Appeal
from District Court, Fergus County; J. Miller Smith
Presiding Judge.
SMITH
J.
The
plaintiff began this action in the district court of Fergus
county to recover judgment against the defendant on a certain
promissory note for $1,550, dated June 20, 1907, due four
months after date, with interest after maturity at the rate
of 10 per cent. per annum. The defendant answered, admitting
the corporate capacity of the plaintiff, and that the latter
was the owner and holder of the note. He also admitted the
making and delivery of the note, but denied that it was given
for a valuable consideration, or for any consideration
whatever. By way of affirmative defense he alleged that the
note was made at the express instance and request of the
plaintiff, without consideration, and for plaintiff's
accommodation. He further pleaded in his answer that at the
time the note was made and delivered, it was agreed between
him and the plaintiff that he should not be required to pay
the note, and that he should not be in any manner liable
thereon. As a further affirmative defense he alleged that the
note was procured by plaintiff through false and fraudulent
representations on the part of plaintiff's cashier, with
intent to deceive and defraud him. This latter defense was
abandoned at the trial.
The
plaintiff by replication denied the new matter set forth in
the answer. The cause was tried to the district court of
Fergus county sitting with a jury. A verdict was returned in
favor of the defendant, and judgment was entered thereon.
From that judgment and an order denying a new trial the
plaintiff has appealed to this court.
The
note purported to have been made for value received. After
the same was introduced in evidence the plaintiff rested.
Thereupon the defendant testified, in part, as follows:
"This note was made in the bank at Moore, at C. W.
Thurston's bank. Thurston was at that time cashier of the
bank. Q. How came you to make this note?" This question
was objected to on the ground that any oral contemporaneous
agreement would tend to vary and change the tenor of the
note, and because it had not been shown that Thurston was
acting within the scope of his authority as cashier. The
objection was overruled, and the witness continued:
"Well, Mr. Thurston asked me to make a note, sign a
note, for $1,500, and I told him that I did not want to sign
the note, and he asked me why, and I told him I could not pay
the note if I was called upon to do so. He said that the bank
would not hold me responsible. He said that his paper would
not, that the bank would not want his paper in there, and
that it would not look well to the bank examiner, and I told
him that was the condition under which I would sign it; that
the bank would not hold me liable or responsible on the note,
and he said the bank would never ask me to pay it, and that
he would look after it, and that I never need bother about
it. And I signed the note, and he took it and turned it in to
the teller. I did not receive any of the proceeds of the
note. I was not called upon to pay the note at the time of
maturity. It must have been a month after the note matured
before anything was said about it. Mr. Thurston was not still
cashier of the bank. Mr. Hedrick, the cashier that went in
afterwards, called upon me to pay the note. It is supposed
Thurston got the proceeds of the note. Of course, at that
time I didn't know whether he did or not. What makes me
think he did is because it has been shown that he did to my
mind. It is through matters subsequently learned that I base
my answer that Thurston got the proceeds of the note. Of my
own knowledge I don't know anything about the matter. I
had no dealings of that sort with Thurston before. He and I
were in the real estate business together at that time. We
were partners at that time in the Judith Basin Realty
Company. At that time I was occupying an office in the State
Bank of Moore; I had a back room. The Judith Basin Realty
Company did not share any of the proceeds of that note. I did
most of the work of the realty company."
John N.
Phillips, a former bookkeeper and teller of the bank,
testified: "Mr. Thurston was cashier of the bank until
September 3, 1907. When this note went into the bank it took
up three of Mr. Thurston's cash items, aggregating
$480.48, which had been running some little time; also two
notes carried in the bank by Mr. Thurston, aggregating
$423.07. These notes were given to the bank by Thurston, and
the proceeds of the Forsyth note, or part of it, took up
those two notes. Four drafts issued by the bank on June 20,
1907, through Mr. Thurston, aggregating $51.40, were also
paid by Thurston from the proceeds of the note. Part of the
other proceeds of this note went to the credit of Mr.
Thurston's account, and he took cash for some of it.
Under date of June 20, 1907, Thurston's account shows a
credit of $400. That $400 came from the proceeds of the
Forsyth note. The balance was taken in cash. While I was
employed in the bank, Mr. Thurston had charge of making the
loans; that was principally his work. He made all kinds of
loans. He made loans as large as the capital of the bank
would stand. I don't think he consulted any of the
directors of the bank. I know positively that on certain
loans he did not consult with other directors of the bank. As
long as he had charge of the bank he pursued that line of
conduct, or making loans of that character and size without
consulting the other directors or officers of the bank. He
had charge of the promissory notes taken by the bank. In
making payments of notes no one was consulted but the
cashier. I didn't consult any one except Thurston. If he
was away I used my own judgment in the matters. The bank had
a manager. Mr. Thurston was the manager. The directors of the
bank held meetings once a year, on the 1st of January. They
never held any meetings after that, until September of the
year 1907. Mr. Hauck, the president of the bank, was about
the bank there quite often, probably twice a week, or once.
He usually came into the bank and talked a little while and
went out again. Mr. Thurston issued the drafts of the bank
exclusively. He made the loans if he was there. If he was
away, I made them in his place. Mr. Thurston used his own
judgment in making loans. There was no one there for him to
consult with. It was the custom to make loans immediately
upon application. A great many promissory notes were taken
without security. Notes were usually taken by Thurston
without consulting any one else. The president of the bank
resided 10 miles from Moore, and the vice president resided
50 miles away. Thurston was in charge of the bank as manager
on June 20, 1907. This note came to the bank in the usual
course of business. Thurston brought it to me. The rest of
the banking force were working under him. He overlooked their
work. He had charge of the moneys."
At the
close of defendant's case the plaintiff moved for a
directed verdict in its favor. The motion was overruled.
Thereupon John C. Hauck, the president of the bank, was
called as a witness for the plaintiff. He said: "I was
supervisor of the affairs of the bank during the year 1907.
Every once in a while we would go over the accounts and check
them all up, I and Mr. Warr, the cashier of the Bank of
Fergus County. We did that for about four months after the
bank was started, and then we done it off and on ever since
up to the time Thurston left. I went through everything that
was in the bank several times in the two years, about five or
six times I should judge. That was when Thurston had charge
of the bank. I never, as president, authorized Thurston to
make any collateral agreements that the paper of the bank
should not be, or was not to be, collected. I don't think
we directors had any meetings in the spring and summer of
1907."
At the
close of all the testimony, the plaintiff's counsel
requested the court to charge the jury that, if the State
Bank of Moore paid any consideration for the note, their
verdict must be for the plaintiff, and also that the alleged
oral agreement of Thurston that the defendant would not be
called upon to pay the note was no defense to the action. The
court refused the requests. Over appropriate objection by the
plaintiff, the court advised the jury that, as between the
maker and payee of a promissory note, oral evidence touching
the consideration thereof could be considered by them, and
that if they found that the defendant received no
consideration, and that the note was made for the
accommodation of the plaintiff, their verdict should be for
the defendant. The jury was also instructed, without
objection, that: "If Thurston owed to or borrowed from
the plaintiff the amount of the note sued upon, and if, at
the request of Thurston, the defendant gave to the plaintiff
the note sued upon in satisfaction of such indebtedness of
Thurston, to the plaintiff, and the plaintiff accepted the
note as such satisfaction, then the note was given upon
sufficient consideration, and the plaintiff is entitled to
recover the amount due on the note."
The
court also gave to the jury instruction No. 3, as follows
"The court instructs the jury that the burden of proof
was on the plaintiff to show that the note was given upon a
valuable consideration, and that, if that was doubtful upon
the whole evidence, plaintiff could not recover; that the
admission by the defendant of the execution...
