First National Bank of Towner v. Reed

The only question in this case is whether the plaintiff bank owns the note in suit as a holder in due course. Whether it took the note as a holder in due course on September 2d is not material, as its present title is not referable to that transaction.

The trial court held that on the 20th day of November, 1916, the original $2,000 note of the Alfalfa Valley Land Company was paid by virtue of the transactions occurring on that day set forth in the statement of facts. This finding is assailed by appellant on the ground that-it is not supported by the evidence. The appellant contends that the transactions occurring between'the cashier of the bank and the *502R. C. Kittel & Company on that day amounted to a renewal of the $2,000 note of the Alfalfa Valley Land Company and that the R. C. Kittel & Company note for $2,500 was collateral to the Land Company note, — the note here in suit remaining with the bank as continuing collateral to the indebtedness of the Land Company. Viewing the transaction in the light of ordinary business experience, we think it a natural inference that the purpose of the cashier was to secure either payment of the Land Compan)'' indebtedness dr further colláteral security therefor, and that under, ordi•nary circumstances the'Land Company note for $2,500 was merely a renewal of its $2,000 note, enlarged to cover the overdraft, and that the R. C. Kittel & Company note was executed as collateral to the note of the Alfalfa Valley Land Company.

However, R. C: Kittel testified that the note of the R. C. Kittel & Company was given in payment of. the Land Company’s indebtedness to the bank, including its $2,000 note and $500 overdraft, and that the Land Company note of $2,500C executed on the 20th day of November, was collateral to the said Kittel-note. Furthermore, the written ' pledge of .the- collateral executed at the time, (including the npte-ih suit) is fhat.of the Kittel & Company.. -The cashier himself testified that “R. C. Kittel & Company’s note was -given- in-payment-of this.$2-,000 Alfalfa, Valley Land Company, note, with the overdraft and interest accruing;”-although/as the trial.-judge suggests, in his opinion, he, “after •- manifold .-urging by attorneys for both plaintiff and defendant — and the court too, for that matter, — did finally sav -that, .the' $2,500 .-Alfalfa Valley Land Company note'.mentioned in-the collateral agreement' (which-note he could not remember on .direct examination) -was. given as renewal.pf • the -$2,Q00 note .and- the overdraft.” . .After .a very careful ; consideration, of the testimony the trial judge concluded .that -••theresult of.the- transaction, on November 20th amounted .to •• a payment, of the $2-,000 Land- Company note.,- and so:;held. In so holding it would appear that the trial judge accepted *503the evidence at its face value, and we cannot say that he was not warranted in so doing. The finding, therefore, must stand. The result is this: The payment of the Alfalfa Valley Land Company note in the manner aforesaid extinguished the title which the bank secured to the note here in suit under the deposit of September 2d. The title which it now has to the note was acquired by virtue of the redeposit thereof made by Kittel & Compaq after the same became due and is subject to the defense herein interposed. It being conceded that the defense was fully established, if available against the plaintiff, it follows that the judgment dismissing the complaint was proper.

By the Court. — Judgment affirmed.