State Savings Bank of Logan v. Osborn
| Decision Date | 20 January 1920 |
| Docket Number | 33070 |
| Citation | 175 N.W. 964,188 Iowa 168 |
| Parties | STATE SAVINGS BANK OF LOGAN, Appellee, v. O. R. OSBORN et al., Appellants |
| Court | Iowa Supreme Court |
Appeal from Harrison District Court.--E. B. WOODRUFF, Judge.
ACTION at law upon a promissory note. Judgment for plaintiff against the defendant Davis, who appeals.
Reversed.
Robertson & Havens, for appellant.
J. A Murray, for appellee.
The note in suit appears upon its face to have been made by Osborn to the appellant Davis, who is alleged to have endorsed it to the plaintiff bank.
Defendant denies liability. The answer filed is unconscionably long, verbose, and involved in its statements, and, had the trial court stricken it on that account, giving defendant opportunity to replead his defense in better form, we should have no difficulty in affirming the order.
Stating the defenses on which reliance is placed, in briefer terms, they are, as we understand them, about as follows: (1) Denial made in general terms; (2) want of consideration for the appellant's endorsement of the note; (3) failure of consideration for the endorsement; (4) payment of the note by Osborn; (5) that there was never any delivery of the endorsed note to the plaintiff, or that the delivery was, at most, conditional; and (6) that the note was endorsed in consideration of a representation by the bank that it held a mortgage on Osborn's property of sufficient value to secure payment of all his debts to the bank, including the note in question, and that, if appellant would endorse said note, the bank would proceed to collect the same from the proceeds of the sale of said mortgaged property, and would apply the first money received on such sale to the payment of said note; that said promise and agreement were never performed, and were never intended to be performed, but were made with the fraudulent intent and purpose to entrap the appellant into an endorsement of the note, and that plaintiff did, in fact, collect enough from the security held by it to pay the note, but failed to apply it upon such indebtedness, as agreed.
The alleged facts on which these various defenses are sought to be founded are substantially as follows: The appellant Davis, a farmer, was about to hold a public sale, to dispose of a considerable quantity of personal property. Preparatory to such sale, he entered into an agreement with the bank by which said bank was to purchase all the promissory notes given by purchasers of the property so sold, and to that end, and to satisfy itself of the financial responsibility of the makers of the notes, the bank was to be represented at the sale by one of its officers, who was to act as clerk, and to take the notes payable directly to itself, without endorsement or guaranty by the appellant. The sale was held, as contemplated. One Joy, an officer of the bank, served as clerk, and took the notes, making them all payable, as agreed, direct to the bank, except one note given by Osborn for $ 374.70. In making settlement with Osborn, Joy, contrary to the agreement between appellant and the bank, inserted the name of appellant as payee of the note, without appellant's knowledge or consent. At some time after the note of Osborn had been so taken by Joy, the latter requested appellant to endorse the note, as a matter of temporary accommodation only; and, upon the promise that the note so endorsed should not be considered delivered, as between appellant and the bank, and that the bank should hold it in possession only temporarily, until it could get a new note and security from Osborn for all his indebtedness to the bank, including said note, appellant did make the endorsement.
Later, as we understand the answer, the bank did obtain a new note from Osborn, stamped the first note "paid," and delivered it to Osborn. Thereafter, the appellant, at the request of the bank, endorsed the new note it had theretofore obtained from Osborn. The pleading further shows that, to obtain said endorsement, the bank, by the officer having the matter in charge, stated and represented to the appellant that it held a chattel mortgage on the property of Osborn to the value of more than $ 500, and that, if appellant would make the endorsement requested, the bank would credit and apply the first moneys collected from Osborn or from the said security to the payment of said note; and that, relying upon said representation and promise, appellant did endorse the note; that, thereafter, the bank did collect from the sale of said mortgaged property more than enough money to pay and discharge said note, but, in violation of its agreement, it applied or credited such collections upon other claims held by it against Osborn.
The narrative of these alleged facts is restated and repeated, in various forms and with various embellishments; but what we have said is sufficient, we think, to enable us to get at the meat of the controversy on which we are asked to pass. The amended and substituted answer, setting up the defense or defenses to which we referred, was not demurred to; but plaintiff moved the court to strike out substantially everything contained in the pleading (except...
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