Versteeg v. Hoeven
| Decision Date | 18 November 1930 |
| Docket Number | 40255 |
| Citation | 239 N.W. 709,214 Iowa 92 |
| Parties | JOHN VERSTEEG, Receiver, Appellee, v. BEN HOEVEN, Appellant, et al |
| Court | Iowa Supreme Court |
OPINION ON REHEARING DECEMBER 16, 1931.
REHEARING DENIED MARCH 8, 1932.
Appeal from Sioux District Court.--C. C. BRADLEY, Judge.
This was a proceeding to collect from the defendants the amount due on a promissory note. A jury was waived and the case was tried to the district court. After a hearing, that court entered judgment for the plaintiff. From this the defendant Ben Hoeven alone appeals.
Affirmed.
Van Oosterhout & Kolyn, for appellant.
G. C Murray and T. E. Diamond, for appellee.
KINDIG J., EVANS, DE GRAFF, WAGNER, and GRIMM, JJ., concur. FAVILLE, C. J., and MORLING, J., dissent.
The defendant John J. DeBruin, until November 20, 1920, owned and operated an implement business in Hospers, Iowa. On that date, DeBruin, finding himself indebted to various creditors in the amount of approximately $ 25,000, asked his brother-in-law, Ben Hoeven, the defendant-appellant, for financial aid. Appellant agreed in writing to assist the defendant John J. DeBruin to the extent of $ 25,000 upon the condition that certain properties be turned over to, and named security given, him. That is to say, appellant demanded: First, a note of $ 25,000, signed by the defendants, John J. DeBruin and his wife, Hattie DeBruin; and, second, that the foregoing note and mortgage be secured: (a) by a mortgage on the stock of implements, warehouse, and shop in Hospers; (b) by a mortgage on certain lots in that town; and (c) by the assignment of a second mortgage upon 239 acres of land in Sioux County, owned by John J. DeBruin and Kryn DeBruin. Kryn DeBruin approved the foregoing contract so far as it concerned his interest in the second mortgage on the Sioux County farm.
In addition to the foregoing, and as a part of the same transaction, the defendant John J. DeBruin turned over to the appellant, for the purposes of security, all notes and accounts belonging to the foregoing hardware store, including the following: First, the note in suit, signed by A. Van de Berg, for $ 1,300, due December 1, 1921; and, second, a note signed by Peter Vos in the amount of $ 1315, due January 25, 1921. An accounting was provided for under the aforesaid written stipulation between appellant and the DeBruins. After the arrangement above named was thus made, the appellant commenced settling John J. DeBruin's obligations. While so doing, appellant found that among the debts to be liquidated for John J. DeBruin was a note of $ 3,041.80, held by the Citizens Bank of Hospers, a copartnership composed of W. M. Smith and F. E. Frisbee. Hence, appellant, together with one Collman, cashier of the First National Bank, at George, Iowa, went to the Citizens Bank of Hospers for the purpose of satisfying John J. DeBruin's obligation on the aforesaid $ 3,041.80 note. For the purpose of negotiation, appellant, upon this occasion, took with him the above-named Van de Berg and Vos notes, which he had received from the hardware store in the manner and way previously explained. Both the Van de Berg and Vos notes were endorsed by John J. DeBruin when the same were turned over to appellant for the purposes of liquidating the business. These notes, that is, the Van de Berg and Vos paper, were offered the Citizens Bank in satisfaction of the John J. DeBruin note of $ 3.041.80, held by that financial institution. Following some preliminary negotiations, the bank agreed to accept the Van de Berg and Vos notes in satisfaction of the John J. DeBruin $ 3,041.80 note, upon the following conditions: First, that appellant pay in cash the difference between the John J. DeBruin note, held by the bank, and the Van de Berg and Vos notes, which was $ 471.96; and, second, that appellant endorse both the Van de Berg and Vos notes.
Further discussion was had, and appellant finally agreed: First, to endorse the Van de Berg and Vos notes; and, second, to execute to the bank his own individual note for $ 471.96. There is a dispute, hereinafter discussed, concerning the conditions under which the endorsement was made, but appellant endorsed the Van de Berg and Vos notes and delivered them to the bank, together with his own note for the said sum of $ 471.96. Thereupon, the bank endorsed the John J. DeBruin note for $ 3,041.80 and delivered it to the appellant.
Thus the matters remained for a considerable length of time. Later the bank went into insolvency, and John Versteeg, the appellee, was appointed its receiver. During the same period, John J. DeBruin became mentally incompetent, and Hattie DeBruin, his wife, was duly appointed guardian of his property. Likewise, during this time, the Vos note was fully paid to the Citizens Bank, but the Van de Berg note has not been paid. Consequently, the present suit was instituted by appellee, as receiver of the Bank, to collect from appellant, as endorser on the Van de Berg note, the amount thereof together with interest and costs.
Many defenses were interposed by appellant. They are these, so far as material: First, that his endorsement was placed on the note with the bank's agreement that there never would be personal liability; second, that the endorsement was for the bank's accommodation only; third, that the endorsement was thus placed by appellant on the condition that the bank's endorsement of the John J. DeBruin $ 3,041.80 note constituted a set-off; and, fourth, that because of the bank's endorsement on the said John J. DeBruin note, the appellant has a counterclaim against his liability under his endorsement on the note in suit. A reply to this answer and counterclaim was filed by the appellee.
By an agreement of the parties, a jury was waived and the cause tried to the district court as a law action. As before said, that tribunal entered judgment in appellee's favor. From this action, the appeal was taken.
Although five grounds for reversal are set forth by appellant in his brief and argument, yet really two propositions are contained therein. These are that the district court erred in holding: First, that the John J. DeBruin note of $ 3,041.80, formerly held by the bank, was paid before the commencement of this action; and, second, that certain testimony offered by appellant relative to the facts and circumstances surrounding the endorsement of such note was improperly excluded. Therefore, the appellant asks for a new trial.
I. Did the district court erroneously hold that the John J. DeBruin $ 3,041.80 note, formerly held by the Citizens Bank, had been paid and discharged before the commencement of the present action? This is the first question raised by appellant on his appeal.
Underlying appellant's theory at this juncture is the thought that if the John J. DeBruin $ 3,041.80 note is not discharged, the Citizens Bank's endorsement may be asserted as a defense against the appellee in this suit. Was such discharge of the note effective? Appellant admits the bank's endorsement thereon is useless to him as a defense unless the instrument is endorsed in such a way as to give it life after satisfaction, so far as the endorser and appellee are concerned. Manifestly, the record justified the district court in finding that the note had been paid and discharged, so far as John J. DeBruin is concerned. Demonstration of this fact can be made by a brief review.
It is here recalled that the agreement between John J. DeBruin and appellant required the latter to satisfy the former's obligation in an amount not exceeding $ 25,000. Under that stipulation, appellant commenced the above described negotiations with the Citizens Bank. As a result thereof, he delivered the Van de Berg and Vos notes, formerly owned by John J. DeBruin, to the bank in return for said $ 3,041.80 note. Assuming that this $ 3,041.80 note had not been discharged, so far as John J. DeBruin and appellant are concerned, before an accounting was had between them under the above liquidation contract, yet a subsequent accounting did fully satisfy and terminate the same before the institution of this suit. John J. DeBruin desired the discharge of the obligation evidenced by that note. Such was the very purpose of his contract with appellant. So, when appellant transferred the Van de Berg and Vos notes and received in return therefor the instrument in question, the obligation was terminated unless in the accounting John J DeBruin would be permitted to repudiate the transaction. That is true because after an accounting approving appellant's action, John J. DeBruin would no longer owe an obligation to the Citizens Bank under the $ 3,041.80 note. Possibly John J. DeBruin thereafter might be liable to the Citizens Bank because of his endorsement on the Van de Berg and Vos notes, but such responsibility would be independent of and separate from his debt under the $ 3,041.80 note. Clearly, the district court was fully justified, under the facts and circumstances, in holding that the Citizens Bank, in receiving the Vos and Van de Berg notes from appellant together with the latter's own note for $ 471.96, fully satisfied and discharged the John J. DeBruin note of $ 3,041.80, subject to the contemplated accounting. Everything in the record supports this view. The district court under the record could well find that the satisfaction of the $ 3,041.80 note by the bank in the transaction described was not conditional but absolute. At least, the only condition would be the approval of appellant's action at the accounting. Dependence was made by the bank, not upon a future rescission of the exchange transaction, but on the endorsements of appellant and John J. DeBruin on the Van de Berg and Vos notes. All this is fully...
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