Tillamook County Bank v. International Lumber Co.

211 P. 183, 106 Or. 339, 1922 Ore. LEXIS 119

• Court: Oregon Supreme Court
• Decided: December 12, 1922
• Status: Published

Opinions

RAND, J.

Plaintiff commenced this action against the International Lumber Company and W. A. Bennett to recover upon three inland bills of exchange, each drawn in favor of and payable to the order of the plaintiff bank. These instruments were drawn on the International Lumber Company by W. A. Bennett, who at the time was doing business under the name of Virgin Spruce Lumber Company. The first is for the sum of $1,000 and is dated October 8, 1920, and by its terms was payable January 9, 1921. The other two are for $3,000 each and were drawn on November 9, 1920, and by their terms were payable on February 9, 1921. Each contains thereon a written indorsement of acceptance. • The indorsement on the one for $1,000 is in these words: “Accepted Oct. 8, 1920, Payable at Tillamook, Ore., International Lmbr. Co., By D. W. Taylor.” The written indorsement on the other two is in the same words except that the date of acceptance is November 9, 1920. The action was commenced against both the drawer and the acceptor, but so far as the record discloses, was prosecuted against the acceptor only.

The complaint alleges that the plaintiff is the owner and holder of these instruments; that D. W. Taylor, by whom the acceptances were made, was the vice-president of the defendant company and was duly authorized to accept said bills of exchange for and on behalf of the defendant company. It also alleged that no payments had been made thereon, except the sum of $235.09, paid upon the $1,000 bill of exchange. The answer admitted that Taylor was the vice-president of said company but denied that he was authorized to accept said bills of exchange for or on behalf of said company. It also affirmatively alleged that the $1,000 bill of exchange had been paid in full and denied that the plaintiff is or ever was the owner or holder of either or any of said bills of exchange. On the trial, the defendant company, through its attorney, admitted that these bills of exchange were executed as alleged in the complaint, and because of this admission we conclude that it was wholly unnecessary for the plaintiff to prove the authority of Taylor to make said acceptances on behalf of said company. The bill of exchange for $1,000 was produced and offered in evidence and is attached to the bill of exceptions and evidence was offered tending to prove that no part of the same had been paid except said sum of $235.09.

From the evidence it appears that the two $3,000 bills of exchange were drawn payable to the order of the bank by Bennett and were then forwarded by Bennett to Taylor, who accepted them on behalf of the company and returned them by mail to Bennett, who then delivered them to the plaintiff bank and was credited upon his account in said bank for the amount thereof. Neither of these two $3,000 bills of exchange was produced upon the trial, nor was any excuse offered for their nonproduction, nor was .any evidence offered which in any way tended to show that the plaintiff, at the time of the trial, was the owner and holder of either thereof.

At the conclusion of plaintiff’s' case in chief, the defendant company moved for a directed verdict. This motion was overruled. It then moved for a judgment of nonsuit against the plaintiff, which was also overruled. Then without requesting the court to submit the cause to the jury the defendant company declined to offer any evidence in its own behalf. Thereupon, upon plaintiff’s motion, the court directed the jury to return a verdict against the defendant company for the sum of $6,863.82, being the amount for which judgment was demanded in the complaint. To each of these rulings the defendant excepted and now assigns them as error.

As the $1,000 bill of exchange was produced, identified and offered in evidence, and there was evidence tending to show that it had not been paid in full and plaintiff was demanding judgment for the unpaid balance, it was proper for the court to overrule defendant’s motion for a judgment of nonsuit against the plaintiff and also for the court to refuse to grant defendant’s motion for a directed verdict. But as it was necessary for the plaintiff, before it could become entitled to a judgment for the amount of these two $3,000 bills of exchange, to allege and if the allegation was denied, to prove that it was the owner and holder of the bills of exchange sued on, and as this allegation was made in the complaint and denied by the answer, the burden of proof to establish this issue was on the plaintiff and as no evidence was offered by the plaintiff upon this issue and no admission concerning the same was made by the defendant, it was not proper for the court to direct a verdict for any sum which included the amount of these two bills of exchange or any part thereof. Nor, under this issue, was it proper for the court to direct a verdict for the amount of these two bills of exchange or for any part thereof for the reason that the same were not produced upon the trial nor were they identified and offered in evidence, nor was the nonproduction of these negotiable instruments excused by proof that the circumstances were such that the defendant could not be compelled to pay them a second time.

“Ordinarily,” says Mr. G-reenleaf, “the bill must be produced at the trial, in all the parts or sets in which it was drawn. If the bill or other negotiable security be lost, there can be no remedy upon it at law, unless it was in such a state, when lost, that no person but the plaintiff could have acquired a right to sue thereon. Otherwise, the defendant would be in danger of paying it twice, in case it has been negotiated. It is also his voucher, to which he is entitled by the usage of merchants, which requires its actual presentation for payment, and its delivery up when paid. Therefore, wherever the danger of a double liability exists, as in the ease of a bill or note, either actually negotiated in blank, or payable to bearer, and lost or stolen, the claim of the indorsee or former holder has been rejected. And whether the loss was before or after the bill fell due is immaterial. On the other hand, "if there is no' danger, that the defendant will ever again be liable on the bill or note, as if it be proved to have been actually destroyed, while in the plaintiff’s own hands, or if the indorsement were specially restricted to the plaintiff only, or if the instrument was not indorsed, or has been given up by mistake, the plaintiff has been permitted to recover, upon the usual secondary evidence. So, if the bill was lost after it had been produced in court, and used as evidence in another action. * * If the loss of a promissory note is proved, the plaintiff, if he is the payee, may recover, unless it is affirmatively proved to have been negotiable; for, in the absence of such proof, the court will not presume that it was negotiable.” 2 Greenl. on Ev. (16 ed.), § 156.

In the case of In re Pirie, 198 N. Y. 209 (91 N. E. 587, 19 Ann. Cas. 672), the petitioner offered in evidence a mortgage, which had been duly executed and recorded, and also an assignment of the mortgage to the petitioner. The mortgage was given to secure two notes of $500 each, one payable in six months and the other in eighteen months from date, with interest. A note in every respect corresponding with date and amount of the second note described in the mortgage and payable in eighteen months was produced by the petitioner and offered and received in evidence over the objection that it had not been sufficiently proven. It was held that “the acknowledgment of the mortgage of necessity embraced an acknowledgment of the matters therein stated, including that of its being a collateral security for the payment of the note described. It is thus an admission of the making of a note corresponding in date, names, and amount with that recited in the mortgage, and is prima facie evidence to that extent of the note secured thereby. But this is not sufficient to permit the note to be received in evidence, or judgment entered thereon. The mortgage merely establishes that there was such a note outstanding. It does not identify the paper offered as the genuine note, or that it was not forged or spurious; and, inasmuch as the burden rests upon the party offering it, it becomes necessary that he supply further evidence showing that it is the genuine paper described in the mortgage.”

Tn- the latter case the court quoted with approval from Palmer v. Manning, 4 Denio (N. Y.), 131, in part as follows:

“ ‘Evidence that the defendant had executed a note answering the description of the note produced, without other proof of identity, is not sufficient to submit to a jury to pass upon the question whether the defendant executed the note produced.’ To the same effect are the cases of Shaver v. Ehle, 16 Johns. (N. Y.) 201; Minard v. Mead, 7 Wend. (N. Y.) 68; Jackson v. Sackett, 7 Wend. (N. Y.) 94; Bardin v. Stevenson, 75 N. Y. 164, 168, and People v. Corey, 148 N. Y. 476, 486 (42 N. E. 1066).”

In support of the decision of the court in directing a verdict for the amount demanded in the complaint, plaintiff invokes the statutory presumption “that a thing once proved to exist continues as long as is usual with things of that nature.” Subd. 33, § 799, Or. L. So far as this presumption applies to a bill of exchange it goes merely to the existence of the instrument itself and does not in any way tend to identify the holder nor establish the ownership thereof. If this presumption could be indulged in to the extent contended for by the plaintiff, the result would be that the plaintiff would be relieved from the necessity of proving a material allegation of its complaint that had been denied by the answer and the burden of disproving such allegation would be cast upon the defendant without any proof to sustain it being required on the part of the plaintiff.

Also, as sustaining the action of the court in directing a verdict which included the amount of these two bills of exchange, plaintiff cites Patty v. Salem Flouring Mills Co., 53 Or. 350, 361 (96 Pac. 1106, 98 Pac. 521, 100 Pac. 298, 18 Ann. Cas. 119), and Rugh v. Soleim, 92 Or. 329, 336 (180 Pac. 930). In the first case cited it was held that if, at the close of plaintiff’s case in chief, the defendant moves for a nonsuit which is overruled, and then declines to produce any evidence and fails to request the court to submit the cause to the jury, he thereby submits the facts to the court for its decision and waives and relinquishes his right to a trial by the jury, and that if then the court, on its own motion, or on that of the plaintiff, directs a verdict in favor of the plaintiff, the action of the court will be sustained if there is any evidence to support the judgment. In the last case cited, it was held “that when both plaintiff and defendant rest the case and move the court for a directed verdict, the direction of the court in that respect must be sustained if any of the evidence will support it.”

In the case of Fletcher v. Yates, just decided, 105 Or. 680, 211 Pac. 179, this court, through Mr. Chief Justice Burnett, said:

“It is true that in the end each party moved for a directed verdict in his own. favor and thereby waived the right of trial by jury, giving the trial judge the exclusive authority to pass upon the weight of the testimony: Patty v. Salem Flouring Mills Co., 53 Or. 350 (96 Pac. 1106, 98 Pac. 521, 100 Pac. 298, 18 Ann. Cas. 119). Ordinarily a verdict thus directed cannot be assailed as a finding of fact, if there is any evidence to sustain it. But this does not obviate the errors committed by the court in producing a state of the testimony as it existed when those motions for a directed verdict were made.”’

None of these decisions is an authority in support of the contention now made. The court is not authorized in any case to direct the jury to return a verdict which is not sustained by some competent evidence upon every material issue in the case. If the issue is one which must be established before recovery in the action can be had and the party having the affirmative of such issue fails to produce competent evidence in support thereof, his right of recovery will be defeated.

The complaint alleged and the answer denied that the plaintiff was the owner and holder of the two bills of exchange. Before plaintiff could recover the amount due upon these instruments it was bound to establish the affirmative of this issue. The admission made by the defendant that the bills of exchange in question were executed as alleged in the complaint did not admit that the plaintiff was the holder of these instruments at the time of the trial, or that plaintiff was entitled to maintain an action thereon. As these instruments were negotiable in their origin they continued to be. negotiable until restrictively indorsed or discharged by payment or otherwise: Section 7839, Or. L. And as they were payable to order they could be negotiated by the indorsement of the holder completed by delivery: Section 7822, Or. L. Under Section 7866, Or. L., a negotiable instrument must be exhibited to the person from whom payment is demanded and when it is paid it must be delivered up to the party paying it. If plaintiff had produced these negotiable instruments and properly identified them and offered them in evidence, there could be no possibility, after paying the judgment appealed from, that the defendant would be again required to pay the amount due on these instruments. But so far as the evidence shows, these bills of exchange may have been negotiated by the plaintiff and may be held by a third party for value and without notice, and if the defendant should pay the judgment appealed from, it might a second time be compelled to pay the amount due on these bills of exchange.

Under the issues of this case, before the plaintiff could be entitled to a verdict for the amount of the two $3,000 bills of exchange or any part thereof, it was necessary for the plaintiff to prove that these instruments had not been transferred and that the plaintiff was the holder of them at the time of the trial. It was also necessary for the plaintiff, before becoming entitled to a judgment for tbe amount thereof, to produce these instruments upon the trial and to identify them and prove that they were genuine and deliver them up by offering them in evidence. “If the possession of the instrument is within plaintiff’s control, he is bound to produce it in court at the hearing. Otherwise he must account for and excuse its nonproduction.” 2 Ency. of Ev.. 540. “The bill or the note sued on must in general be produced at the trial before a verdict and judgment can be rendered thereon, or an excuse shown for its nonproduction, as that it is lost or destroyed, or is in the possession or control of the adverse party, unless everything which the production of a note in evidence would prove is admitted by the pleadings.” 8 C. J. 1Q58, § 1367. Until these instruments were produced, identified and offered in evidence, or the nonproduction of them excused, there was no evidence before' the court, under the issues in this case, to sustain its action in directing a verdict for any sum or amount which included the amount due upon either of said bills of exchange or any part thereof.

It was therefore error for the court to direct a verdict for an amount which included the amount of these two bills of exchange, and for that reason the judgment will be reversed and the cause will be remanded for further proceedings not inconsistent herewith. Reversed and Remanded.

Burnett, C. J., and McBride and Harris, JJ., concur. For the petition, Messrs. Botts & Winslow. Contra, Mr. W. I. Harrison, Mr. Robert H. McGrath and Messrs. Wilbur, Beckett & Hotvell.