St. Paul National Bank v. Cannon
| Decision Date | 21 April 1891 |
| Citation | 48 N.W. 526,46 Minn. 95 |
| Parties | St. Paul National Bank v. Thomas E. Cannon, impleaded, etc |
| Court | Minnesota Supreme Court |
Action in the district court for Ramsey county against Cannon, the maker, and Wm. Heiser, the payee and indorser, of a promissory note, the former alone defending. Trial before Kelly, J., and verdict for $ 570.38 directed for plaintiff. Appeal by defendant Cannon from an order refusing a new trial.
Order reversed.
James H. Foote, for appellant.
William G. White, for respondent.
The plaintiff, as an indorsee of a promissory note, seeks by this action to recover thereon against the maker. The note was made by the defendant in April, 1888, payable on or before one year thereafter to one Heiser, at the Bank of Minnesota. It was conclusively shown by the evidence that before the maturity of the note it was pledged to the plaintiff bank by one Houghtaling, as collateral security upon a discounting of Houghtaling's note by the bank. When Houghtaling presented the note as such security it bore the indorsement in blank of the payee, Heiser. It is claimed on the part of the defendant that the plaintiff was barred or estopped by a former action prosecuted by Houghtaling against this defendant to recover on the same note. This was after Houghtaling had transferred the note to this plaintiff as collateral security. It is alleged in defence that in that action judgment was rendered against Houghtaling on the ground that the note had been paid at maturity. On the trial the court allowed the defendant to introduce evidence to show that this plaintiff had consented to the prosecution of the action by Houghtaling. Afterwards, and upon the motion of the plaintiff to strike out such evidence on the ground that it did not show such consent, the court struck out the evidence. The striking out of this evidence is one of the grounds of error assigned. We will assume that the answer was sufficient to entitle the defendant to produce this evidence if the fact sought to be established by it would have constituted a defence. The motion of the plaintiff, and the ruling of the court striking out the evidence, were not based upon the insufficiency of the answer, but on the ground that the evidence did not go to make out a defence. Nor on this appeal is it urged that the evidence should have been stricken out because of any insufficiency in the answer. We are therefore to consider whether this evidence tended to show a defence.
We are satisfied that from the evidence in question it might have been found as facts that Houghtaling commenced the former action without the knowledge or consent of this plaintiff which then held the note as collateral security; that afterwards, and before the trial of that action, the bank was advised of its pendency, and knew that thereby Houghtaling was seeking to recover against this defendant as the maker of the note, Houghtaling claiming to be the holder of it; that with this knowledge the bank consented to produce the note at the trial, and on the day of the trial did send the note to Houghtaling's attorney and he produced it on the trial as evidence of the plaintiff's (Houghtaling's) right to recover. If such were the facts, the bank should be now estopped to prosecute this action, after a judgment on the merits in the former action. By the transfer of the note to the bank as collateral security, Houghtaling had conferred the legal title upon the pledgee, with the right to enforce and make available the security by action against the maker; and thereby the right of Houghtaling to recover on the note was necessarily suspended, for that would be inconsistent with the right of the pledgee, by action on the note, to make the pledged security available. Lamberton v. Windom, 12 Minn. 151, (232, 246.) Nor, as it would seem, could the pledgeor have successfully maintained that action without the acquiescence and consent of the bank. He could not have shown a right to recover as the holder of the note without producing it, and thus showing that he was the holder. Armstrong v. Lewis, 14 Minn. 308, (406.) The bank could not well be called upon to produce the note in support of Houghtaling's right of recovery without being so far informed of the facts that it would be chargeable with notice of the nature of the action. In such case, as the maker ought not to be held doubly liable on the note, both to the pledgeor and to the pledgee, it would be the duty of the bank, even though compelled by subpoena duces tecum to produce the note, to disclose its own title, which, as must be assumed, would defeat a recovery by the pledgeor. But it is fair to construe the act of the bank in the former action as indicating its consent to so far waive its rights as pledgee as to allow the pledgeor to recover in his action against the maker. From its sending the note to Houghtaling's attorney in order that it might be produced on the trial in support of his right of recovery, the bank forbearing to assert its own right inconsistent with that of Houghtaling in that action, such consent or waiver might be inferred. If the bank thus waived its right and voluntarily lent its aid to enable the pledgeor to recover, the action might properly be maintained by Houghtaling; and, after judgment on the merits, whether in favor of Houghtaling or against him, the bank ought not to be heard to say that, because its right to recover on the note had not been adjudicated, it should be allowed to prosecute this action against the same defendant, as maker of the note. The doctrine of estoppel in...
To continue reading
Request your trial