Bank of Montreal v. Howard

Dunbar, J. Action upon a promissory note alleged to have been executed and delivered by the defendants Howard and Kincaid to the defendant Lawry, and indorsed by him to plaintiff. Howard and Kincaid answered jointly, admitting the signing of the note, but alleged as affirmative defenses want of consideration, duress, nondelivery, and that the note was held by the plaintiff merely as collateral security for the payment of a debt- of $3,000 owing to it by Lawry. Lawry answered separately, but, inasmuch as he has not appealed from the judgment,- his answer is not material. The case was tried to the court without a jury, and judgment was rendered in plaintiff’s favor for the full amount of the note. Howard and Kincaid appeal. It seems that Lawry had advanced to Kincaid $3,363, used in developing certain mining properties in which Kincaid and Howard were jointly interested. Lawry wished to secure. an option for the purchase of the mines; also desired the repayment of the money. After some little negotiation, an agreement was reached by which an option for. the purchase of the mines for $85,000 was granted Lawry, and Howard and Kincaid agreed to give to Lawry, for the $3,363 advanced by him, a note for that amount, and that the note together with a deed for the mines was to be placed in escrow, with the respondent bank. 'The escrow agreement provided that by January 1, 1904, Lawry should pay the respondent or, [13] Howard and Kincaid the sum of $85,000, the deed was to he delivered to him, and the note was to be returned to them. If he did not do so, the deed was to be returned to them, and the note was to be delivered to him. Lawry did not pay them the money, and on January 16, 1904, he borrowed $3,000 from the respondent and indorsed to it the note in suit as a collateral therefor. In April, 1904, Howard and Kincaid demanded the return of the deed because Lawry had not taken up his option, and respondent returned the deed to them. Many legal questions are discussed at length by appellants, but under the testimony in this case they do not seem to us to be applicable, there being no facts to sustain them. There is not sufficient proof in the record to show the extension of time claimed by the appellants to have been made with reference to the escrow agreement, nor do we think that the lack of proof in that regard was obviated by the statement which was made by the counsel for the respondent in his opening address. The court found, and was justified by the testimony in such finding, that the note made by Howard and Kincaid was executed freely and voluntarily by both of them, and without duress, fear, or fraud being practiced upon either of them. It appears from the testimony that the bank, respondent here, was never notified by either of the appellants that any fraud in executing the note was charged, and when the time expired the appellants went to the bank and got the deed according to the agreement. The question of whether or not there was a technical delivery to Lawry of the note is not important. It was delivered to him under the agreement, an'd the appellants recognized that agreement and benefited by it by demanding and obtaining possession of the documents that they were entitled to under said agreement. We are not inclined to interfere with the ruling of the court in denying a continuance. It seems to us from the record in the case, which is comparatively 'short, that there is no defense to this action, either equitable or legal. There [14] is one proposition, however, if we understand the record correctly, upon which the court erred, and that is as to the amount of the judgment. As we understand the proof in this case, there is no claim on the part of the respondent bank that it has any interest in this note sued upon except such interest as it has in it as security for the loan of $3,000 made by it to Lawry, and when it subjects it to the use and purpose for which it was intended, viz., securing the debt of $3,000, its rights in the note terminate. It is not a party in interest beyond that amount, and there is no reason that we can conceive of why it should be entitled to a judgment for the remainder of the note. The judgment will therefore have to be modified to that extent, and the court is instructed to reduce the judgment by the amount of $363, the excess of the note over the debt for which it was pledged as collateral. The appellants will be adjudged costs in this court. Mount, C. J., Fullerton, Hadley, and Crow, JJ., concur.