Court Opinion

ID: 6739194
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:42.336962+00
Date Added: 2024-06-11T16:01:54.313064
License: Public Domain

Christianson, Ch. J.
(dissenting). The majority opinion is based upon the premise that the plaintiff received from the defendant Edwards, “either as an absolute payment or as collateral,” a $1,600 note, secured by mortgage on an 80-acre tract of land in Pierce county in this state. A careful reading of the evidence leads me to the conclusion that the premise does not, in fact, exist.
The note involved in this suit bears date June 30, 1914. The defendant Johnson does not contend that he understood that the note was accompanied by any collateral, or that the bank should later receive any collateral.
The $1,600 Burnley note and mortgage bear date April 21, 1917. The evidence shows that the defendant Edwards took these papers and a $4,000 mortgage on other lands, and submitted them in person to Dinehart, the president of the plaintiff bank, on May 28, 1917. In looking them over he (Dinehart) discovered that there was a discrepancy between the principal $1,600 note, and the interest coupons attached thereto. Dinehart, in his testimony, gives the following version of the transaction: “Edwards turned over the mortgage on that (80 acres in Pierce county) for $1,600 on the 28th of May. I looked *346over the note, the coupons' attached, and the mortgage read 5 per cent and the coupons called for $80 each, and, says I, ‘You made a mistake here,’ and he looked it over and says: ‘I am going down to Illinois, and I will have that note and coupons corrected;’ and he took the note, and I have never seen it since.” The mortgage securing the $1,60,0 note, the assignment of the mortgage, and the abstract of title, were left with Dinehart. Dinehart says that at that time he agreed with Edwards that the bank would take the two mortgages, if it found that the mortgagor “was good.” It is undisputed that the $1,600 note has never been returned, although the plaintiff bank has repeatedly written Edwards in regard thereto. The only evidence relating to the $1,600 note and mortgage is the testimony of Dinehart. And if there is any basis for the holding of the majority it must be found in his testimony.
In this connection it may be mentioned that the defendant Edwards testified by deposition. And it is significant that he claims no credit for the $1,600 note. He does, however, claim that the note involved in this suit has been, or should have been, paid, by the proceeds of some other notes.
I quote from his testimony:
Q. On or about the 15th day of July, 1917, did you have any conversation with Mr. C. E. Dinehart with reference to this note in controversy ?
A. Yes. ...
Q. State what that conversation was, to the best of your recollection.
A. To the best of my recollection it was that I wanted him to take some other notes that I had secured by mortgage and signed by Chas, and Wm. Anderson, amounting to about $7,000 to be applied partly to pay the balance of the two Johnson notes, balance to be paid to the Eirst National Bank of Rolette, North Dakota, to pay off certain notes to which they held the Anderson notes as collateral security. Mr. Dine-hart, at that time, said he would look up the Anderson notes, and if they were satisfactory they would take them and apply the proceeds in that way.
Q. At the time you had the above conversation with Mr. Dinehart there was only a balance due on those two Johnson notes, and did I *347understand from your testimony that these Anderson notes were, if accepted by Mr. Dinehart, to pay those two Johnson notes in full?
A. Yes. '
Q. Are you indebted in any sum whatever to Mr. Dinehart or the State Bank of Slayton, the plaintiff herein, or either of them on account of the two Johnson notes in controversy?
A. I am not.
Q. Have you paid those two notes in full ?
A. I have, not in currency, but by the Anderson notes, and in accordance with the agreement with Mr. Dinehart, which I have testified about before.
Dinehart denied the arrangement testified to by Edwards, and claimed that the plaintiff had applied the proceeds of the Anderson notes in accordance with the understanding which he and Edwards had relative thereto. The trial court submitted to the jury the question whether the proceeds of the Anderson notes should have been applied as claimed by Edwards, and the jury found in favor of the plaintiff upon this question.
Hence, the statement in the principal majority opinion, that “evidently the Burnley note and mortgage were given to apply on the note in suit, either as absolute payment or as collateral,” is contrary to the testimony of both Dinehart and Edwards.
The majority opinion makes reference to the transfer by Edwards to the bank of 441.60 acres of land. The evidence shows that Edwards had sold this land to a man named Linson. Later Linson turned tha land back to Edwards. There were first mortgages against the land, aggregating large amounts. Apparently Edwards was in no position to take care of the payments, so he turned over to the plaintiff bank a second mortgage upon, and a deed for, the land, with the understanding that the bank would pay the interest and taxes, etc., until the land could be sold. The undisputed evidence shows that the bank paid over $8,800 to take up the first mortgages, interest payments, and taxes. This transaction originated subsequent to the execution of the note in suit, and so far as the record shows had no connection whatever therewith. There is not a scintilla of evidence tending to show that the land was to be held as collateral to the note in suit. The evidence shows that Edwards sold all of the land so transferred to the plaintiff; and *348that the plaintiff, in accordance with Edwards’s directions, executed deeds to the various purchasers, and gave full and proper credit for all proceeds of such sales.
Manifestly, Scandinavian American Bank v. Westby, 41 N. D. 276, 172 N. W. 666, does not sustain the holding that the plaintiff bank is liable for the $1,600 Burnley note, either as purchaser or as the holder of collateral. In the case cited, Westby signed a note for one Stafne, “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 by Mr. Hagan [the president of the payee bank] that such stock furnished ample security for the payment of the indebtedness.” 172 N. W. 674. Thereafter the Scandinavian American Bank, in violation of its agreement with Westby, delivered the bank stock to a party, who converted it. When the bank sued Westby upon the note, he counterclaimed for the damages which he claimed to have sustained by reason of the bank’s breach of contract. In this case no such condition exists. The defendant Johnson has interposed no counterclaim. His answer makes no specific reference to the Burnley note, — although there is an averment, upon information and belief, “that the said plaintiff has collected many promissory notes given as collateral to the promissory note described in the complaint, the proceeds of which have not been properly applied by said plaintiff, and for which no credit has been given these defendants, and that if proper credits had been applied on the herein-described note it would be discharged and paid in full.” The note involved in this suit was made almost three years before the Burnley note and mortgage came into existence. The Burnley note was never, in fact, delivered to the plaintiff bank. During the negotiations between the president of the bank and Edwards regarding the purchase of this note, the defect or irregularity was discovered, and the note was turned over to Edwards. It had not become the property of the bank. Nor had it. been delivered as collateral to the note in suit. It is undisputed that Edwards has never returned the note to the bank. So far as anyone knows he may have negotiated it elsewhere. The evidence shows that,, after the bank satisfied itself that the $1,600 note was good, it has stood ready to purchase and pay for the same, and would have done so at any time the note had been turned over to it.
*349Clearly tbe plaintiff bank should not be held liable as a purchaser and required to pay for the Rumley note. Nor should it be held liable on the theory that the note was held as collateral security to the note in suit, and that the plaintiff bank has violated some obligation which it owned to the defendant as regards such security. I believe that the trial court was entirely correct in instructing the jury that, in determining the case, they must not take into consideration, or base their verdict upon, the $1,600 Rumley note.