Case ID: neb_37/html/0626-01.html
Source: Caselaw Access Project
Author: {"author": "Irvine, C.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Commercial National Bank of St. Paul, Minnesota, v. John W. Brill et al.
    Filed September 20, 1893.
    No. 4984.
    1. negotiable Instruments: Authority of Secretary of Corporation to Transfer: Validity of Indorsements: Evidence. Where a bank has an arrangement with a corporation whereby the bank agrees to discount notes held by the corporation, and in pursuance of such agreement such notes have customarily been brought to the hank and been negotiated by the secretary of the corporation, such facts are sufficient evidence of the authority of the secretary to transfer a particular note and of the genuineness of the indorsement upon such note, the proceeds of the note having been placed by the bank to the corporation’s credit, and paid out on the corporation’s checks.
    2. -: -: -: The Declarations of Officers of such corporation, made after the transfer to the bank, are inadmissible in a suit by the hank against the makers of the note, for the purpose of showing want of authority in the secretary to make the transfer.
    3. Verdict Supported by Incompetent Evidence: Review. Where incompetent evidence is admitted against objections, but the admission of such evidence is not specifically assigned as error, this court will nevertheless disregard such incompetent evidence in considering the question whether the verdict is sustained by the evidence.
    Error from the district court of'Cuming county. Tried below before Norris, J.
    
      M. McLaughlin, for plaintiff in error.
    
      C. C. McNish, contra.
    
   Irvine, C.

The plaintiff in error brought tbis action in the district court of Cuming county to recover from the defendants in error upon a promissory note for $315, made to the order of the J. H. Mahler Company, and by that company indorsed to plaintiff. The defendants admitted the execution of the note but alleged that it had been procured from them by the Mahler Company by fraud and without consideration, and that one Miller, the secretary of the Mahler Company, had, without authority from that company, delivered the note to the plaintiff, and that the plaintiff knew that Miller had no authority to transfer the note. The plaintiff in reply denied the affirmative allegations of the answer, and pleaded that it was a bona fide purchaser for value before maturity.

The case was argued largely upon the question as to whether or not the bank took the note with notice of the fraud alleged. It will be observed, however, that the precise issue tendered and joined was as to the transfer of the note to the bank and the authority of the officer making the same.

Upon the part of the bank, its cashier testified that he bought the note for the bank in the ordinary course of business without notice of any of the relations existing between the Mahler Company and the makers; that the bank had arrangements with the Mahler Company by which it agreed to discount notes held by the Mahler Company, not to exceed at any time $25,000; that this note was taken under that agreement; its proceeds placed to the credit of the Mahler Company and checked out by that company. He further testified that Miller, the secretary of the Mahler Company, presented most of the notes for discount. This note bears an indorsement as follows: “J. H. Mahler Company, per J. H. Mahler, Prest.”

While the secretary of a corporation has not, merely by virtue of his office, authority to negotiate notes held by the corporation, it is well settled that if such an officer has been permitted by the directors to negotiate notes, or if the company acquiesce in and receive the benefit of such acts, a purchaser of a particular note, familiar with such facts, may assume the officer’s authority, and the corporation will not be permitted to set up a want of authority against such purchaser. (Lester v. Webb, 83 Mass., 34; Partridge v. Badger, 25 Barb. [N. Y.], 146; Foster v. Ohio- Colorado Reduction & Mining Co., 17. Fed. Rep., 130.) The testimony of the cashier brings the case within this rule. There is no direct evidence of the genuineness of the indorsement itself, but the indorsement being regular in form, and the note having been brought to the bank by that officer of the company who customarily attended to such business, the indorsement must be taken as genuine. As against this testimony there is nothing except the testimony of one of the defendants and another witness as to admissions or statements made to them by the president and secretary of the Mahler Company long after the bank took the note. This testimony was clearly inadmissible against the bank. The admission of this evidence, although there were proper objections and exceptions, is not specifically assigned as error in the petition in error; but it is assigned as error that the verdict is not sustained by the evidence, and the court, in passing upon that assignment, will not consider incompetent evidence admitted over proper objections and exceptions. The bank having made a prima facie case which was not disputed except by such incompetent evidence, there was no evidence sufficient to sustain the verdict in favor of the defendants.

Reversed and remanded.

The other commissioners concur.