Opinion
Decided April 28, 1926.
Charge to jury — Giving special requests before argument mandatory, when — Section 11447, General Code — Refusal not prejudicial where substance embraced in other special requests — Specific instructions may be given at conclusion of evidence — Error disregarded where one issue properly submitted and general verdict returned — Negotiable instruments — Bank chargeable with cashier's knowledge of fraud in procuring note — Bona fide holder, and note obtained by fraud — Note for purchase of property transferred to bank — Purchaser cannot recover from bank after note paid.
1. Section 11447, General Code, respecting giving of instructions before argument in civil cases, is mandatory; but refusal to give request, where covered substantially in other requests given before argument, is not prejudicial error.
2. In action on note, charge that knowledge by cashier of plaintiff bank of fraud in procuring note, obtained in any manner, would be notice to plaintiff, substantially covered defendant's requested charge on question of plaintiff's notice of fraud.
3. Section 11447, General Code, in providing that the court, after argument is concluded, shall charge the jury, does not forbid giving of specific instructions as to law at conclusion of evidence and before argument, although not requested.
4. Where favorable finding on either issue whether plaintiff was bona fide purchaser for value and whether note was obtained by fraud would entitle it to recover and no interrogatories were submitted to show on what issue general verdict for plaintiff was based, any error in refusal of requests before argument on issues other than fraud, which was properly presented, and on which verdict may have been based, will be disregarded.
5. Where note for purchase price of property, though induced by fraud, was transferred by seller to bank, purchaser without question paying note to bank could only recover amount from seller after rescission of sale for fraud, since, if bank took note subject to defenses, after payment it became merely channel through which consideration for purchase passed from buyer to seller.
ERROR: Court of Appeals for Sandusky county.
Messrs. Ritter Schminck, Mr. Frank O'Farrell and Messrs. Culbert Culbert, for plaintiffs in error.
Mr. Charles Gallinger, for defendant in error.
The Second National Bank of Bucyrus, Ohio, as plaintiff, brought an action in the court of common pleas of this county against Paul E. Schaaf and Harry E. Zimmerman, as defendants, to recover upon a promissory note dated July 1, 1919, for $10,000, with interest. The jury returned a verdict in favor of the plaintiff for the full amount prayed for in the petition, and judgment was entered thereon. Plaintiffs in error now seek a reversal of this judgment.
On March 1, 1919, Anton Boerder and Helen Boerder of Toledo, Ohio, as first parties, entered into a written contract with C.F. Michael, W.H. Picking, Philip Browarsky, and A.G. Stoltz, of Bucyrus, Ohio, as second parties, which involved certain rights in and to property of the Tungsten Steel Company, and especially certain formulæ for the manufacture of steel, which, it was claimed, could be used for making razor blades and for similar purposes without forging. The contract also provided for the liquidation of the Tungsten Steel Company and the organization of a new corporation, which should own and carry on the manufacture of steel under these formulæ.
On June 30, 1919, the plaintiffs in error herein entered into a contract with the second parties above referred to, which was consented to by Anton Boerder, by the terms of which the plaintiffs in error acquired all of the right, title, and interest of said second parties to the contract referred to above and to all their interest in the Tungsten Steel Company and all property of whatever kind and character owned by that company, except accounts receivable and the cash of the company. Plaintiffs in error assumed, and agreed to pay, the accounts payable of that company, aggregating $953.18, and in addition thereto, as consideration for the formulæ and property obtained, agreed to pay $50,000, and in payment thereof the plaintiffs in error executed and delivered five promissory notes for $10,000 each, payable to the order of C.F. Michael. Two of the five notes were afterwards acquired by the defendant in error, one of which was paid several months before the other, the note here in question, became due. A.G. Stolz was either cashier or president of the defendant in error during all of the time from the entering into the contract on March 1, 1919, down to the time of the commencement of the action, having originally been cashier of the bank for a number of years and then later elected to the position of president, in which capacity he was acting at the time defendant in error purchased from C.F. Michael the note in controversy. The defendants in the court below claimed upon trial, first, that the note was obtained through fraudulent representations made by Boerder at the time the defendants below purchased the property from the Bucyrus parties, and, second, that the plaintiff below was not a bona fide holder of the note in question for the reason that its president had knowledge at the time the note was purchased that it had been obtained by fraud.
An examination of the charge of the court shows it to be comprehensive, applicable to the issues involved, and free from error prejudicial to the rights of the plaintiffs in error. Plaintiffs in error claim, however, that the trial court erred in refusing to give before argument their requests Nos. 14 and 15, which read as follows:
"(14) If you find from the evidence that A.G. Stoltz transacted any business in behalf of the plaintiff in relation to the note described in the petition, prior to the time that the plaintiff purchased said note, then any notice to or knowledge of said Stoltz relating to the consideration of said note, or the means by which said note was obtained from the defendants, is chargeable to and becomes notice to and knowledge of the plaintiff.
"(15) Notice to or knowledge of a managing officer of the plaintiff, received by him in the ordinary course of the business of the plaintiff, is notice to or knowledge of the plaintiff, and, therefore, if you find from the evidence that A.G. Stoltz, in the usual and ordinary course of business of the plaintiff, had or received notice or knowledge of the consideration of the note described in the petition, on or prior to the date when the plaintiff claims to have purchased said note, then any notice to or knowledge of said Stoltz so had or obtained by him becomes notice to or knowledge of the plaintiff."
There is no question that the provisions of Section 11447 of the General Code with respect to giving instructions before argument in civil cases are mandatory. Cincinnati Traction Co. v. Kroger, 114 Ohio St. 303, 151 N.E. 127. The fact that the giving of such request is mandatory does not make it prejudicial error to refuse to give such a request, where the principles stated therein are covered substantially in other requests given before argument. Chesrown v. Bevier, 101 Ohio St. 282, 128 N.E. 94. The trial judge gave before argument, as a substitute for requests Nos. 14 and 15, the following:
"Notice to or knowledge of the cashier or president of the bank, received by him in the ordinary course of the business of the plaintiff, is notice to or knowledge of the plaintiff, and, therefore, if you find from the evidence that A.G. Stoltz, in the usual and ordinary course of the business of the plaintiff, at any time prior to the purchase of the note in question, transacted any business in behalf of the plaintiff in relation to the said note and by means of the transaction gained knowledge of the alleged fraudulent representations by which the note in question was obtained, or in any other manner received or had such knowledge prior to the purchase of said note, then any notice to or knowledge of the said Stoltz so had or obtained by him becomes notice to or knowledge of the bank of the alleged false and fraudulent representations by which the note in question was obtained, if it was so obtained."
We are satisfied that the principles plaintiffs in error sought to incorporate in requests Nos. 14 and 15 were substantially covered by the statement of the law which the trial court gave as a substitute therefor. While, in the case of Chesrown v. Bevier, supra, the court was undoubtedly speaking of requests made by the parties, it is not apparent how the plaintiffs in error were prejudiced if the court, in the substitute for the two requests before argument, gave, in substance, all the principles contained in the two requests refused.
A careful examination of the substitute discloses that the court before argument told the jury that if A.G. Stoltz "in other manner received or had such knowledge prior to the purchase of said note," that is "knowledge of the alleged fraudulent representations by which the note in question was obtained," such knowledge would be the knowledge of the plaintiff. More the defendants could not rightfully ask for. The instruction given in the substitute fully stated the law as to knowledge and notice.
It will be observed that the requests referred to make no mention of false representation, but speak only of knowledge of consideration of the note and of the means by which the note was obtained. The plaintiff might have such knowledge, and yet have no knowledge of false representations. While the requests are subject to this criticism, the substitute given is not.
Section 11447, General Code, also provides that the court, after the argument is concluded, shall charge the jury. The charge was given as required. This section does not forbid the giving of specific instructions as to the law at the conclusion of the evidence and before argument, any more than it forbids giving them at the time evidence is admitted under special instructions. If special instructions, so given, are correct statements of the law, and applicable to the issues, giving them at such times is not erroneous.
We see no reason why the rule declared in the third syllabus of State, ex rel. Lattanner, v. Hills, 94 Ohio St. 171, 113 N.E. 1045, L.R.A., 1917B, 684, should not be applied to this case. The third proposition of the syllabus reads:
"Where, upon the issues made by several defenses to a claim sued upon, a general verdict is found for the defendant, it not being disclosed by answers to interrogatories or otherwise upon which issue the verdict was based, and the record disclosing no error touching either the presentation or submission of at least one of such issues, a finding upon which in favor of the prevailing party would justify a general judgment which is rendered, error of the trial court in the submission of other issues will be disregarded."
The rule was declared in the case of Sites v. Haverstick, 23 Ohio St. 626, which is commonly looked upon as the pioneer case in Ohio upon that principle, and has recently been discussed by the Supreme Court in Ochsner v. Cincinnati Traction Co., 107 Ohio St. 33, 140 N.E. 644, and Scioto Valley Ry. Power Co. v. Rutter, Adm'x., 112 Ohio St. 500, 147 N.E. 910. Commonly it has been applied to uphold a verdict in favor of the defendant. We see no reason why it should not be applied to uphold a verdict in favor of the plaintiff, in a proper case. In the instant case there were two issues involved, first, the question whether the plaintiff was a bona fide purchaser of the note in question for value without notice, and, second, whether there was a defense to the note on the ground of fraud. If either issue were decided by the jury in favor of the plaintiff, it would prevail. The record does not show that any interrogatories were submitted to test the mental processes of the jury, thereby to reveal upon what issue or issues the verdict was based. There is no error disclosed in the record respecting the issue of fraud, and requests Nos. 14 and 15 relate wholly to other issues. The jury may have based the verdict for the plaintiff upon the issue of fraud.
Claim is made that the trial court erred in refusing to submit to the jury the issue made upon the cross-petition, which prayed for a judgment for $10,000 and interest, being the amount which was paid by the plaintiffs in error to the defendant in error as the principal and interest of the promissory note that first became due. We think there was no prejudicial error in this action of the court for the reason that when the plaintiffs in error, as makers of the first note, paid the note without question, they were relegated to their action for the amount paid the Bucyrus parties as a consideration for the property purchased, after rescission for fraud, upon the theory, that, while the bank took the note subject to defenses, when the note was voluntarily paid the bank merely became the channel through which a part of the consideration for the purchase passed from the buyer to the seller.
An examination of the record shows that the verdict is not manifestly against the weight of the evidence, that there is no error disclosed therein which is prejudicial to the rights of the plaintiffs in error, and that the verdict and judgment do substantial justice as between the parties.
Judgment affirmed.
RICHARDS and YOUNG, JJ., concur.