Union National Bank v. A. Moomaw

• Decision Date: 07 July 1921
• Docket Number: 21412
• Citation: 184 N.W. 51,106 Neb. 388
• Parties: UNION NATIONAL BANK, APPELLEE, v. A. MOOMAW, APPELLANT
• Court: Nebraska Supreme Court

184 N.W. 51

106 Neb. 388

UNION NATIONAL BANK, APPELLEE, v. A. MOOMAW, APPELLANT

No. 21412

Supreme Court of Nebraska

July 7, 1921

APPEAL from the district court for Scotts Bluff county: RALPH W HOBART, JUDGE. Reversed.

REVERSED.

Morrow & Morrow, for appellant.

Wright Mothersead & York and C. L. Kagey, contra.

Heard before MORRISSEY, C. J., DAY, DEAN and LETTON, JJ.

OPINION

MORRISSEY, C. J.

Defendant appeals from a judgment entered in the district court for Scotts Bluff county.

Action was brought by plaintiff as the holder of two promissory notes in the sum of $ 1,000 each, given by defendant to the Globe Life Insurance Company of Salina, Kansas. One note bears date of November 9, 1917, and the other November 17 1917. The issues as to each note are the same. After setting out a copy of each note the petition alleges: "That before maturity of the said note and in due course of business plaintiff purchased said note from the said Globe Life Insurance Company for a valuable consideration, and said Globe Life Insurance Company duly indorsed and assigned said note, and this plaintiff became, and ever since has been and is now, the owner of said note and is entitled to the payment thereof."

The answer admitted the execution and delivery of the notes to the insurance company, but denied all other allegations in the petition. It specifically denied that the insurance company indorsed or assigned the notes to the plaintiff, but averred that one W. S. Hayslip, who was treasurer of the company, and who had made the indorsement, had no authority to indorse the name of the company on the note, and alleged that the indorsement was not the indorsement of the insurance company. It also alleged that the company received no consideration for the note. It alleges that by false and fraudulent representations defendant was induced to execute the notes for shares of capital stock in the insurance company, pleading at length a state of facts which would constitute a defense to the notes if they were in the hands of the original payee, and constituting a defense provided plaintiff did not become the owner and holder in due course. At the close of the evidence the court directed a verdict for plaintiff.

As grounds of error defendant alleges that the court erred in permitting the introduction of the notes in evidence. The basis of the assignment is found in the contention that although the notes were made payable to the Globe Life Insurance Company, they were in fact the property of one Felix Broeker, president of the company, and that the company was not authorized by its charter to indorse commercial paper for the benefit of other parties; that the treasurer of the corporation had no authority to make the indorsement, and therefore the notes were inadmissible in evidence until plaintiff first proved that the treasurer was expressly authorized by the bylaws or by resolution of the board of directors to make the indorsements. In support of the first contention, it is claimed that the capital stock of the insurance company, for which these notes were given, had first been sold by the company to Broeker, and he had employed a selling agency to make the sale to plaintiff and others, and that the stock actually issued was not the treasury stock of the corporation, but the stock of the individual, Broeker. The proof appears to show that Broeker had taken over a large block of stock under a contract with his own company and given his notes therefor, but the certificates of stock were still held by the company and on receipt of defendant's notes certificates of the proper denomination were issued to defendant. Defendant had signed a written subscription for stock of the insurance company; he had executed his notes payable to the order of that company; his subscription and his notes reached the company, and the company issued the stock. It is hard to perceive on what theory he may now be heard to say that these notes were not the property of the company. True, it is said in defendant's brief that there is no record in the office of the insurance company that it ever issued any stock to defendant or that it ever received the notes. On the other hand, the record before the court as a whole seems to confess the issuance of the stock, and the proof shows that the notes were in the hands of the company officers and by them delivered to plaintiff. The officers of the insurance company may have misappropriated the funds, but that would not necessarily affect the ownership of the notes. As to the sufficiency of the indorsement, even if conceded...