Northern National Bank v. Lewis

Cassoday, J. Lewis dk Ferguson Bros., as indorsers for Rood & Maxwell, can only be held liable on the notes in suit for any balance that may remain unpaid after applying thereon the net proceeds of any and all securities given by Rood & Maxwell to the plaintiff bank, or for its benefit, as collateral thereto. This general proposition is virtually conceded so far as the net proceeds on the foreclosure of the chattel mortgage are concerned. The defendants contend, however, that a much larger amount of the moneys received upon the foreclosure of the chattel mortgage should have, been applied upon the notes in suit. The chattel mortgage contains a stipulation for the renewal and extension, from time to time, of the claims therein mentioned, as might be agreed upon by the parties for a limited period, but contains no specific direction as to which, if any, of such claims should be first paid out of such net proceeds, nor anything as to the order of such payments. In the absence of any designation by Rood & Maxwell as to the application of the moneys received on the foreclosure [480] sale, the plaintiff would seem to be at liberty to apply the same upon any of said claims, in its discretion. Stone v. Talbot, 4 Wis. 442; Robbins v. Lincoln, 12 Wis. 7; Hannan v. Engelmann, 49 Wis. 283; Gallun, v. Seymour, 76 Wis. 257. Nothing appears in the record before us to indicate that the plaintiff exceeded its authority under the above rule in making such application. Whether a different showing may be made upon a new trial, it is impossible here to tell. It was in effect held by the trial court that the option contract given September 19, 1887, by Rood & Maxwell to and in the name of E. A. Shores, was really so given by them, and received by Shores, as president or agent of the plaintiff bank and for its use and benefit, and as further security for the payment of the indebtedness which Rood & Maxwell then owed the bank; and that the $5,750 which Shores received, February 24,1888, bf Thompson & Walkup Company on account of that option contract, was so received for the use and benefit of the plaintiff, and must be applied on its said indebtedness against Rood & Maxwell; and that by such application the notes in suit had been paid and satisfied. It is contended on the part of the plaintiff that the admission of parol testimony to prove that the transactions named were both for the use and benefit of the plaintiff, instead of Shores individually, was a contradiction of the writings, and hence error. Quoting from an English judge, Ryan, C. J., stated the rule thus: “ There is no doubt that where such an agreement is made, it is competent to show that one or both of the contracting parties Were.agents for other persons, and acted as such agents in making the contract, so as to give the benefit of the contract on the one hand to, and charge with liability on the other, the unnamed principals, and this whether the agreement be or be not required to be in writing by the statute of frauds; and this evidence in no way contradicts the written agreement. It does not deny that it is binding on those whom, [481] on tbe face of it, it purports to bind, but shows that it also binds another, by reason that the act of the agent in signing the agreement, in pursuance of his authority, is in law the act of the principal.” Weston v. McMillan, 42 Wis. 569. To the same effect, Stowell v. Eldred, 39 Wis. 614; Wiener v. Whipple, 53 Wis. 302; Kirschbon v. Bonzel, 67 Wis. 178; Mechem, Ag. §§ 695-701. It is true the option contract was made by one of the partners in the name of the firm, and was under seal; but it is apparent that it would have been equally binding without any seal, and hence the same rule is applicable. Ibid.; Mechem, Ag. § 702. It follows that there was no error in admitting parol evidence tending to prove that the transactions were for the use and benefit of the plaintiff. We are clearly of the opinion, however, that there was evidence on the part of the plaintiff tending to prove that the option contract was taken by Shores for his own individual benefit, and not for the use or benefit of the plaintiff. This conflict of evidence was certainly such as to necessitate the submission of the case to the jury. It is true that, had the option been exercised by Shores, his heirs or assigns, then it would have been necessary for him or them to have deposited in the plaintiff bank the $70,000 to the credit of Bood & Maxwell, subject, however, to the payment of their indebtedness to the bank; but by the terms of the contract the bank was only to have such benefit upon the exercise of such option. But neither Shores nor his heirs nor his assigns ever exercis'ed such option, and it is plausibly urged that all right to exercise the same, by its terms, expired October 24, 1887, the day on which Bood & Maxwell made a general assignment for the benefit of their creditors. Nevertheless it is conceded that the Third National Bank of St. Paul acquired a lien by way of an attachment upon the lands covered by the option, October 22, 1887, two days prior to the general assignment; and that [482] the Thompson & Walkup Company acquired that lien by an assignment from the Third National Bank. To make that lien available, the Thompson & Walkup Company deemed it necessary to procure, and did procure, from Shores the transfer of said option, and paid him therefor $5,750, February 24, 1888, as mentioned in the foregoing statement. Upon the part of the plaintiff it is claimed that such transfer was a mere assignment, which gave the plaintiff no additional rights; while on the part of the defendants it is contended that it was a release or surrender of a claim or right to the lands given by Rood & Maxwell prior to said attachment, and hence should inure to their benefit and the benefit of the bank. If the option contract was in fact taken by Shores as president or agent of the bank, and for its use and benefit, and as further security for its indebtedness against Rood & Maxwell, and the $5,750 was received, as indicated for the release or surrender of that contract in order to make such attachment more available, then there would seem to be good reason for holding that the money so received should be regarded as paid on account of such prior claim or right so created by Rood & Maxwell, and hence should be applied upon such indebtedness. If the plaintiff, by itself or agent, as such real owner of the option contract, received therefor the $5,750, it is in no position to claim that such contract was valueless by rear-son of the option never having been exercised, or its having previously expired, or the action of the bank in relation to the same having been ultra vires, or for any other reason. If such were the facts, then it is enough to know that Shores, acting for the plaintiff and the Thompson & Walkup Company, treated the contract as a valid claim upon the lands, created by Rood & Maxwell as further security for their indebtedness to the bank. The questions presented therefore resolve themselves into disputed questions of fact, upon which the evidence is more or less con [483] flicting, and hence the case should have been submitted to the jury. By the Oowt.— The judgment of the circuit court is reversed, and the cause is remanded for a new trial.