Port Washington State Bank v. Polonia Phonograph Co.

Eschweiler, J. The Kuryer Publishing Company urges on its separate appeal that the evidence permits no conclusion other than that its indorsement of the note in suit was for accommodation only; that it had no corporate power or authority to so indorse, or that in any event its treasurer had no power or authority to sign such indorsement so as to bind it. It thereby challenges the eighth and part of the fourth findings of fact above set forth. The superintendent of the Laboratories testifies that the original contract for the records and other articles was made with both companies. Many of the invoices were made out to the Kuryer Publishing Company, others to the Polonia Phonograph Company. On plaintiff’s demand defendant produced a large number of such invoices at the trial and many of them show upon their face that they were stamped by the Kuryer Publishing Company, followed by initials in spaces on such stamp indicating that the prices and extensions had been examined and found correct. Many of the records sold were designated “Kuryer Records.” No written protest or objection appears to have been made at any [76] time to such manner of shipment or invoicing. The president of the Polonia Phonograph Company, being at the same time the treasurer of the Kuryer Publishing Company, admitted that some of the correspondence concerning the original transaction was on the letter-heads of the Kuryer Publishing Company, and he was unable to explain how it happened that the invoices were so addressed to the Kuryer Publishing’Company. Upon this record we think the court was justified in his findings of fact in this regard and in the necessary conclusion therefrom that the Kuryer Publishing Company indorsed for value and not for accommodation. The appellant Polonia Phonograph Company asserted by answer h number of grounds upon which it claimed to be released from liability, but upon the trial, however, no evidence was produced to support some of such, and the only question here presented is as to whether or not there can be asserted an offset by the Polonia Phonograph Company. Under the evidence the plaintiff was a holder in due course under sec. 1676 — 22, Stats., except and unless it did not comply with the requirement of sub. (3) of said section, namely, take in good faith and for value. One Moeser was the principal managing officer of the Laboratories at the time of the transactions in question and also one of the three directors of the plaintiff. It appears, however, that he took no part on behalf of the plaintiff in the acquiring of the note from the Laboratories, and although there was some testimony by the president of the Polonia Phonograph Company that he notified Moeser before the transfer, of the note that there was a claim for damages by the Polonia Company against the Laboratories, yet on cross-examination it' appears that such notice was not given until afterwards. This being so, the objection on that point cannot be entertained and the question needs no further consideration. Manufacturers’ Nat. Bank v. Newell. 71 Wis. 309. 314. 37 N. W. 420. [77] In an action at law such as this is the rights and liabilities of the parties are to be ordinarily determined as they stand at the time of the commencement of the action. Turner v. Pierce, 31 Wis. 342, and inferentially at least in Manufacturers’ Nat. Bank v. Newell, 71 Wis. 309, 316, 37 N. W. 420; McCammon v. Kaiser, 218 N. Y. 46, 48, 112 N. E. 572; Hutchinson v. Coonley, 209 Ill. 437, 443, 70 N. E. 686; Blanchard & Son Co. v. American R. Co. (N. H.) 108 Atl. 291; Billings H. Co. v. Bryan (Mont.) 206 Pac. 418; 1 Corp. Jur. 1149, 1150; 1 Ruling Case Law, 337. The same has been held to be the rule in determining the status of a defendant in an action charging him as a wrongdoer. State ex rel. Mengel v. Steber, 158 Wis. 309, 311, 149 N. W. 32. From the time the note was taken by the plaintiff bank and an appropriate credit made upon the deposit account of the Laboratories and up to and after the commencement of this action, that account was constantly in excess of the face of the note, so that at all such times the plaintiff was in position to and had the legal right to charge the amount of such note with then accrued interest against such deposit and return the note to its depositor, the transferor. Such being the situation, the bank was not a holder in due course within the statute. This rule is so declared in Curry v. Wis. Nat. Bank, 149 Wis. 413, 419, 136 N. W. 549, and directly so held in Manufacturers’ Nat. Bank v. Newell, 71 Wis. 309, 316, 37 N. W. 420; also in Hodge v. Smith, 130 Wis. 326, 334, 110 N. W. 192; Thompson v. Sioux Falls Nat. Bank, 150 U. S. 231, 244, 14 Sup. Ct. 94; Citizens’ State Bank v. Cowles, 180 N. Y. 346, 349, 73 N. E. 33; McNight v. Parsons, 136 Iowa, 390, 113 N. W. 858. See, also, 22 L. R. A. n. s. 718; Brannan, Neg. Inst. Law (3d ed.) p. 173; Whitley, Bills, Notes, and Checks, p. 133; 8 Corp. Jur. 482; 6 A. L. R. 254, note; 3 Ruling Case Law, 1055. It is therefore unnecessary to here pass upon any questions concerning the position of a bank holding such paper [78] in the event that after maturity or dishonor but before suit commenced or notice given of infirmity or defense the account of the transferor with the bank is reduced to an amount below the face of the note. Though the plaintiff cannot be deemed such a holder in due course as to defeat defendant’s right to assert defenses or offsets to such note, still it by no means follows that the defendant Polonia Phonograph Company is entitled, as it here asserts, to have applied as an offset to the note its claim for defective records. Such issue was not disposed of by the court below nor can 'we do so. Defendant’s answer asserts in substance that which is in accord with the position taken by the Laboratories on the trial, namely, that any defective .records furnished were to be returned and replaced, but on the trial and here it is asserted that the Laboratories were obliged, under the original contract, to repay or at least give credit tO' the Polonia Phonograph Company of an amount equal to the purchase price of such defective records. In this state of the record we shall do no more than remand this cause for further proceedings in the court below upon the questions as to what right, if any, the Polonia Company had as of the time of the commencement-of this action to an offset against the note, and, if any such right, to what amount it was damaged. By the Court. — Judgment reversed, and cause remanded for further proceedings pursuant to this opinion.