19 S.W.2d 740 (Mo. 1929), 27573, Stover Bank v. Welpman
|Citation:||19 S.W.2d 740, 323 Mo. 234|
|Party Name:||Stover Bank v. Louis Welpman, Appellant|
|Attorney:||George W. Day for appellant. A. J. Bolinger for respondent.|
|Judge Panel:||Lindsay, C. Seddon, C., concurs; Ellison, C., absent.|
|Case Date:||June 29, 1929|
|Court:||Supreme Court of Missouri|
Appeal from Platte Circuit Court; Hon. Guy B. Park, Judge.
(1) Plaintiff pleaded a title in itself, to the note sued on, by indorsement and delivery to it by the Merchants' Bank. The answer put this allegation in issue. Hence, it was incumbent on plaintiff to prove the constituent elements of such a title. Nance v. Hayward, 183 Mo.App. 217; Federal Discount Co. v. Becker, 138 Mo.App. 54; Dunlap v. Kelly, 105 Mo.App. 1; Hugumin & Co. v. Hinds, 97 Mo.App. 346. (2) The burden thus assumed by plaintiff, it sought to discharge by showing that the president of the Merchants' Bank, without authority conferred by the board of directors of said bank, wrote the indorsement upon the note held by that bank, to which the one sued on was collateral. But the law forbids an indorsement by a bank official of a note given a state bank for money loaned by it, without authority first given such official by the board of directors, evidenced by a written record of such authorization. Sec. 11762, R. S. 1919; Bank of Kirksville v. Sloop, 198 Mo.App. 225. (3) The above propositions are not answered by asserting that the authority of the Sloop case is overthrown by the subsequent ruling of the St. Louis Court of Appeals in Taylor v. Fuqua, 203 Mo.App. 581. In the Sloop case, the question of the power of a state bank's cashier to sell the bank's notes was under consideration. The St. Louis Court of Appeals having a different question before it, merely directed attention to the fact that the court had overlooked the 1915 amendment to Sec. 1112, R. S. 1909, which amendment omitted from that section the words "sell" and "selling" as used therein. Laws 1915, pp. 146-147. Whether or not the omission of those words is such as to confer power to "sell" such notes, is an open question, not necessary to be determined in this case, because we have here the allegation of an indorsement, which is still under the ban of the section referred to coupled with the necessity of proving that allegation. "This section, therefore, as it now stands, deprives a cashier merely of the power to indorse, pledge, or hypothecate notes, etc., received by the bank for money loaned, without antecedent authority conferred by the board of directors, making any such act void." Taylor v. Fuqua, 203 Mo.App. 587. (4) It is not necessary to determine the effect of the omission of the word "sell" from the section of the statute under consideration, because it has long been the law of this state that the assets of a corporation are, and of right should be, under the exclusive control of its board of directors, and that its president may not sell, or assign, them without express authority from the board. Ferguson v. Transportation Co., 79 Mo.App. 356; Integrity Mining & Mill. Co. v. Moon, 130 Mo.App. 633. And the law governing banks and business and manufacturing corporations, is essentially the same in respect to this. Secs. 11746, 10152, R. S. 1919. The St. Louis Court of Appeals did not decide in the Fuqua case, that the cashier of a state bank now had authority to sell the bank's notes. The facts show that such a holding would have been obiter dictum. Taylor v. Fuqua, 203 Mo.App. 587. The court was merely undertaking to determine the effect of the statute, on the facts before it. (5) Carefully reading the collateral agreement, it seems to give the holder of that note the right to sell the collateral, on non-payment, not the right to sue upon it in the holder's name. Nor is it clear that the Merchants' Bank, had the right, even if acting through its board of directors, to transfer the note pledged and sued upon. The pledgee of commercial paper has no such right in the absence of express authority. Millikin-Helm Com. Co. v. Albers, 244 Mo. 38; Greer v. Bank, 128 Mo. 559. (a) The collateral agreement respecting the pledge, if ambiguous, must be held not to give plaintiff the right to transfer the note sued on to obligations other than the one to which it was originally pledged. Hornsby v. Knorpp, 207 Mo.App. 302. (b) The payment of the debt to which the note sued on was pledged, prior to its transfer to the other note held by plaintiff, extinguished plaintiff's power to dispose of it, otherwise, than by a return to the payee, as demanded. Hornsby v. Knorpp, supra.
(1) An officer of a state bank has the right, in the usual course of business, to sell and transfer commercial paper. Sec. 11762, R. S. 1919; Taylor v. Fuqua, 203 Mo.App. 581; Sedgewick v. Bank, 295 Mo. 262. (2) The pledgee of commercial paper may maintain an action thereon in his own name. Tennent v. Union Central, 112 S.W. 754; Dickey v. Porter, 203 Mo. 1; Secs. 814, 837, R. S. 1919; Jones on Pledges (2 Ed.) secs. 429, 430.
[323 Mo. 237] In this case, at the close of plaintiff's evidence, the trial court gave the peremptory instruction offered by defendant, afterward set aside the involuntary nonsuit taken, and defendant appealed. Upon appeal, the Kansas City Court of Appeals ruled that the court erred in setting aside the involuntary nonsuit; but, deeming its decision to be in conflict with a ruling of the St. Louis Court of Appeals, transferred the cause to this court for determination.
The suit is upon a promissory note in the sum of $ 1100 executed on December 15, 1920, by the defendant, Louis Welpman, and payable to H. K. Welpman, one year after the date thereof. In September, 1923, H. K. Welpman borrowed money from the Merchants' Bank of Kansas City, Missouri, and executed his note therefor. On [323 Mo. 238] January 7, 1924, the unpaid amount on said indebtedness was $ 1346, and on that date H. K. Welpman executed to Merchants' Bank his renewal note in the sum of $ 1346, and delivered the note herein sued on as collateral security. The new note thus given by H. K. Welpman to the Merchants' Bank recited the giving of collateral security in a lengthy agreement, incorporated in the note, wherein various terms and conditions were stated, concerning the rights of the holder of the note in and to the collateral. There was testimony to the effect that the original loan made by the Merchants' Bank to H. K. Welpman was made at the request of the cashier of the plaintiff bank, and under an agreement that plaintiff would take over the note of H. K. Welpman and pay the Merchants' Bank in full the amount that might be due on the obligation of H. K. Welpman. The plaintiff bank was a customer of the Merchants' Bank and had an account with that bank. In April, 1924, the officers of the Merchants Bank asked the plaintiff to take over the H. K. Welpman note. There was at that time due and unpaid on that note the sum of $ 969.59. That amount was charged to the account of plaintiff, and on April 9, 1924, the president of the Merchants Bank indorsed and delivered that note to the plaintiff, and with it, delivered the collateral -- the note in suit. This indorsement and delivery was made without any meeting or action of the board of directors in respect to the transfer of said note. Both of said banks are organized under the laws of the State. The indorsement so placed upon the note ran as follows: "Without recourse, pay to the order of Stover Bank. Hal R. Lebrecht, Pres." Within a few months thereafter, H. K. Welpman paid to the plaintiff the balance due on the note, and at the time of completing payment demanded that the note herein sued on be delivered to him. At, and prior to, the time the Merchants Bank transferred and delivered the H. K. Welpman note and the collateral note, to the plaintiff, H. K. Welpman had become and was indebted to the plaintiff bank, through other transactions, in the sum of $ 5450. The plaintiff refused to deliver up the note herein sued on, and retained the same as and for collateral security for the payment of such other indebtedness. The note sued on shows its indorsement by H. K. Welpman, in blank. It contains a provision for the payment of an attorney's fee in the event of suit brought thereon.
The amended petition alleged that the note sued on was indorsed by the payee, H. K. Welpman, and delivered to the Merchants Bank as collateral security for the payment to the Merchants Bank of the note and collateral agreement executed by H. K. Welpman, and that "the note of this defendant together with the indebtedness of said H. K. Welpman was for value, by said Merchants Bank, indorsed over to and delivered to the plaintiff herein, and that plaintiff is the holder of the same for value under the collateral agreement of said H. K. Welpman."
[323 Mo. 239] The amended answer admitted the execution of the note sued on and denied all other allegations. It alleged that after the maturity of the note, and without defendant's knowledge, H. K. Welpman delivered the note to the Merchants Bank as collateral security...
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