State Bank of Tabor v. Kelly

• Decision Date: 25 October 1899
• Parties: STATE BANK OF TABOR v. KELLY ET AL.
• Court: Iowa Supreme Court

109 Iowa 544

80 N.W. 520

STATE BANK OF TABOR

v.KELLY ET AL.

Supreme Court of Iowa.

Oct. 25, 1899.

Appeal from district court, Mills county; N. W. Macey, Judge.

Action in equity upon a promissory note and to foreclose a mortgage securing the same. From a judgment in favor of defendants, plaintiff appeals. Affirmed.E. B. Woodruff, for appellant.

John Y. Stone, for appellees.

WATERMAN, J.

One W. M. Coats, a director of plaintiff bank, negotiated the loan represented by the note sued upon, taking the note, together with the mortgage securing it, in his own name. He afterwards transferred them to the bank. Subsequently to the transfer, Coats looked after the matter for the bank, and received the various payments made by defendant. The petition is in the usual form. The answer avers payment, and sets out the various amounts, and dates thereof, for the payment was in installments. Among the other allegations of the answer is this: “On October 25, 1893, the defendant Isaac Kelly paid $200 on said note to said W. M. Coats, who was agent of the plaintiff, and authorized to receive such payment. This $200 was paid in the form of a note made by Thomas Partridge and John Baldwin to the defendant Isaac Kelly, which will be more fully explained hereafter.” The controversy here is as to this payment. Plaintiff admits having received the note, but claims that it was taken as collateral security only, and that it has never been paid. Defendant, on the other hand, insists that it was taken as payment to the full extent of its face value. As we have said, the payments on the note in suit were made to Coats as representing the bank. When the Baldwin note was given to Coats, he receipted therefor in this form: “Received of Isaac Kelly, note for $200, signed by Thomas Partridge and John Baldwin. Note dated December 23, 1892, interest at 7 per cent. To apply on note in bank. W. M. Coats.” Defendant testifies that he intended and understood this to be accepted as a payment pro tanto on his obligation. Prior to this time the cashier of the bank had told defendant that whatever Coats did in the matter would be satisfactory to plaintiff. It does not appear what statement, if any, Coats made to the bank when he sent to it the Baldwin note, which he did promptly after receiving the same. It is undisputed, though, that the bank retained this note for some 18 months after its receipt before notifying defendant that it was not acceptable as a payment. It is true, the cashier testifies that he notified defendant, before the transaction as to the Baldwin note, that it would be taken by the bank only as collateral. But we...