Wells v. W.U. Tel. Co.

• Decision Date: 23 November 1909
• Citation: 123 N.W. 371,144 Iowa 605
• Parties: A. JUDSON WELLS, Appellee, v. WESTERN UNION TELEGRAPH COMPANY and B. G. LYMAN, Appellants
• Court: Iowa Supreme Court

123 N.W. 371

144 Iowa 605

A. JUDSON WELLS, Appellee, v. WESTERN UNION TELEGRAPH COMPANY and B. G. LYMAN, Appellants

Supreme Court of Iowa, Des Moines

November 23, 1909

Appeal from Webster District Court.--HON. R. M. WRIGHT, Judge.

ACTION at law to recover damages of defendant telegraph company for negligently transmitting a forged telegram purporting to have been signed by the Bank of Denison and directed to the Commercial Bank of Britt, Iowa. There was a trial to a jury resulting in a directed verdict for the plaintiff, and defendants appeal. Affirmed.

Affirmed.

George H. Fearons, H. D. Estabrook and Wright, Call & Sargent, for appellants.

Kelleher & O'Connor and Senneff & Bliss, for appellee.

OPINION

DEEMER, J.

Plaintiff is a resident and citizen of New York, and defendants are the Western Union Telegraph Company and B. G. Lyman, its one time operator at the town of Denison, in this state. As assignee of Schriver Bros., a copartnership doing business in this state, and of the Commercial Bank of Britt, Iowa, each alleged to be the owner of a claim or cause of action against the telegraph company and its agent, Lyman, plaintiff brought this action to recover damages for defendants' negligence in sending to the bank of Britt a forged and fictitious telegram reading as follows: "March 14, 1902. To Commercial Bank, Britt, Iowa. We will honor Barnes draft for eighty-nine hundred seventy-two dollars. [Signed] Bank of Denison." While several grounds of negligence are charged, they may all be epitomized for the purposes of this appeal, into one, and that is that Lyman, the telegraph operator, knew, or in the exercise of ordinary care and prudence, should have known that the message was false fictitious, and forged, and that the sender thereof, one Barnes, had no authority to send it, and that he knew, or should have known, that the message was unauthorized by the Bank of Denison, and that it was sent with intent to defraud the addressee thereof or some person who would be justified in relying thereon. Defendants filed an answer in which, among other things, is pleaded (1) a former adjudication; (2) that plaintiff's assignment is and was without consideration, colorable, and fictitious, and made with the sole purpose and intent of defeating a removal to the federal courts; (3) that plaintiff, as assignee of the Bank of Britt, could not recover because no notice was given to defendant as provided by sections 2163 and 2164 of the Code; and (4) that plaintiff, as assignee of Schriver Bros., can not recover, because his assignor being an undisclosed principal, could not have done so. The answer also denied any negligence on the part of the telegraph operator. The trial court sustained a demurrer to that part of defendants' answer pleading a former adjudication, and of this complaint is made. It is also contended that the trial court erred in directing a verdict for plaintiff for reasons which will appear during the further consideration of the case.

It appears from the undisputed testimony that the firm of Schriver Bros. sold a lot of cattle to one Barnes for $ 8,972, and took his check upon the Bank of Denison for the amount. They, however, refused to surrender the cattle without some guaranty that the check would be paid, and they then agreed that Barnes should have the Bank of Denison transmit such a guaranty by telegram. Schriver Bros. requested that the telegram be sent to the Bank of Britt. Barnes lived at Denison, and had been engaged in the live stock business for some time. He had transacted a great deal of business with the telegraph company through its agent, Lyman. After the agreement with Schriver Bros. with reference to the telegram, Barnes returned to Denison, and there, over the telephone, dictated to Lyman the dispatch heretofore set out. The agent testified that he knew this message, although signed in the name of the Bank of Denison, was being dictated by Barnes, the man who drew the draft or check to Schriver Bros.; testified that he knew it was Barnes who called over the phone, and that, after giving the substance of the message, he, Barnes, said, "Sign it 'Bank of Denison.'" Lyman made no inquiry of the bank about the matter, but sent the message as it had been dictated. The charge for sending the message was not made to the bank, but, as we understand it, to Barnes. Indirectly, Lyman also testified that he knew that the telegram as sent had reference to Barnes' live stock business. The draft or check to which it referred had been left with the Commercial Bank of Britt by the Schrivers pursuant to an arrangement whereby credit was to be given to the Schriver Bros. upon receipt of the guaranty, and, although the cattle had been shipped, they were not to be released to Barnes until the receipt of such a message. The message was delivered to the Commercial Bank in due season and it directed the release of the cattle to Barnes, who immediately disposed of them. The Commercial Bank upon receipt of the spurious telegram gave Schriver Bros. credit for the amount of the check or draft upon its books, and forwarded said draft in due course for collection. When the draft reached Denison, the bank upon which it was drawn refused to accept or honor it, repudiated the telegram as false and spurious, and allowed the same to go to protest. When the draft was returned to the Bank of Britt, it demanded that Schriver Bros. make the same good, and thereupon they executed to the said bank their notes for the amount thereof. These notes are worthless, however, for the reason that Schriver Bros. are insolvent, and they were indorsed to plaintiff in this action, who now holds them as part of his claim under his assignments. It appears that Schriver Bros. brought suit against the Western Union Telegraph Co. alone in the federal court for the Northern District of Iowa, which suit went to trial and judgment in that court in favor of the said Schriver Bros. for the full amount claimed. Upon appeal to the United States Circuit Court of Appeals, the judgment was reversed. See 129 F. 344 (64 C.C.A. 96). The reversal was for error in one of the instructions. Upon remand to the trial court it was again heard before Hon. Henry T. Reed and a jury, resulting in a verdict for plaintiff in the case for the same amount as before. Again an appeal was taken and again a reversal was had. See 141 F. 538 (72 C.C.A. 596, 4 L.R.A. (N. S.) 678). The reversal on the second appeal was largely upon the ground that, as Schriver Bros. were the undisclosed principals of the Bank of Britt, they could not recover. The case was thereupon remanded without any judgment having been entered to the federal trial court. When the case reached that court on the second remand, plaintiffs dismissed the same without prejudice, and thereafter they assigned their claim to plaintiff herein, who is a resident and citizen of the State of New York.

I. Defendant's plea of former adjudication is bottomed upon these proceedings in the federal courts. It is manifest from this statement that there never was any final judgment against Schriver Bros. in those courts. True, several opinions have been rendered therein which for the purpose of final trial at nisi would constitute the law of the case for those courts; but it is idle to say that there has, in fact, been a former judgment adjudicating the right of plaintiff's assignor to recover. It is said, however, that these opinions settled the law of the case, and are binding as such. This is true in part. They do settle the law of the case for all purposes of trial in the federal courts, the opinion on appeal being conclusive on the trial courts in further proceedings had therein; but, as no further proceedings were had, these decisions are of no more weight with us than if they had been rendered by any other court of a foreign jurisdiction in cases to which these litigants were not parties. There can not well be much doubt about this proposition on principle and the authorities seem to point to but one conclusion. Hooper v. Railroad, 107 Tenn. 712 (65 S.W. 405); Foley v. Cudahy Packing Co., 119 Iowa 246, 93 N.W. 284; Gardner v. Railroad, 150 U.S. 349 (14 S.Ct. 140, 37 L.Ed. 1107); Spring Valley Co. v. Patting, 210 Ill. 342 (71 N.E. 371). The trial court correctly sustained the demurrer to that part of the answer pleading a final adjudication.

II. It is argued that the assignments to plaintiff were without consideration, colorable, and fictitious, and made for the sole purpose of preventing a removal of the suit, or suits, to the federal court. There is no testimony to support this claim. The evidence introduced by the defendant itself shows that plaintiff purchased the claims and took the assignments, and that he paid $ 3,000 therefor. There is nothing but the barest inference that this was done to prevent a removal to the federal courts. The case in this respect is ruled by Vimont v. Railroad, 64 Iowa 513; Vimont v. Railroad, 69 Iowa 296; Stryker v. Crane, 123 U.S. 527 (8 S.Ct. 203, 31 L.Ed. 194); Jahn v. Lumber Co. (C. C.) 157 F. 407; Everett v. Railway Co., 73 Iowa 442, 443; Hawley v. Railway Co., 71 Iowa 717. Of course, if the assignments were without consideration and merely colorable, as defendants contend, that would defeat the action, but the record does not support such a claim. As tending to support these views, see Provident Savings v. Ford, 114 U.S. 635 (5 S.Ct. 1104, 29 L.Ed. 261); Oakley v. Goodnow, 118 U.S. 43 (6 S.Ct. 944, 30 L.Ed. 61).

III. Again, it is said that, as assignee of the Bank of Britt plaintiff has no right to maintain the action for the reason that neither he nor the bank served any notice of their claim for damages, as provided in sections 2163: and 2164 of the Code. These sections, so far as...