The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1923-11-16
Fred Matthys Held Liable for
Accommodation Note to
Scandinavian-American
Bank
TO SHOW COURT
He Claimed NoN Given to
Enable Showing That
Bank Was in Good
Condition

Fred Matthys, Cass county farmer,
is held liable on q note OF S3,ooo
which he maintained was given to
+. e. Wood. national executive COM
mittceman of the Nonpartisan
League and by him transferred to
the Scandinavian-A American bank IN
Fargo in 1919 to enable the bank to
make a showing before the supreme
court in a proceeding then before
that tribunal, in decision handed
down by the supreme court today.
The Cass district court, Judge NJ. >.
Englert presiding is sustained in
the decision.
Matthys defended himself against
the attempt of o. L. Engen, receiver
Of the Observation-Disclosures bank,
to collect the note on the ground 1T
was gained through conspiracy and
that it was not to be collected. The
court, in its decision holds:
/. Where one giving promissory
note so that it may be used for the
purpose Of making the assets of
bank appear stronger than they actu-
ally are, and where the bank subse-
quently fails, the one so giving the
note is, in a suit by the receiver,
representing creditors, estopped to
assert the accommodation character of
the instrument or to reply upon an
agreement that the instrument was
not to be regarded as a note.
Receiver May Recover.
2. When so estopped, one is not
prejudiced by rulings OF the lower
court which prevent him from estab-
fishing a consp piracy consisting in
design to obtain his note for the
ostensible pufposeY indicated and
subsequently using it for security
for advances to the party accom-
modateu to Third parties. He is not
liable on account Of the advances
but on account of the estoppel.
3. Since the receiver may recover
Notwithstanding the accommodation
character of the instrument and
though not a holder in due course,
the maker is not prejudiced by in
structions relating to the burden OF
proof which devolves upon holder
in due course.
It is understood that many other
cases. of a more or less similar ma
ture, where Nonpartisan League far
mers gave accommodation notes on
assurances that they would not have
to be paid, for various League enter
prises, are pending in the various
courts throughout the state.
Matthys executed the promissory
note on December 20, 1919. 1t was
at this time that there was con-
troversy over the Scandinavian
American bank, known as a, League
bank. The majority of the bank
ing board had ordered the bank
closed and an original proceeding
was brought in the supreme court
for the purpose of enjoining the ma
jority of the banks Of that board,
William LANCER and Thomas Hall,
from interfering with the bank.
Between the time of the filing Of
the petition in the high court and
the time the order was returnable,
the defendant Matthys met in the
hack room of the bank with William
Lemke, acting as attorney for the
examiner: "A. C. Townley and Spur
geon O'Dell, an officer of the bank.
Matthys asserted.
Wanted to Show Court.
"Lemke called the defendants at
tention to an itemized statement of
$153.OOO Of assets in the bank that
were Objectionable to LANCER, the at
torney general, and explained that
these assets consisted largely OF
post dated checks and small notes
given by farmers" the decision, writ
ten by Justice Birdzell recites. "He
stated that it was desired to, have
additional security to support these
assets and that they wanted to get,
quoting the defendants testimony,
some good farmers notes for larger
amounts, so we can show the su-
preme court that this item is ade-
quate security Lemke also assured
him that he would never have to
pay it; that it would not be used
as note and that they might not
have to show it, but he wanted it so
he would have it to make an impress
sion upon the court. Townley stated,
in that same connection, that he, the
defendant, didn't understand, and he
explained that the League had been
financed on accommodation notes
from the beginning; that no one
ever had to pay them or lose pen
ny on. them, SO he, the defendant.
would never have to pay but would
soon have the note back"
O'Dell also declared the transac-
tion was all right, Matthys said
Matthys then executed ! note for
$1,000, but the manner in which this
note was carried does not appear in
the record. the court states. How
ever, it was entered e, an asset Of
Continued on Page 81
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