Court Opinion

ID: 6738576
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:20.911975+00
Date Added: 2024-06-11T16:01:53.131983
License: Public Domain

Christianson, J.
(concurring specially). I concur in a reversal and a remand of the case for the purpose of a trial upon the question of the value of the bank stock; but 1 do not concur in all that is said in the opinion prepared by Mr. Justice Grace, and I entirely disagree with him in so far as his views are at variance with the principle announced by this court in First Nat. Bank v. Meyer, 30 N. D. 388, 152 N. W. 657.
And, while I do not believe that the rule announced in First Nat. Bank v. Meyer, supra, is applicable to or involved in this ease, I deem it proper to observe that that decision represents the deliberate judgment of this court as then constituted upon a question argued and deemed to be decisive of that case. The Negotiable Instruments Act was adopted by the different states to secure uniformity on the important subjects covered by the act. This being so, not only should the rule of stare decisis apply with full force, but great weight ought to be given to the harmonious decisions of other states, construing provisions of the act. Union Trust Co. v. McGinty, 212 Mass. 205, 98 N. E. 679, Ann. Cas. 1913C, 525. The principle announced in First Nat. Bank v. Meyer, supra, is sustained by the overwhelming, and practically unanimous, weight of judicial authority. See authorities cited in First Nat. Bank v. Meyer, supra. See also Union Trust Co. *296v. McGinty, supra; German American State Bank v. Watson, 99 Kan. 686, 163 Pac. 637; Grabam v. Shephard, 136 Tenn. 418, 189 S. W. 867, Ann. Cas. 1918E, 804; Niotaze State Bank v. Cooper, 99 Kan. 731, 162 Pac. 1169. The great unanimity with which courts in other states have announced and adhered to the rule, both prior to and subsequent to the decision in First Nat. Bank v. Meyer, is at least persuasive evidence that First Nat. Bank v. Meyer was decided correctly.
As already stated I do not believe that the rule announced in First Nat. Bank v. Meyer is at all involved in this case. It is true the plaintiff in its brief argues that the defendant is primarily liable, and cites First Nat. Bank v. Meyer, in support of its argument. But the defendant does not deny this, or question the correctness of First Nat. Bank v. Meyer. Neither does the defendant contend that he is discharged from liability upon the note by reason of plaintiff’s surrender of the collateral security. On the contrary, defendant concedes liability on the note, and merely asks that the damages which he has sustained by reason of plaintiff’s breach of contract be offset against the amount due on the note. In his brief defendant says: “This is a suit on a promissory note and the indebtedness is admitted in the answer, but there is a counterclaim for the value of the collateral security which the defendant says the plaintiff converted.” And in defendant’s reply brief the same proposition is most emphatically adhered to. He says: “We did' not urge that the passive negligence of Hagen (the president of the plaintiff bank) when Stafne seized the stock, and his ratification of Stafne’s forcible annexation of it, in face of Westby’s warning, and in disregard of his duty as a bailee . . . discharged Westby. We interposed plaintiff’s conversion as a counterclaim and offset, not a defense. We did not urge that the fact that Hagen permitted Stafne to take and keep twenty shares of bank stock of which he was trustee and which he was under legal duty to preserve with “at least ordinary care, discharged Westby. . . . We urged his neglect of duty as a bailee and his presentation of the stock to another as a counterclaim. . . . It is ‘to the extent to which he is prejudiced’ upon which the counterclaim is based.” There should be no difficulty in understanding defendant’s position. It could not have been stated more clearly and unequivocally.
The evidence shows that the original loan was made for $1,V45.90. *297It was evidenced by a promissory note for that amount signed by J. A. Stafne, dated August 8, 1911, payable November 1, 1912. The note was secured by collateral consisting of stock in the Williston State Bank of the par value of $2,500, and stock in the Citizens State Bank of Alexander of the par value of $2,000. The certificates in the latter bank were in the name of J. A. Stafne, but the certificates in the Willis-ton State Bank were in the name of A. J. Stafne. The two Stafnes were brothers and both interested in the Citizens State Bank of Alexander. About two years thereafter the defendant Westby acquired the interest of John and Albert Stafne in the Williston State IBank Stock so pledged to and held by the plaintiff as collateral. Arrangements were made whereby the plaintiff bank agreed to release the Williston State Bank Stock in consideration of Westby’s signing with Albert Stafne a renewal note for the amount of the principal and interest accrued on the original note. Such renewal note was executed by Westby. It bears date November 28, 1913. This latter note was renewed on March 25, 1914. It was again renewed on November 20, 1914, when the note involved in this action was executed. It is undisputed that Westby was not a party to the original transaction, and that the renewal notes included no consideration except the principal and accrued interest on the original loan. It is also clearly established that Westby executed the note dated November 28, 1913, with the absolute understanding that the $2,000 stock in the Citizens State Bank of Alexander would continue to be held by the plaintiff as collateral security, as well as with the assurances of Mr. Hagan that such stock furnished ample security for the payment of the indebtedness. It is also established that Westby executed the renewal note involved in this action, with the continued undex-standing that the bank stock should remain security as before. Thereafter the Citizens State Bank of Alexander got into financial difficulties, and the State Examiner required that John and Albert Stafne sever connections with the bank, and that $11,000 of notes of doubtful value be replaced. One Eric Stafne took the objectionable notes, and paid into the bank in place thereof $11,000 in cash. After this replacement had been made the plaintiff bank permitted the bank stock which it held as collateral security to come into the hands of Erie Stafne, and, after new certificates-had been issued in his name, Stafne sold and transferred them to *298others. The evidence leaves no room for doubt but that it was always the understanding of the plaintiff and defendant as well as of Eric Stafne that the bank stock should remain as collateral security for the note involved in his action.
While it is true that, “except where it is otherwise provided by statute or by agreement of the parties, the fact that plaintiff holds collateral security for the instrument sued on, which he has not resorted to or attempted to enforce, or which he has not returned, or that he has been so negligent in disposing of such collateral that the maker would have a cause of action against him therefor, is not a good defense to an action at law” (8 C. J. 802, 803), it does not follow that a defendant who has sustained detriment by the wrongful or negligent acts of the plaintiff in the disposition of such collateral is precluded from setting this up by way of counterclaim or set-off in an action on the note. The legal effect of the note, and the defendant’s liability thereon, remain unchanged. These are not altered because the plaintiff has breached the obligation which it owed to the defendant with respect to the collateral security. “There is no such thing as setting up one right of action in bar of another right of action.” Taggard v. Curtenius, 15 Wend. 155. But, as already stated, the defendant does not seek to set up plaintiff’s breach of obligation as a defense to the note, but asks that the damages he has sustained by reason of plaintiff’s negligent or wrongful acts be offset against the amount due on the note. Defendant’s counterclaim or set-off is not an ingredient of, and in no manner affects the contract evidenced by, the note, whereby Westby agreed to pay the plaintiff a certain sum. Such counterclaim is predicated upon plaintiff’s breach of the contract relating to the collateral held by it. Plaintiff did not preserve such collateral. And' it is conceded that it is unable to deliver it to the defendant upon the payment by him of the note involved in this action. It seems clear that the plaintiff has breached the obligation which it owed to the defendant with respect to the collateral, and that for such breach of duty the defendant is entitled to recover the detriment which he has suffered; viz., the value of the collateral. See Ambler v. Ames, 1 App. D. C. 191, 196; Taggard v. Curtenius, supra; 22 Am. & Eng. Enc. Law, 899. See also Sykes v. Everett, 161 N. C. 600, 4 A.L.R. 751, 83 S. E. 585; Potter v. Tyler, 2 Met. 58, 63. This being so, there is *299no reason why tbe defendant may not counterclaim or set off the damages which he has sustained in the action on the note. Emerson-Brantingham Co. v. Brennan, 35 N. D. 94, 159 N. W. 710.
I agree with Mr. Justice Grace with regard to the presumptive values of bank stock. And while it is time the evidence in this case shows that the bank involved in this action had been in financial trouble, it also shows that the orders of the examiner had been complied with, and it must be assumed that any impairment had thereby been made good.
In my opinion the evidence does not justify plaintiff’s claim that the defendant either consented to or ratified plaintiff’s disposition of the collateral. Nor can it be said that the defendant has waived, or is estopped from asserting, his counterclaim.
Beuce, Oh. J. I concur in the above opinion by Mr. Justice Ci-inis-TIANSON.