First National Bank v. Anderson , 112 Or. 167 ( 1924 )

COSHOW, J.

The amended answer sets np in detail the facts and transactions ont of which the cause of action and the alleged fraud arose. The answer is too long to set out in full. In substance, it alleges that the defendant, Helmholtz, was about to have a public sale of his dairy equipment and plant including the ten head of cows, which were sold to the defendant Anderson for the amount represented by the note; that the defendant, Helmholtz, was approached by the president and cashier of the bank in behalf of the defendant Anderson stating that the plaintiff bank was financing Anderson; that L. S. Roberts, cashier of the plaintiff bank, was clerk at the sale as a representative of the bank, and for the purpose of passing on the credit of the purchasers at the sale; that the ten cows were sold to the defendant Anderson and that the bank officers represented to the defendant, Helmholtz, that his note was a bankable note and that the bank would accept it without discount; that the defendant, Helmholtz, insisted that the note accepted be secured by bankable collateral and be such as the bank itself would accept without the defendant, Helmholtz, indorsing it; that in furtherance of this arrangement and plan the said Roberts as cashier served as clerk at said sale, and charged therefor the sum of $90 for about five or six hours’ work; and further discounted the note given by the defendant Anderson for said ten head of cows 5 per cent; that contrary to the arrangement as understood by the defendant, Helmholtz, the note taken from Anderson for the cows was made payable to Helmholtz and he was asked by the officials of the bank to indorse the note, which he refused to do because the bank had not secured it by a chattel mortgage and because the note, under the arrangement made between said Helmholtz and the officials of the bank, would be the property of the bank; that about six weeks after the sale the defendant, Helmholtz, was again solicited by the officials of the bank to indorse the note; that at that time the officials of the bank represented to the defendant, Helmholtz, that the note had been secured by a chattel mortgage and that said chattel mortgage was then in the possession of the bank; that relying on that statement the defendant, Helmholtz, indorsed the note.

The answer denies the execution and indorsement of the note as alleged in the complaint and for a further and separate answer sets up the facts substantially as stated above.

In fact and in truth the bank did not have the chattel mortgage securing the note as it represented to the defendant, Helmholtz, and by virtue of which representation Helmholtz indorsed the note. The contention of the plaintiff is that the answer admits having indorsed the note and that the defense alleged in the answer is ain attempt to vary the terms of the written contract.

The facts pleaded in the amended answer do not tend to vary the written terms of the contract, but allege fraud in securing’ the indorsement of the defendant, Helmholtz. The matters set out in the answer regarding the arrangement of the sale and the part taken therein by the officials of the bank are matters of inducement which are properly pleaded in order to state the facts which were consummated by the false representations of the officials in securing the indorsement of the defendant, Helmholtz.

The representation that the bank had secured the chattel mortgage from the defendant, Anderson, and then had it in its possession was a statement of fact, and it is clearly alleged that the defendant, Helmholtz, was thereby induced, in reliance upon those representations, to indorse the note after having previously refused to do so because it had not been secured and was not taken by the bank in accordance with the arrangement made between it and the defendant, Helmholtz. Fraud is a defense to any action founded on a contract. The legal effect of an obligation secured by fraud is no obligation. The defense of.the defendant, Helmholtz, does not seek to vary the terms of the written contract in any sense. The defense is that the indorsement of the defendant, Helmholtz, was procured by fraud and the matters alleged in the answer are the acts and conduct of the plaintiff through its officers contributing to the fraud practiced on the defendant Helmholtz.

Instruction No. 3 set out in the statement correctly expresses the law on the issues. It indicates that the Circuit Court confined the jury to the determination of the question of whether or not the indorsement of the defendant, Helmholtz, was procured by fraud. The Constitution of the state forbids this court from inquiring into a question of fact when properly submitted and determined by a jury: Article VII, Section 3c, Constitution of Oregon.

There being some evidence tending to support the defense and the questions of fact having been properly submitted to the jury, this court is precluded from examining the evidence with a view of weighing its value. The court is as much bound by the verdict of the jury as are the parties to the cause where that verdict is based on evidence and the jury has been properly instructed. For this reason it is not the intention of this court to express their opinion upon the facts, but accepts the verdict of the jury. That verdict sustains the allegations of fact in the amended answer to the effect, that the defendant, Helmholtz, was induced to indorse the note by fraud. That being true, the legal effect is that the defendant Helmholtz did not indorse the note and is not liable thereon.

The objections to the testimony disclosed by the bill of exceptions are not well taken. The question propounded to the defendant, Helmholtz, and which he was permitted to answer over the objection of the plaintiff, was not of any great importance, but was harmless. It was not reversible error, if error at all, to permit it to be answered. The refusal of the court to permit the same witness to answer the question propounded by the attorney for the plaintiff on cross-examination was not error. From the record it appears that the question was propounded as an impeaching question, but neither the place nor the time was fixed in the question: Section 861, Or. L. The facts at issue having been fairly submitted to the jury and the jury having returned a verdict in favor of the defendant, Helmholtz, the judgment of the Circuit Court must be affirmed and it is so ordered.

Affirmed.

McBride, C. J., and Burnett and Band, JJ., concur.