Johnson County Savings Bank v. Redfearn

• Citation: 125 S.W. 224,141 Mo.App. 386
• Parties: JOHNSON COUNTY SAVINGS BANK, Appellant, v. W. E. REDFEARN et al., Respondents
• Decision Date: 07 February 1910
• Court: Court of Appeal of Missouri (US)

125 S.W. 224

141 Mo.App. 386

JOHNSON COUNTY SAVINGS BANK, Appellant, v. W. E. REDFEARN et al., Respondents

Court of Appeals of Missouri, Springfield

February 7, 1910

Appeal from Greene Circuit Court.--Hon. James T. Neville, Judge.

REVERSED AND REMANDED.

STATEMENT.--Action upon a promissory note, payable in six installments of $ 83.20 each, executed by defendants to the Equitable Manufacturing Company of Chicago, Illinois, endorsed as follows:

"Pay to the order of Johnson County Savings Bank, Equitable Manufacturing Company, per O. H. Brainerd, Fin. Sect."

The petition alleges that the plaintiff became the owner of said note before maturity for a valuable consideration. The answer alleges that the consideration of the note was the purchase of a lot of jewelry from the Equitable Manufacturing Company and that at the time of the execution of the note and cotemporaneous therewith, there was executed a contract between the Manufacturing Company and defendants containing certain stipulations, warranties and obligations of the parties, providing that under certain conditions, defendants might return to the Equitable Manufacturing Company the unsold portions of said jewelry, and then alleges that the execution of both the note and the contract were secured by the fraudulent representations of the salesmen of the Equitable Manufacturing Company, and that plaintiff had knowledge of these facts at the time of the transfer of the note to it.

The plaintiff moved to strike out all that part of this answer which alleged the execution of the contract and the failure of the Equitable Manufacturing Company to comply therewith. This motion was overruled, plaintiffs then filed reply, the case went to trial before a jury, and at the beginning of the trial, the court held that the burden of proof was on the defendant. Defendant then introduced testimony tending to show that the note and contract were secured by fraud and in order to show that the plaintiff, bank, had knowledge thereof, placed the president of the bank upon the stand and examined him in relation thereto. At the close of defendant's testimony plaintiff asked a peremptory instruction to find for the plaintiff. This the court refused; the plaintiff offered no testimony and the court then, upon its own motion, gave the following instruction.

"The written documents in evidence, the testimony of plaintiff discloses a scheme of doing business between the Equitable Manufacturing Company and the plaintiff so reasonably liable to deceive and defraud the citizens of the State as to be unenforceable at law. Your verdict will, therefore, be for the defendants."

The jury then returned a verdict for defendants, plaintiff has appealed to this court, assigning as error:

1. The action of the court in overruling appellant's motion to strike out a portion of respondent's answer.

2. That the court erred in admitting oral evidence as to conversations between the salesman for the Equitable Manufacturing Company and the respondents prior to the execution of the note, and especially did the court err in permitting respondent Redfearn to testify as to the signature of Mr. Kennedy.

3. The court erred in refusing to give the instruction requested by appellants, and erred in giving the instruction of its own motion directing the jury to return a verdict for the respondent.

Judgment reversed and cause remanded.

J. O Martin and Hamlin & Seawell for appellant.

(1) The motion to strike out a part of defendant's answer is in the nature of a demurrer, and if that part of the answer included in the motion does not state a defense, the motion should have been sustained, and pleading over by filing a reply does not waive the point. Elfrank v. Seiler, 54 Mo. 134; Ryans v. Prior, 31 Mo.App. 561; Donahue v. Bragg, 49 Mo.App. 276; Haase v. Nelson, 64 Mo.App. 131. (2) "Appellant, being the transferee of negotiable paper, before maturity, is presumed to have acquired it in good faith, and the burden is on the respondents to show the contrary." Merrick v. Phillips, 58 Mo. 436; Mayes v. Robinson, 93 Mo. 114; Keim v. Vette, 167 Mo. 399. (3) "If the trial court was of the opinion that the appellant accepted said note as collateral security for a pre-existing debt, then the question as to its knowledge of the fraud, if any, in the procurement of the note or of its consideration, should have been submitted to the jury under appropriate instructions." Investment Co. v. Fillingham, 85 Mo.App. 534; Bank v. Bank, 109 Mo.App. 672.

T. J. Murray for respondents.

(1) When a party aids in the execution of a fraud, and shares in its proceeds, he is chargeable with all of its consequences. Lincoln v. Claflin, 7 Wall. 132; Hornblower v Crandall, 7 Mo.App. 220, 78 Mo. 582; Watson v. Crandall, 78 Mo. 583. (2) If a party intentionally misrepresents a material fact, or produces a false impression, in order to mislead another, or to entrap or cheat or to obtain advantage of him, it will constitute positive or actual fraud in the truest sense of the term, and the misrepresentation is not confined to words or positive assertions, but may consist of deeds or acts or artifices to mislead. Bank v. Crandell, 87 Mo. 209; Price v. Atkinson, 117 Mo.App. 52; Jewelry Co....