First National Bank v. Pohland

Vinje, C. J. The case seems to have been tried on the theory that it was necessary to connect the note in suit with the forged notes of the cashier. It seems also to have been tried on the theory that a consideration must move from the bank directly to the defendant in order to establish the validity of the note. This is evidenced by the form of the question in the special verdict which read, “Was the note in suit executed and delivered by the defendant to the bank without any valuable consideration therefor having been received by the defendant?” Under the testimony the jury would be warranted in answering this question “No.” In [407] deed, that was the only answer the testimony sustained. The theory of the trial court that the consideration must pass directly from the payee to the maker is further evidenced by the following instructions given to the jury. “But the Doctor says that those prior notes had no existence as genuine obligations of his. That he didn’t give this note to renew the prior notes, and when he did give it he got nothing of value for it, and therefore that he ought not to be required to pay. If he gave it without any consideration, never received valuable consideration for it, it is not a legal obligation of his. If he did receive a valuable consideration for it he ought to pay it.” The vice of this theory of the case is that it overlooks both the law and the facts. The undisputed facts are that the defendant gave this note as an accommodation to his brother in order that his brother’s liability to the bank might be reduced. In other words, it was distinctly understood that he was to receive no consideration for the note, but that the consideration was to go to his brother in two ways: first, by diminishing his indebtedness to the bank in the sum of $3,000, and second, by securing an extension of the time of payment for six months. This was a valid consideration and supports the bank’s action. It is not necessary that the consideration should move to the maker of the note. It may move to a third party. In this case the consideration was passed directly from the bank to the cashier. The bank credited the cashier with the amount of this note, and in view of the inquiry made by the bank and the assurance under the defendant’s signature that the note was his individual obligation and that the bank could regard it as such, makes it doubly certain that it was the intent and understanding of the parties that the consideration for this note should pass from the bank to the cashier and not from the' bank to the maker of the note. In other words, the maker of the note by its execution borrowed $3,000 from the bank and loaned it to his brother, [408] and he in turn paid the $3,000 to the bank and his indebtedness was extinguished in that amount. The bank, therefore, gave a valuable consideration for it by reducing the indebtedness of the cashier to it. _ The fact that the bank examiner finally considered that this note should not be counted in diminishing the cashier’s liability to the bank is quite immaterial. The bank gave the cashier credit for it and that was the purpose for which the note was executed. The fact that the bank comptroller did not so hold after defendant had repudiated his absolute obligation on the note can make no difference so far as the bank is concerned. The brother’s promise to take care of the note when due could not be relied upon by defendant as a defense against the bank, for even if his brother had been a cashier of the bank when the promise was made the defendant was chargeable with notice that the cashier could not bind the bank by such a promise. State Bank v. Forsyth, 41 Mont. 249, 108 Pac. 914, 28 L. R. A. n. s. 501, and note; State Savings Bank v. Montgomery, 126 Mich. 327, 85 N. W. 879; Loomis v. Fay, 24 Vt. 240; and Thompson v. McKee, 5 Dak. 172, 37 N. W. 367. The consideration, without question, passed from the bank to the cashier, and since it was understood by the maker that it should so pass when he signed the note, it became and is a valid instrument entitling the bank to a recovery thereon. By the Court. — Judgment reversed, and cause remanded with directions to enter judgment for the plaintiff for the amount of the note and interest.