another question, requesting him to give his best judgment as to the amount of grain on hand, after giving an estimate, he says: "I can tell if I see the ledger." The ledger referred to was a book kept by the Gribben-Alair Company at its office at New Rockford. This ledger was afterwards produced in court, and introduced in evidence by the defendant, and the expert accountant, Thompson, repeatedly referred to it in his testimony. He (Thompson) said that the so-called ledger “contains a complete statement of the grain in the elevators on June 7, 1907." This is in harmony with the statement of Alair that he could tell the amount of grain on hand if he could see this ledger. How can it be seriously contended that the evidence adduced by the plaintiff does in fact establish the amount of grain on hand in the elevators on June 7, 1907?

On the other hand, the defendant produced books of account showing the various receipts and expenditures. It also put upon the stand Gunderson, who testified as to these matters, as well as Mr. Thompson, an expert accountant of recognized ability, who went thoroughly into the matters in controversy. He based his testimony as to the amount of grain on hand on June 7, 1907, upon the books of the GribbenAlair Grain Company as kept by it prior, and up to June 7, 1907. The Gribben-Alair Grain Company was awarded all profits reflected by "overages." Thompson explained the method used by him in determining the amount and value of the grain on hand on June 7th. When asked: "When you make your calculation as I understand it, you give the plaintiff the benefit of any doubt as to overages?" he answered: "Yes, sir, in every case." According to the computations made by Thompson the assets of the Gribben-Alair Company on January 1, 1908, amounted to $36,548.68. And this amount-as he explained-included the account of $3,171.50 against the plaintiff, to which reference has heretofore been made.

Alair testified as follows with respect to the grain shipments:

Q. Then, isn't it a fact that all the grain that was on hand, whatever amount that might have been in those seven elevators, was shipped out either to the P. B. Mann Company, or to the Minnesota Grain Company, and that the amount was received by the Gribben-Alair Company as to those sums?

Q. You saw the account sales of the Gribben-Alair Grain Company shipped to or received by the Minnesota Grain Company? For all shipments?

A. Yes, sir; all the cars shipped received account sales of the ship

ments.

It should be noticed that the Gribben-Alair Grain Company was a going concern. It was operating elevators at seven different points in the state. It had its headquarters at New Rockford. It maintained a bookkeeper and kept its books at that place, and the different buyers in the different elevators made reports to that office. According to the understanding between the parties, all grain on hand on June 7, 1907, was shipped out, and it is undisputed that all grain had been shipped out, and also five of the elevators sold before the end of August of that year. Hence, when plaintiff entered into the settlement agreement on March 10, 1909, all moneys from the sale of grain and from the sale of the five elevators had been received. If plaintiff's contentions in this case are correct these sums would have more than paid off all debts of the Gribben-Alair Grain Company, and plaintiff's distributive share of the surplus would have more than paid off his entire debt. It is somewhat strange that the terms of the agreement are as set forth, if the plaintiff at that time actually believed the contentions which he now claims to be true.

Some reference has been made in this case to the fact that Gunderson refused to permit the plaintiff or his attorney to examine the books of the Minnesota Grain Company. It is not apparent how this could affect the admissibility of the books in evidence. In this connection. it may be noted, however, that Gunderson denied that he refused to permit such examination, and claimed that he permitted Brice (Lahart's attorney) to examine them, and even to take some of them to his office. And Lahart admits that he was informed by Brice to the effect that he had been permitted to examine the books. Lahart testified: "Mr. Brice said he had got the books, that Mr. Gunderson let him have the books. He had a man in his office go through everything. He said he acted real good and let him go through everything."

Reference has also been made to the fact that Gunderson admitted that he had drawn some money out of the Gribben-Alair Grain Company's assets. The record fully discloses what was done. Gunderson was asked to give the then condition of the Gribben-Alair Grain Company. He says: "There is on hand, $23,339.30, and Gunderson and Alair have, and it is practically myself, same thing,-$14,637.28, the total assets are $37,967.68; indebtedness to the Minnesota Grain Company, $6,349.93, making the net worth $34,326.65. In addition to that, have an account against J. W. Lahart which is in the form of a judgment for $3,231.50." On his cross-examination he admits that he has drawn out some money and charged it to his account. Just what was wrong about that is hard to understand. He owned two thirds of the assets outright and absolutely, and he had a lien for over $10,000 against the other one third. This lien exceeded the full amount of such interest, so Gunderson was in fact the owner of all the assets. In his testimony Gunderson was referring to entries made in books of account, which were offered in evidence. These are the same books upon which the expert accountant based his testimony, and the books are part of the record transmitted to this court.

Our reconsideration of this case on the petition for rehearing has merely confirmed our convictions that the judgment appealed from is right. The conclusion reached in our former decision must stand. A rehearing is denied.

W. A. MARLATT, Appellant, v. EUGENE COUTURE, Respondent.

1. Where a promissory note is executed conditionally, and delivery is made in violation of such conditions, no liability arises on such note. Promissory note-false and fraudulent representations — procured by — invalid.

2. Where a promissory note is procured by false and fraudulent representations, the same has no validity and the maker incurs no liability thereon.

Corporation stock

promissory note given for-conditional making -on

note illegally given no liability arises.

3. Where a promissory note is given for corporate stock, assuming that the conditions were such that a promissory note could be legally given, no liability arises upon the note in absence of the delivery of the stock.

Opinion filed May 25, 1918. Rehearing denied November 30, 1918.

Appeal from the District Court of Rolette County, North Dakota, Honorable C. W. Buttz, Judge.

Affirmed.

Fred E. Harris, for appellant.

Charles A. Verret and Flynn & Traynor, for respondent.

GRACE, J. Appeal from the district court of Rolette county, North Dakota, Honorable C. W. Buttz, Judge.

This is an action to recover upon a promissory note for $150. The complaint is in the ordinary form. The answer admits the execution of the promissory note, and, by way of defense, alleges a total failure of consideration, and further alleges that the note was executed conditionally upon certain alleged agreements set forth in the answer, and that the note was not to become effective until the conditions were fulfilled; that there was an express agreement between plaintiff and defendant at the time of the execution of the note, that the plaintiff should furnish the defendant certain shares of stock in the corporation known as the St. John Creamery Company, which is alleged to be insolvent at the time of the execution of the note and at all times since, and that such fact was known to the plaintiff; that the plaintiff had no right or authority to sell or agree to sell such stock and was unable to and never did deliver such stock to defendant. There were further allegations in the answer as to representations, and an express promise on behalf of the plaintiff that the buildings and machinery of the St. John Creamery Company, which was not then in operation, should be fixed up and put in good operating condition within a reasonable time after the execution of said note; that the plaintiff would cause said St. John Creamery Company to resume its operation in first-class shape within reasonable time. Then follows the allegation that such representations were false and fraudulent, and made for the sole purpose or

obtaining the signature of the defendant, and allegations that none of the conditions were performed by the plaintiff. The facts in the case are as follows:

In 1909, the plaintiff had constructed a creamery at St. John, North Dakota. This company was incorporated under the laws of North Dakota, and its stockholders were farmers and business men in the vicinity of St. John. Plaintiff had a mortgage upon the creamery and its contents. Plaintiff was in the business of selling creamery machinery. In 1913, the creamery, for a time, ceased to do business.

It is contended by plaintiff that, at the time of getting new subscriptions and notes and the promissory note in question, he was getting them as additional security for the protection of the debt due him. The defendant denied that he had any knowledge that the plaintiff was taking the new subscriptions for that purpose at the time he gave the note in question. The note was executed with the understanding and agreement that the defendant would get three shares in the St. John Creamery Company, which shares were never delivered to the defendant. The following indorsement was on the back of the note: "Collateral to St. John Creamery Company notes and mortgages for $4,300 dated October 22, 1909."

The defendant denies that such indorsement was on the note at the time of its execution. The following is the agreement set forth in the subscription list:

"For value received, we, the undersigned, hereby agree to pay the sum set opposite our respective names, in cash, to W. A. Marlatt, for which shares of stock will be issued by the St. John Creamery Company, said sum was, when paid in cash, to be applied on mortgage given to said, W. A. Marlatt by St. John Creamery Company, and the balance, if any, to be paid over to the St. John Creamery Company and may be used as surplus or working capital. If any notes given same will be held as collateral security to mortgage notes." The defendant signed this subscription list.

Defendant claims, at the time he signed the note, the plaintiff represented to him he would get Mr. Hagan from Devils Lake for manager in such creamery, who, it appears, was regarded as very competent for that position. The plaintiff denies this and claims that what he said to Mr. Clifford while at the bank when the note was signed was, that

41 N. D.-9.