The First National Bank of Laramie v. Vaughn

• Citation: 151 P. 1118,96 Kan. 402
• Decision Date: 09 October 1915
• Docket Number: 19,660
• Parties: THE FIRST NATIONAL BANK OF LARAMIE, WYOMING, Appellant, v. RIGGS VAUGHN, Appellee
• Court: United States State Supreme Court of Kansas

151 P. 1118

96 Kan. 402

THE FIRST NATIONAL BANK OF LARAMIE, WYOMING, Appellant, v. RIGGS VAUGHN, Appellee

No. 19,660

Supreme Court of Kansas

October 9, 1915

Decided July, 1915.

Appeal from Rush district court; ALBERT S. FOULKS, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. NOTE--Action by Indorsee--Defense Fraud--Tender Back of Valueless Consideration Unnecessary. In an action by the indorsee of a negotiable promissory note it is not necessary for the defendant, the maker of the note, who defends on the ground of fraud of the payee in procuring the note, to offer to return the consideration promised for the note where such consideration was either of no value or has not been received.

2. SAME--No Material Error in Evidence. The matters complained of concerning the introduction of evidence have been examined, and nothing is found warranting a reversal of the judgment.

3. SAME--Presumptions that Transcript is Correct. Recitals in a journal entry of judgment concerning the burden of proof will be controlled by what actually transpired on the trial, as disclosed in the transcript of the evidence and in the instructions to the jury.

4. SAME--Verified Denial Put in Issue the Indorsement of the Note. In an action by the indorsee of a negotiable promissory note, an answer that denies all the material allegations of the petition, denies that the plaintiff is the owner of the note in good faith for a valuable consideration before maturity, and denies that the note was indorsed to the plaintiff before maturity for value, meeting the allegations of the petition, verified by the affidavit of the defendant, in which he states that the facts and denials set forth in the answer are true, puts in issue the indorsement of the note to the plaintiff.

5. SAME--Immaterial Instructions. A judgment will not be reversed because of error in instructions which could not have misled the jury under the issues and evidence.

G. Polk Cline, of Larned, and E. E. Glasscock, for the appellant.

W. H. Russell, and Frank U. Russell, both of La Crosse, for the appellee.

OPINION

MARSHALL, J.

This is an action on a negotiable promissory note. Judgment was rendered in favor of the defendant. The plaintiff appeals.

The petition alleges that the note was duly indorsed, transferred and delivered to the plaintiff before maturity, for value; that the plaintiff is the owner and holder thereof in good faith; and that no part of it has been paid. The note was signed by the defendant, was made payable to the order of the Colorado-Wyoming Coal Company, and bears the following indorsements:

"Payment guaranteed; protest waived. The Colorado-Wyoming Coal Company, by A. J. Spengle, Treasurer. Northwestern Land and Iron Company, by A. J. Spengle, Treasurer. Pay to the order of any bank or banker, all prior indorsements guaranteed. 99-20 Laramie, Wyoming, 99-20. A. C. Jones, Cashier."

The answer admits the execution of the note; denies each and every and all material allegations of the petition save such as are admitted, modified or explained; denies that the note was indorsed to the plaintiff before maturity for value; and denies that the plaintiff is the owner of the note in good faith for a valuable consideration, before maturity. The answer also alleges that the note was given for stock in the Colorado-Wyoming Coal Company, and that the note was procured by that company through fraudulent representations. The answer is verified by the affidavit of the defendant, in which he states that the facts and denials set forth in the answer are true. The plaintiff did not introduce any evidence to prove any of the indorsements on the note. The jury found that the note had been procured through fraud.

The plaintiff complains of a number of matters, but they can be reduced to five propositions. First, the court erred in denying the plaintiff's motion for judgment on the pleadings; second, the court erred in the admission of evidence; third, the court erred in compelling the plaintiff to assume the burden of proof; fourth, the court erred in holding that the verification of the answer put in issue the indorsements on the note; and fifth, the court erred in the instructions to the jury. We will discuss these in the order named.

1. The argument advanced by the plaintiff in support of its contention that the court erred in denying the plaintiff's motion for judgment on the pleadings is, that the defendant did not offer to return the stock in the Colorado-Wyoming Coal Company, received by him when he executed the note. There is no allegation in the answer that he did offer to return this stock. There is an allegation that the stock had become worthless and valueless, because of the facts which the defendant set up as a fraud upon him. Under these circumstances it was not necessary for him to offer to return this stock. (National Bank v. Peck, 8 Kan. 660; Smith v. McNair, 19 Kan. 330; Wicks v. Smith, 21 Kan. 412, 415; Babb v. Lindley, 23 Kan. 478, 481; McKee v. Eaton, 26 Kan. 226, 232; Mfg. Co. v. Lewis, 30 Kan. 541, 544, 1 P. 812; Taft v. Myerscough, 197 Ill. 600, 64 N.E. 711; Defenses to Commercial Paper, Joyce, § 211.)

It appears from the brief of the defendant and from the transcript of the evidence that by the terms of the contract between the defendant and the Colorado-Wyoming Coal Company, entered into at the time the note was executed, the stock was not delivered to the defendant, and was not to be delivered to him until the note was paid. He had nothing to return.

2. It is contended that the court erred in denying the motion of the plaintiff to quash the depositions of witnesses Grant and Hopkins, and that the court erred in receiving the evidence of witness S. S. Vaughn. We have read the depositions of witnesses Grant and Hopkins, and have examined the transcript of all the evidence. There was no substantial or prejudicial error in the admission of evidence. None of the evidence complained of concerned the indorsements on the note. There was ample competent evidence to establish fraud on the part of the Colorado-Wyoming Coal Company in obtaining the note.

3. The plaintiff argues that the court erred in compelling it to assume the burden of proof on all the issues. The journal entry of judgment recites that the court required the plaintiff to assume the burden of proof on all the issues of fact joined by the pleadings. This is contradicted by the instructions to the jury. The court instructed the jury that the burden was on the plaintiff to prove the indorsements on the note, and that it was upon the defendant to prove fraud, after which the burden would shift to the plaintiff to prove that it was the holder of the note in due course. From the instructions set out it appears that the court properly instructed the jury concerning the burden of proof, and from an examination of the transcript it appears that the burden was either properly imposed or voluntarily assumed by the parties. The burden of proof actually imposed or voluntarily assumed on the trial as shown by the transcript, and as given to the jury in the instructions, must control a...