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Northwestern Bank v. Moretz

Filed: April 6, 1982.

THE NORTHWESTERN BANK
v.
J. DOUGLAS MORETZ



Appeal by plaintiff from Christian, Judge. Judgment entered 11 February 1981 in District Court, Lee County. Heard in the Court of Appeals 9 March 1982.

Whichard, Judge. Judges Martin (Robert M.) and Martin (Harry C.) concur.

Whichard

Plaintiff's complaint demanded judgment against defendant for the balance due on a promissory note. Defendant's answer pleaded, inter alia, that the note was delivered subject to a condition precedent that plaintiff would "pursue every possible effort" to collect the sum due from one Clyde Baker by prosecuting Baker for giving plaintiff a worthless check in payment of the sum due; and that plaintiff had willfully failed to fulfill the condition precedent, thereby relieving defendant of any obligation.

Plaintiff's evidence showed the following:

Clyde Baker applied to plaintiff for a loan to enable him to purchase defendant's automobile. Plaintiff initially denied the application, but subsequently approved it upon defendant's co-signing Baker's note. Baker thereafter gave plaintiff a worthless check in purported payment of the note. Defendant thereupon executed the note at issue in payment of the original note.

Acting on defendant's advice, plaintiff instituted criminal charges against Baker on the worthless check. On request of plaintiff's home office legal counsel, however, an officer of plaintiff thereafter informed the prosecuting attorney by letter that plaintiff had no further interest in the prosecution, because it had been paid in full by defendant as endorser.

Defendant's evidence showed the following:

Defendant signed Baker's note to enable Baker to secure funds with which to purchase defendant's automobile. When an officer funds with which to purchase defendant's automobile. When an officer of plaintiff advised defendant that Baker had given plaintiff a worthless check in purported payment of the note, and that the note was in default, defendant executed a new note to plaintiff. Defendant told plaintiff's officer he would sign the new note if plaintiff would "continue after Clyde Baker . . ., because he [was] the one that ought to have to pay it." Defendant received no new money for signing the new note, and the new note "was delivered . . . on the condition that [plaintiff] continue to proceed after Clyde Baker." The condition was "a verbal condition or understanding" which defendant reached with plaintiff's officer prior to signing the new note.

Defendant subsequently learned of the letter from plaintiff's officer to the prosecuting attorney, which stated that the original note had been paid in full by the endorser and that plaintiff thus had no further interest in the prosecution. He also learned that plaintiff's local counsel had represented Baker on the worthless check charge and had told plaintiff's officer that plaintiff "did not want to be in the position of prosecuting someone on a bad check under those circumstances."

The jury found that the second note was conditioned upon plaintiff's prosecuting Baker for the worthless check and for his

default on the note; and that plaintiff, through its officer's conduct, breached the condition precedent. Judgment was accordingly entered ...


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