South Side State Bank v. Jardine

*106 HONORABLE JOSEPH R. JACKSON, District Judge, sitting in place of MR. JUSTICE GALEN, absent on account of illness, delivered the opinion of the court. Action on a promissory note in the sum of $3,000, made and executed July 6, 1920, and due one year after date, given by Moses D. Jardine to the Yellowstone Packing Company for twenty shares of its capital stock. It is alleged that before maturity, and for value, the packing company sold the note to the South Side State Bank with indorsement: “Without recourse, pay to the order of the South Side State Bank. Yellowstone Packing Company, by J. B. Henderson, President.” There is also an indorsement in blank, “Moses D. Jardine,” said to have been made at the time of the execution and delivery of the note. The complaint contains the usual formalities proper to an action of this character; that plaintiff is the owner and holder of the note; that nothing had been paid on principal or interest; demand made and relief sought. *107 By answer Jardine admits the corporate capacity of the plaintiff; that he signed his name on the face of the note; that demand was made by plaintiff and demand refused, and denies all other allegations. As a further answer defendant sets up that the J. B. Henderson mentioned in the complaint and one Blake came to the Jardine ranch in the Big Hole Basin, Beaver-head county, Montana, authorized to sell the corporate stock of the Yellowstone Packing Company, and in soliciting the defendant to buy twenty shares of the stock represented and warranted that it had the value of $3,000 and upwards; that it was then earning large dividends; that if defendant would subscribe for twenty shares and give his note he would receive therefor a stock certificate, and afterwards large dividends, and that every year thereafter the Yellowstone Packing Company would purchase all the livestock that defendant and his neighbors had to sell, and for which they would pay a higher price than would be paid by others. Defendant further alleges that the corporate stock did not then have nor since has had any value; that no stock certificate, dividends, proceeds or thing of value was ever paid to or received by him; that no buyer for the Yellowstone Packing Company since the execution of the note has offered to purchase or purchased any of the livestock of defendant or his neighbors, although every year since the note was executed they had been the owners of suitable livestock, and were ready, willing and able to sell it at a reasonable price; that no consideration ever did exist for the execution of the note, the ownership of which by plaintiff is denied. Issue was joined, and trial had by jury. The record discloses, on the part of the plaintiff, that it received the note from the Yellowstone Packing Company on June 8, 1921, as part of collateral security for a loan to it for $10,000, and continuously thereafter owned and held it without notice of infirmity or defect in title, and that no part of principal or interest had been paid. The defendant’s case shows that defendant signed the subscription note July 6, 1920, and also an application to the packing company by which he subscribed *108 for and agreed to purchase twenty shares of its stock at $150 per share, payable according to the terms of the note. Defendant testified: “As to what was the occasion of my giving this note and signing it on the face, I will say that I gave it for what I thought was a pretty good proposition from what they represented to me.” No stock certificate was ever offered or delivered to the defendant. Some testimony was had on the part of the defendant concerning the physical value of the plant of the Yellowstone Packing Company, all of which was lower than the $600,000 value placed upon it, according to the defendant, by Henderson and Blake. Defendant testified that on the evening of July 27, 1921, Henderson came to his place and wanted him to renew his note, and after that time he had correspondence from the Yellowstone Packing Company with reference to the payment of the note, and also had a letter from the bank inclosing two notes as renewals for the original, both payable to the packing company at the plaintiff’s bank. Defendant paid no attention to the notes or correspondence. After both sides had closed, the court-, upon motion, directed verdict for plaintiff, and from the judgment defendant appeals. Error is urged on the insufficiency of defendant’s testimony to take the case to the jury upon the questions of fraud in the inducement, lack of consideration and plaintiff’s ownership of the note. With respect to consideration, defendant under his own testimony affixed his name to the note with a knowledge and understanding that he was purchasing the stock, but that the certificate for it was not to be delivered to him until the note was paid. That the stock stood in his name on the company books is indicated by the issuance to him of a proxy, and that he considered himself the owner is shown by his signing the proxy and returning it to the company. . In an action on a note given for corporate stock it is not necessary to have tendered the certificate, which in fact is but evidence of ownership, without a demand having been *109 made, or unless the contract calls for it. (Gallatin County Farmers’ Alliance v. Flannery, 59 Mont. 534, 197 Pac. 996.) In this ease the defendant made application for the purchase of the stock, and the same was approved by the corporation in the acceptance of the note by the agent of the company in payment. This constituted a sale. (Gallatin County Farmers’ Alliance v. Flannery, supra; Majors v. Girdner, 31 Cal. App. 47, 159 Pac. 826.) As to plaintiff’s ownership of the note, there is nothing in the record to justify its submission to the jury. The conversations related and the correspondence had could in no event change the character of the instrument as indorsed. With respect to fraud in the inducement, the record merely shows that Henderson and Blake informed defendant it was worth $150 per share, had paid twenty per cent dividend the previous year, and that they expected it would be better that year. As to what the stock was really worth outside its par value, as to whether or not the Packing Company paid twenty per cent or nothing, the record is barren. Defendant’s own testimony that the sellers “expected” the dividend to be higher in the future than twenty per cent is merely the expression of a wish or hope, and cannot be construed as actionable fraud. (Citizens’ State Bank v. Snelling, 55 Mont. 476, 178 Pac. 744.) The judgment is affirmed. ’Affirmed. Mb. Chief Justice Callaway and Associate Justices Rankin, Holloway and Stark concur.