Brotherhood of American Yeomen v. Farmers' Equity State Bank , 45 N.D. 532 ( 1920 )

<xrace, J.

This action is one by plaintiff to recover the sum of $326.23, which he claimed to have on deposit in defendant’s bank. The defendant refused to honor plaintiff’s check in that sum.

The case was tried to a jury, and, at the close of the ease, each party moved for a directed verdict, after which the court discharged the jury and made findings of fact and conclusions of law, adjudging and determining that plaintiff recover judgment in the sum of $360.99, and judgment was accordingly entered for this sum. A motion to vacate and set aside the judgment and for a new trial was denied.

The facts are not in dispute. Plaintiff is a foreign corporation, with its principal office in the city of Bes Moines, Iowa. A local lodge or chapter was organized in the city of Mandan, of which one August Usselman was duly elected and acting as its correspondent or secretary, from the 11th day of August, 1917, until the 18th day of September, 1918.

The plaintiff carried an account in its corporate name in defendant bank. ' The correspondent had sole and exclusive charge and custody of the financial affairs of the local chapter during all the time he served in that 'capacity.

On August 11, 1917, he purchased a draft, payable to the plaintiff, for $273.30, and in payment thereof gave his note, payable to the defendant, for $185.70, and paid $87.60 in cash, which was signed, The Brotherhood of American Yeomen, by August Usselman, Secretary.

On August 24th, Usselman paid $118.10 on the note, leaving a balance of $67.60, which he paid on September 14, 1917.

On September 14th, he purchased a second draft, payable to the defendant, in the sum of $266.55, and gave a demand note, payable to the defendant bank, and signed it in the same manner as he had signed the previous note.

On October 5, 1917, he paid on this note $197.50, and on October 18th, paid the balance. On the 18th day of October, he purchased a third draft, payable to plaintiff, in the snm of $322.86, and for this he paid $35 in cash, and gave a demand note, payable to the defendant, signed in the same manner as the notes above mentioned. He paid this note October 18th, and purchased a fourth draft, in the sum of $313.65, paying for it $31.48 in cash, and gave a promissory note for $282.17, signed in the same manner as the former notes.

He paid this note on December 10th and purchased a fifth draft for $328.60, payable to plaintiff, and paid for this $26.28 in cash, and gave his note for $332.32. On this note, he paid $14.13 on December 10th, leaving a balance of $288.19 still due on the note.

During the months of January, February, March, and May, the-secretary purchased other drafts from the defendant, which he paid for in cash and with checks.

On July 6, 1918, the secretary renewed the promissory note dated December 10th. The amount of the new note, given in place of the old note and interest, amounted to $305.23.

In the fall of 1918, August TJsselman died. Defendant presented its demand renewal note to the officers of the local chapter for payment, and payment was refused.

On the 10th day of July, 1919, the defendant bank applied the sum of $326.23, which the plaintiff had in the bank in the form of a general deposit, in payment of the principal and interest then due upon the said demand note, and gave notice of its action to the local office of the plaintiff, and surrendered the note, indorsed and fully paid.

On July 11, 1919, one Helbling, an officer of the local chapter, in his official capacity, signed and presented to the defendant bank a check, in the sum of $326.23, payment of which was refused on the claim that at that time plaintiff had no funds in the bank, and at the same time gave notice that the general deposit in question had been applied in payment of the principal and interest due upon the note in suit.

It is admitted that TJsselman was the agent of plaintiff; that he acted as such during all the time when the various remittances above mentioned were made to the plaintiff. He had actual authority to. collect from the membership of the homestead (the local lodge) the money, in the way of assessments, etc., which the members were required to pay at various times, in accord with the rules, regulations, and eonstitution of the plaintiff; and it was his duty, when collection thereof was made, to remit the same to the plaintiff at Des Moines.

It does not appear that he had any actual authority from plaintiff to borrow money nor execute the notes which were executed, and if he had executed note or notes to the bank or any other person, without the knowledge or consent of the plaintiff, and had received the money thereon, and converted it to his own use or otherwise disposed of it, and paid no part of it to the plaintiff, we think, in such case, the plaintiff would be under no liability on such note, and could not be bound by the acts of its agent, thus acting entirely without authority.

In this case, however, while it may be true the agent was acting outside of his authority in executing the note in question and receiving the money thereon, it also appears, and it is true, that plaintiff received all the money from its agent which he procured on the note.

The plaintiff cannot in one breath say the agent had no authority to execute and deliver the note, and in the next say that, notwithstanding he had no such authority, it is entitled to the proceeds or fruit of his unauthorized act.

We think what we have said is decisive of this case. The question of the ostensible authority of Usselman to execute the note in question has been raised. We do not think this is a material issue herein, nor is a decision on that question necessary to a decision of the case. In fact, in view of what we have said, we think whether Usselman had or had not ostensible authority is immaterial, and that subject needs no further consideration.

We think the laws, rules, and constitution of the plaintiff are no notice to the defendant, in the absence of proof that it had knowledge or notice thereof.

Assuming that they are usually binding on a member of the lodge or organization, even if it should appear such member had no actual knowledge thereof, and this, on the theory that, being a member, he is-presumed to have knowledge of its laws, rules, and constitution, etc.,, .it does not follow that they are notice to a stranger to the organization or lodge.

We are satisfied the court was in error in concluding, as a matter of law, that defendant was indebted to plaintiff in the sum of $326.25,, or any other sum; and further was in error in holding that the allegations of the complaint are true. Most, if not all, of the errors assigned are well taken.

We are of the opinion the order and judgment appealed from should be reversed. They are reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

The appellant is entitled to his costs and disbursements on appeal.

Birdzell, Bobinson, and Bronson, JJ., concur.