City National Bank v. Mason

Ladd, J. On August 12, 1913, defendants executed their promissory note to the De Soto Motor Car Co. for $522.16, payable on or before January 1, 1914. The note was transferred to plaintiff on or about October 1, 1913, being indorsed “De Soto Motor Car Co., per L. A. Miller.” It ivas given in renewal of one of the two notes of $500 each, executed in August, 1912, the other renewal having been paid. Defendants pleaded: (1) That the original notes were without consideration; and (2) that one Field obtained said notes through the perpetration of fraud on the defendants; and these issues were submitted to the jury. 1. Appeal and error : reservation of grounds: failure to object to instructions. I. The • instructions were not objected to, and therefore criticisms thereof may not be considered. State v. Nott, 168 Iowa 617; State v. Piernot, 167 Iowa 353; State v. Cooper, 169 Iowa 571; Thomas v. Illinois Cent. R. Co., 169 Iowa 337; Parkhill v. Bekin’s Van & Storage Co., 169 Iowa 455, 468; State v. Fisher, 172 Iowa 462; State v. Stanton, 172 Iowa 477; American Fruit Prod. Co. v. Davenport V. & P. Works, 172 Iowa 683; Joyner v. Interurban R. Co., 172 Iowa 727; Johnson v. Bernstein, 178 Iowa 1052; Pengilly v. Southern Land Co., (Iowa) 157 N. W. 146 (not officially reported); Gilman v. McDaniels, 177 Iowa 76; Hanson v. City of Anamosa, 177 Iowa 101; Sawyer v. Hawthorne, 178 Iowa 407; Berry v. Hardin, 178 Iowa 165; Rule v. Carey, 178 Iowa 184; Cohen v. Hayden, 180 Iowa [826] 232; Chumbley v. Courtney, 181 Iowa 482. 2. Bills and notes : consideration : want o£ consideration : evidence. II. One of the defendants, Mason, was asked to “tell the jury what the conversation was that you had with L. M. Field at the time and place.” An objection as immaterial and incompetent was overruled. The point made in the brief is that evidence that the note was payable only upon conditions not expressed in the note was not admissible. It is enough to say that no evidence of that kind was sought to be elicited. The evidence was tendered in order to prove want of consideration of the original notes, and that these were obtained by misrepresentations on the part of Field. The law is well settled that, if a promissory note is without consideration, a renewal thereof, even though extending the time of payment, also is without consideration. Paxson v. Nields, 137 Pa. St. 385 (21 Am. St. 888); Seager v. Drayton, 217 Mass. 571 (105 N. E. 461); Wheelock v. Berkley, 138 Ill. 153 (27 N. E. 942); 8 C. J. 218, and cases cited in note. The note sued on, then, stands in place and stead of the original note and is subject to like defenses, and the evidence bearing on the want of consideration of the original notes tending to establish fraud in their inception was admissible. 3. Trial: in-, structions: applicability to evidence. III. The court instructed the jury that the burden of proof was upon the defendants to show that plaintiff took the note with notice of the want of consideration, and it is insisted that the record was without evidence bearing thereon. We have been unable to discover any such evidence in the record, and because of its absence are of the opinion that this issue ought not to have been submitted to the jury. IV.The defendants testified, in substance, that Field [827] approached them with the proposition that they purchase a share of stock in a company to be organized, known as the De Soto Motor Car Co., a sales and manufacturing company, saying that he had disposed of 9 shares of the par ■value of $1,000 each, and the one offered was the last; that he would guarantee a dividend of 8 per cent annually; that he would retain their notes given for the stock until the company was organized and the stock certificate issued, and send it to them; that he would not sell or dispose of the note in the meantime; that the factory was to be at Auburn, Indiana. In reliance on what he said, the two notes of $500 each were given. Neither the share of stock nor any other thing of value was ever received by either defendant, nor has either demanded the share of stock. The only evidence of the falsity of these representations is that of Mason, who swore to being in Auburn, Indiana, in October, 1914, and that “the De Soto Motor Car Company never built no factory and had no manufacturing plant that I know of. * * * I do not know whether or not the De Soto Motor Car Company had any factory at any time;” and that it had no office or place of business that he could learn of; and he based this testimony on inquiries made of men he met on the streets, including Field. With reference thereto, the court instructed the jury that the representation of Field that he would deliver the share of stock, that he would guarantee a dividend, and that he would hold the note, would not alone constitute fraud, though the promises may have been false; but that, if the “said Field made the foregoing representations, coupled with the representation that he had disposed of nine shares of stock, and had had experience in the manufacturing of automobiles, and such statements or a portion thereof were false, and he knew the same, or a part of the same, were false, and the de [828] fendañts relied upon the truth of such statements and made said note because of such reliance, then the note had its inception in fraud, and the plaintiff cannot recover in this case unless it is shown by a preponderance of the evidence that it bought said note before maturity and for valuable consideration, and without knowledge of said fraudulent acts of said Field.” Appellant contends, and rightly so, that no evidence was adduced tending to show that Field had not disposed of the nine shares of stock, as represented by him, or that he did not have experience in the manufacturing of automobiles. As there was no evidence bearing on these issues, the court erred in submitting them to the jury. 4. Bills and course: defective indorsement : effect. notes : holder in due Y. The burden of proof to show that the note was acquired without notice of fraud in its inception was on the plaintiff, and it insists that this was so fully met that a verdict should have been directed for plaintiff. We do not regard the evidence of that conclusive character, especially in view of the indorsement of the note by one not shown to have been an officer of the payee nor in fact nor by virtue of his employment authorized to transfer the note by indorsement, and other matters developed in the testimony of plaintiff’s cashier. See Arnd v. Aylesworth, 145 Iowa 185; McNight v. Parsons, 136 Iowa 390; Keegan v. Rock, 128 Iowa 39; In re Estate of Philpott 169 Iowa 555. — Reversed. Gaynor, C. J., Evans and Salinger, 33., concur.