Sykes v. First National Bank

• Decision Date: 20 October 1891
• Court: South Dakota Supreme Court
• Parties: E. T. SYKES and D. D. BROOKS, partners doing business as E. T. Sykes & Co., Plaintiffs, v. FIRST NATIONAL BANK, Defendants.

2 S.D. 242, 49 NW 1058 (1891)

E. T. SYKES

and

D. D. BROOKS,

partners doing business as E. T. Sykes & Co.,

Plaintiffs,

v.FIRST NATIONAL BANK,

Defendants.

South Dakota Supreme Court

Appeal from Circuit Court, Lincoln County, SD

Hon. Frank R. Aikens, Judge

Affirmed

R. B. Tripp, Bartlett Tripp, Yankton, SD

Attorneys for appellant.

L. B. French, Yankton, SD

Attorney for respondent.

Opinion filed Oct. 20, 1891

CORSON, J.

This is an action brought by plaintiffs to enforce the payment of the sum of $7,088 alleged to have been assigned to plaintiffs by one Pattee, which had come into the possession of the defendant with notice of the assignment. The action was tried to a jury, and a verdict and judgment directed by the court in favor of plaintiffs. Motion for a new trial was made and overruled, and defendant appeals to this court from the judgment and order. The plaintiffs in their complaint allege that in April, 1888, a contract was entered into between one Pattee and the board of trustees of the Dakota Hospital for the Insane, by which said Pattee agreed to construct two wings to said hospital, including a plant for steam heating, for the sum of $70,000; that subsequently said Pattee entered into a sub-contract with those plaintiffs to construct said steam heating plant for said two wings for the sum of $7,088; that said Pattee, in accordance with the terms of said subcontract, and at the time of making the same, duly assigned to the plaintiffs by an instrument in writing the sum of $7,088 of the money to become due from the territory on his contract with the board, payable out of the steam heating fund; that the plaintiffs fully performed their said subcontract; that the board of trustees issued to said Pattee vouchers for the sum of $10,000 on said steam heating fund, which vouchers were transferred to the defendant by said Pattee, and warrants obtained thereon from the territorial auditor, which were paid to defendant by the territorial treasurer, and that said defendant received said fund with notice that said sum of $7,088 of said fund had been duly assigned to the plaintiffs by said Pattee; that, upon the receipt of said fund by said defendant, it promised the plaintiffs to pay to them the amount so assigned to them; and that same had been demanded of said defendant, and payment thereof refused. The answer admits the copartnership of plaintiffs, the making of the contract between the said Pattee and the board of trustees, and the incorporation of the defendant, and denies the other allegations of the complaint. The answer then alleges that in August, 1888, and for a long time thereafter, said Pattee was one of the depositors of said defendant bank, and that his deposits consisted chiefly of vouchers issued to him by the board of trustees of the Dakota Hospital for the Insane on the contract between said board and said Pattee, set out in the complaint; that said vouchers were forwarded to the territorial auditor by the defendant, and he issued his warrants thereon, which were transferred by indorsement by the defendant under and by virtue of a power of attorney from Pattee, and collected by the defendant of the territorial treasurer, and the money placed to the credit of Pattee in the said defendant bank; that the amounts so placed to the credit of said Pattee were and could be drawn out by said Pattee on checks in the ordinary course of business; that on or about January 7, 1889, the said Pattee transmitted to the defendant vouchers on said steam heating fund for $8,029, which were collected in the manner above stated on account of said Pattee; that on or about the same date said Pattee transmitted to the defendant a check in favor of said plaintiffs for the sum of $7,088, with a bill for $261.95 against said plaintiffs to be deducted therefrom, said check to be paid on condition of the allowance and deduction of said bill; that defendant communicated the fact of the drawing of said check by Pattee, and the bill for $261.95 to be deducted therefrom, to the plaintiffs; that plaintiffs refused to allow said bill, or receive the amount of said check less said bill, which fact defendant communicated to said Pattee, who thereupon directed the defendant not to pay said plaintiffs anything on account of their said contract, and revoked defendant's authority to honor said check, which said revocation remains in full force and effect.

The facts, as proven and admitted on the trial, briefly stated, are as follows: In the spring of 1888 the board of trustees of the Dakota Hospital for the Insane, situated at Yankton, S. D., entered into a contract with one J. B. Pattee to construct two wings to the Dakota Hospital for the Insane, including heating apparatus for heating the same. In July of that year said Pattee entered into a written contract with the plaintiffs, Sykes & Co., to construct in said wings to said hospital steam heating apparatus, in which subcontract between Pattee and Sykes & Co. are the following clauses: "The said J.B. Pattee, the party of the first part, agrees and obligates himself to set apart from the payments or fund to be received by him from the Territory of Dakota, by proper and legal assignment and order upon the board of trustees of the Dakota Hospital for the Insane, or other proper authority or body, the sum of $7,088, to be applied from time to time towards the payment of said materials and labor, which said assignment and order shall be duly accepted by said body or authority. It is further expressly understood and agreed that the performance and the payments hereunder are conditioned upon the execution of the bond for the faithful performance of this contract by the second party, (Sykes & Co.,) and the execution of the assignment and order by the first party, (Pattee,) and the acceptance thereof hereinabove referred to." In pursuance of the terms of said contract above specified, said Pattee, on July 20, 1888, made the following order and assignment: "To the Board of Trustees of the Dakota Hospital for the Insane—Gentlemen: I, J. B. Pattee, of Yankton, D.T., contractor, for a valuable consideration, assign, transfer, and set over to E. T. Sykes and D. D. Brooks, as partners doing business as E. T. Sykes & Co., of Minneapolis, Minn., all of my right, title, and interest in and to the sum of $7,088, the same being part of the fund out of which I, as said contractor, am to be paid for material and labor furnished and performed thereon, said assignment of that portion of said fund to be paid to E. T. Sykes & Co. in the manner and upon the terms and conditions set forth in a certain memorandum of agreement dated July 20th, 1888, signed by said J, B. Pattee and E. T. Sykes and D. D. Brooks as such partners, a copy of which is hereto attached for the guidance of said trustees. And I do hereby respectfully request and order you, as such trustees; to make payment and issue the proper orders for the payment of said sum according to the terms and conditions of said agreement and this assignment, and charge to me said sum when paid, to be deducted from the amount due and to become due upon my said contract with the said Territory of Dakota. J. B. PATTEE." This order and assignment was presented to the board of trustees for the hospital, but the board declined to accept the same. Thereupon, on August 15th, Mr. Pattee wrote to Sykes & Co. the following letter: "E. T. Sykes—Dear Sir: ... I presented the assignment to the board, but, while they thought well of it, they found legal objections, which I have not time to explain. I will fix your matter satisfactorily through the First National Bank of Canton. Mr. Gale, the president of the bank, is the president of the board of trustees. Yours, in haste, J. B. PATTEE." And on the following day, August 16th, J. H. Gale, then cashier of the defendant bank, wrote to Sykes & Co. the following letter: "Canton, Dakota, August 16, 1888. E. T. Sykes & Co., Minneapolis, Minn.—Gentlemen: Mr. J. B. Pattee presented the paper you sent him to the board, and requested and urged them to sign it, but they could not, as that goes beyond their jurisdiction, so Mr. Pattee requested me to write you and explain the matter fully. All vouchers are made out by the board to the order of Mr. Pattee, and the warrant is also drawn to his order, but I have a power of attorney to indorse his drafts or warrants, and the president of this bank is the president of the board of trustees of the Yankton Asylum, and all vouchers are endorsed by Mr. Pattee, and turned over to this bank by the president of the board, and we get the warrant from the auditor. Now, you see everything is handled in such a way that you are perfectly safe, and we will remit to you just as fast as we get the warrants advanced on this fund, viz., 'steam heating.' Trusting this will be satisfactory, and that you will rest easy, I remain, very respectfully, J. H. Gale." And on August 18th Sykes & Co. wrote in reply as follows: "Minneapolis, Minn., August 18, 1888. J. H. Gale, Esq., Yankton, Dak.—Dear Sir: Your Explanation and agreement in the matter between Mr. Pattee and ourselves is satisfactory. We have given instructions to have bond and contract delivered to Mr. Pattee. In the meantime we have been making contracts, and don't expect there will be any delay by us in the completion of the buildings. The boilers are nearly ready. Yours, respectfully, E. T. Sykes & Co." E. T. Sykes, one of the firm of Sykes & Co., testified on the trial that, "upon being informed that the assignment was not accepted by the board, I stopped any further action in the matter. ... Before this [probably referring to the Gale letter] I had informed Mr. Pattee we would require security before going on with the contract. I so wrote him, and he kept writing me because I did not go on any further in the work. ... The contract referred to in this letter (letter to Gale of August 18th) was the contract for the work, and the bond was to secure Mr. Pattee...