney fees and court costs in the action of Joe Keller v. Sidles Company, in which the plaintiff, therein sued the defendant, therein, not on the check, but for the original debt for which the check was given, and obtained judgment against the defendant, which judgment the defendant paid before bringing the action at bar?

Some further statement of facts is necessary for a full understanding of these questions. About June 25, 1938, Joe Keller and Edward Sporrar called upon plaintiff, doing business in Woodbury County, Iowa, to purchase an airplane, on which they paid earnest money or a down payment in the sum of $299. The plaintiff could not furnish the airplane and on July 9, 1938 it attempted to refund the money to the intended purchasers by issuing its check on the bank at Lincoln, Nebraska, where it had a sufficient balance in its checking account, for $299 payable to Keller, and delivered the check to Sporrar. About September 16, 1938, attorneys for Keller notified the plaintiff by letter that Keller had not received the check but that it had been cashed on the forged indorsement of Keller's signature, and presented to the defendant by Bert McMahon and cash was paid him therefor. The letter demanded payment of the $299 from the plaintiff, who at once notified defendant of the contents of the letter, and suggested that defendant send to Keller a remittance of the amount, and proceed against those who endorsed the check. The letter gave it the necessary information as to endorsement and the time of payment by the Lincoln bank. Defendant did not comply with the letter. Thereafter Keller sued the Sidles Company, alleging the payment of the earnest money, the company's admitted inability to furnish the airplane, and its failure to refund the money, and demanded judgment for the amount. Sidles Company then served written notice of the action upon the defendant and the drawee bank demanding that they undertake the defense of the action at their own expense, and if they did not Sidles Company would do so but would look to them for full reimbursement. Neither the defendant, nor the drawee complied with the demand. Sidles Company defended, and filed answer admitting the purchase of the airplane, the payment of the earnest money, its inability to deliver the airplane, but denied that it had failed to return the earnest money, and averred that it had done so on July 9, 1938. The court found for Keller and rendered judgment against Sidles Company for the amount of the check and interest, on March 19, 1940. About April 10, 1940, Sidles Company served timely written notice of the entry of judgment of $318.27, of its expense of $150 for attorney fees, upon the defendant and the drawee, and that they prosecute an appeal at their own expense, but if they did not, Sidles Company would pay the judgment, costs and all expense, and seek recovery therefor from them. No appeal was taken and plaintiff paid the judgment and costs and the attorney fees, which are conceded to be reasonable, in an aggregate amount of $469.97, and brought this action to recover that amount.

In its answer defendant denied the legal sufficiency of plaintiff's cause of action as alleged; denied that it was ever legally liable, as endorser or otherwise, to the plaintiff as the maker of the check; denied that it was liable since the money on the check which it received was the money of the drawee and not the money of plaintiff. For further answer the defendant alleged: the plaintiff's negligence in attempting to deliver the check by a messenger as its agent and if there was a forgery it was by said agent, which negligence was the proximate cause of plaintiff's loss; the check upon being paid became a dead check and neither the drawee, nor the plaintiff was a holder in due course; the endorsement of defendant did not inure to the benefit of the plaintiff as drawer; the defendant has received no money from plaintiff; the defendant's liability was not adjudicated in the Keller action; the plaintiff did not act diligently in discovering the alleged forgery and in seeking to recover its loss after such discovery; the negligence of plaintiff would prevent defendant's recovery against the forger and the endorser prior to defendant.

On the trial the check, the notices served on defendant to defend, the petition and judgment in the Keller case were all introduced in evidence. Testimony was also received in this action by the attorney for Keller, in his action against Sidles Company, that the endorsement of Keller's name on the check was not in the handwriting of Keller, and that in the trial of the Keller case the matter of the genuineness of Keller's endorsement, and whether he received the proceeds of the check were involved, and that there was testimony by Keller that he did not make the endorsement, and he never endorsed the check or received the money, and that he never authorized Sporrar to receive the check or to endorse Keller's name on it cash it.

On the trial of the case before us, it was admitted by defendant that on October 25, 1938 an affidavit of Keller was received by it setting out that he had never received the check, endorsed it or cashed it and never had received any refund from Sidles Company. On this affidavit was the genuine signature of Keller.

It was also stipulated that when the defendant received the check from Bert McMahon for deposit, it was credited to McMahon, a long-time depositor, and that it bore the endorsement "Joe Keller" and "Bert McMahon" and that defendant placed the following endorsement on the check: "Pay to the Order of Any Bank or Banker. All Prior Endorsements Guaranteed. Pioneer Valley Savings Bank, Sergeant Bluff, Ia. A. W. Wies, Cashier" when it sent the check to the drawee, where it was charged to the deposit account of plaintiff, and $299 was remitted to the defendant.

It was also stipulated that when McMahon deposited the check he told the defendant that Keller was at the Sergeant Bluff airport, and that it did not learn of the...