Court Opinion

ID: 6739823
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:21:04.111319+00
Date Added: 2024-06-11T16:01:55.460293
License: Public Domain

*962
On Rehearing.

Per Curiam.
A reargument of this case was ordered, upon which the parties advanced contentions as follows:
On behalf of the defendant, that the court erred (i) in holding that the note was delivered to become a part of the assets of the bank; (2) in holding that prejudicial error was committed in admitting the testimony relative to the guaranty contract between Roberts and Beiseker on one hand and the bank on the other; and (3) in admitting evidence to prove the wealth of Beiseker. On behalf of the defendant and respondent Davidson it was argued that the error or errors upon which the reversal is based in the principal opinion were not such as to entitle the plaintiffs to a new trial against him. These contentions are controverted by the appellant.
The majority of the court is still of the opinion that the note in suit was delivered for the purpose of becoming a part of the assets of the bank, or in renewal of other notes given for that purpose. This conclusion, in the opinion of the majority, necessarily follows from the testimony of the defendants themselves, who stated expressly that such notes were given “to take the place of” the debt owed by the publishing company and to “cover up” the overdraft of the publishing company. Obviously, it could not take the place of the debt owed by the publishing company on the books of the bank or cover up the overdraft without being entered as an asset in the “bills receivable” account of the bank. No person consenting to such an arrangement is in a position to say that a note, so delivered, did not become an asset. For the purpose of this question, it is immaterial whether the asset be enforceable or not. In our opinion, the plaintiff had a right to have the case submitted to the jury from the standpoint of the note being an asset, subject to whatever legal defense the defendants might otherwise have, and it was error for the court to submit this question as one of fact. Whether this error alone was sufficiently prejudicial to require a reversal we need not determine.
The previous holding with respect to the admission of prejudicial evidence relating to the guaranty contract and to the wealth of Beiseker was to the effect that the evidence relating to this contract, coupled with that concerning Beiseker’s wealth, was prejudicial. It is pointed out in the petition for rehearing that the appellant is not in a position to complain of the evidence in question because proper objections were not *963made upon the trial. The record shows that when the guaranty was first mentioned at the trial, the testimony was stricken out, on motion of the plaintiff’s attorney, on the ground that it was irrelevant to any issue in the case. Following this, however, and during the cross-examination of the defendant’s witnesses, the guaranty was referred to several times, and the testimony was allowed to go to the jury. The manner in which the fact was brought out will be seen from the following, taken from the cross-examination of the defendant Stickney. Referring to certain occurrences at a directors’ meeting, held after the change in the ownership of the bank, he was questioned, concerning a conversation in which the note in suit and others were mentioned as accommodation paper, whereupon he testified: , •
“Q. Well, just how did it come up? now tell us'that.- A. Well, as I told you, the entire situation developing out of this change and on the guaranteeing of the paper, made by Beiseker, covering all the paper and the general situation was under discussion. That is the facts, and they were talked at different times, and one of these statements — this particular fact was mentioned. * * *
“Q. When you said to these men that this Was accommodation paper that was in this bank, signed by Mr. Carson and myself, was accommodation paper, they absolutely made no remark about it at all — just let it drop right there? A. No; they said it was immaterial to them; the bank would protect it anyway (was protected anyway?)
“Q. And they said that it was purely immaterial to them?’ A. No, not necessarily that, but words to that effect.'
“Q. What were the words? A. I am simply giving you the sum and substance of the talk; they said they weren’t concerned with that; that they had the guaranty. The guaranty was short, and Í read it myself.
“Q. Who was it that said that? They didn’t say it in unison, did they? A. No; I think the conversation at that time was directed to Mr. Aas, and I think he handed me the contract covering the guaranty.,
“Q. So you think it was Mr. Aas at that time said they weren’t concerned in the matter as to whether it was accommodation paper or not, because they had the guaranty? A. Yes, sir. * >* * ...
“Q. And you knew at that time you were claiming and that you didn’t owe that note ? A. I knew at that time that the bank was depending upon the guaranty of Beiseker.”
*964As this testimony was elicited by the attorney for the plaintiff, upon cross-examination, the error, if any, in its admission, in so far as prejudicial to the plaintiff, is not available on appeal. But, though the plaintiff cannot complain of the evidence relating to the guaranty contract, it does not follow that it cannot avail itself of the prejudicial error, if any, in the admission of the evidence as to Beiseker’s wealth. Immediately after the cross-examination, partially quoted above, was concluded, one of the defendant’s attorneys upon redirected examination inquired as follows:
“Q. You say you saw a written guaranty of all these notes signed by Mr. Beiseker? A. Yes, sir.
“Q. Did you know Mr. Beiseker, have you met him, or just know him by reputation? A. Yes, sir.
“Q. You knew him to be a very wealthy man, didn’t you?
“Mr. Bangs: That is objected to as irrelevant, incompetent, and immaterial.
“The Court: Objection sustained.
“Mr. Lambert: We simply want to show that his guaranty of these notes was good. We object to anything that was not an exhibit in this case.
“The Court: You do not know just what the form of that guaranty was?
“Mr. Lambert: We haven’t got it. We would be glad to have it and offer it in evidence if they will produce it.
“The Court: The question in my mind is whether the guaranty was a guaranty of the apparent assets of the bank without respect to a particular instrument.
“Mr. Lambert: I do not know what it is, but it is my understanding that it is.a guaranty of all the notes that were turned over, guaranteeing that there would be no loss on the notes.
“The Court: In other words, a guaranty of the assets of the bank.
“Mr. Lambert: Not of the assets, of the notes.
“The Court: Of course they are assets.
“Mr. Lambert: Yes, some of the assets, but there might be others.
“The Court: I will overrule the objection.
“Witness: A. I know that he is reputed to be a very wealthy man.
“Q. What was your idea then and now as to his guaranty in regard to making any notes or these notes good, or any of the assets of the bank or all of' the assets of the bank ?
*965“Mr. Bangs: That is objected to as irrelevant, incompetent, and immaterial.
“The Court: Objection overruled.
“Witness: A. That guaranty will make them absolutely good in my opinion.
“Q. Did you believe by reason of this guaranty that that paper was good paper in the bank at the time you signed this report or list of notes he has spoken of?
“Mr. Bangs: That is objected to as irrelevant, incompetent, and immaterial, and calling for a conclusion of the witness.
“The Court: Objection overruled.
“Witness: Yes, absolutely.”
We are of the opinion that this evidence is not rendered competent by reason of the previous admission of testimony relating to the existence of the guaranty contract. It may well be that the facts transpiring at a certain meeting of directors could not be fully elicited without narrating a conversation which would disclose the existence of the guaranty contract. But from this it does not follow that the defendant is entitled to show that the plaintiff is fully indemnified from any loss incident to failure to recover upon the note in suit, by reason of the fact that the guaranty contract is an obligation of a person of adequate means. The wealth of the guarantor is foreign to any issue in the case. His ability to meet payment of the entire amount affords no more legal reason for denying recovery against the defendants than his lack of means would afford for a judgment favorable to the plaintiff. Such testimony can only serve to prejudice a fair trial. It should be excluded for every reason that prevails in excluding indemnity insurance in casualty litigation; See Beardsley v. Ewing, 40 N. D. 373, 168 N. W. 791, and authorities therein cited.
But the respondents argue that, inasmuch as it is sought to visit censure upon them for certifying, as a part of the assets of the bank, paper which they knew to be for the accommodation of the bank, and consequently as not representing an enforceable asset in its hands, they should be permitted to show that no prejudice could have resulted from their act in so doing by reason of there being a sound guaranty behind the notes. We do not regard this circumstance as sufficient justification for resort to such prejudicial, incompetent evidence. All of the defendants admitted being parties to a transaction whereby representations were *966to be made to the Comptroller of the Currency that they were indebted to the bank for an amount equivalent to the publishing company’s overdraft, whereas, in fact, an arrangement existed according to which they were not to be- held thus liable. This arrangement, according to the testimony of all the defendants, was made long prior to the existence of the Beiseker guaranty. Hence the moral and legal quality of their act is not reflected in its true light by being linked with the guaranty. Moreover, even though Beiseker’s guaranty made the paper, absolutely good, the continued representation of the notes as the liability of those who had signed them was a fraud on the examining authorities. We adhere to our previous holding that the admission of this evidence was prejudicial.
We have carefully reconsidered the record of the trial, with a view to determining whether or not the errors which require a reversal of the judgment were such as to destroy the probability of a fair trial of the plaintiff’s rights as against Davidson. - While he was represented at the trial by counsel who did not appear- for the other defendants, and though it appears that his counsel separately examined witnesses with a view to establishing 'his particular defenses, yet the record shows lie reaped the full benefit of the testimony offered on behalf of other defendants. It also shows that in instructing the jury the trial court did not distinguish between Davidson and the other defendants', except in so far as was' necessary to present the issue of conditional delivery which was submitted by Davidson alone. In this state of the record we are of the opinion that the'interests of justice require a new trial as to-Davidson. ' ...
Justice Bronson concurs in the above per curiam, subject to his personal views expressed in the original decision herein.
Judgment reversed, and new trial granted.
Birdzell, Bronson, and Christianson, JJ., concur.