The Salmon Falls Bank v. Leyser

• Decision Date: 16 May 1893
• Citation: 22 S.W. 504,116 Mo. 51
• Parties: The Salmon Falls Bank v. Leyser, et al., Appellants
• Court: Missouri Supreme Court

22 S.W. 504

116 Mo. 51

The Salmon Falls Bank v. Leyser, et al., Appellants

Supreme Court of Missouri, Second Division

May 16, 1893

Appeal from Pettis Circuit Court. -- Hon. Richard Field, Judge.

Affirmed.

G. W Barnett for appellant, Ilgenfritz and Sangree & Lamm for estate of Henry Leyser.

(1) The objection to the introduction of any evidence upon the ground that the petition did not state facts sufficient to constitute a cause of action should have been sustained. Burnside v. Fetzner, 63 Mo. 107; Sheldon on Subrogation [1 Ed.], secs. 188, 160, 161, 162; Scott v Roberts, 67 Mo. 293; Los Angeles v. Signoret, 50 Cal. 298; Lambert v. Haskell, 80 Cal. 611; Bliss on Code Pleading [1 Ed.] rule 2, p. 282; Ibid. sec. 318. (2) There is no privity of contract between the plaintiff and the defendants; and no consideration from the plaintiff to the defendants to support a promise. Turk v. Ridge, 41 N.Y. 201; Manny v. Frazier, 27 Mo. 419; Ham v Hill, 29 Mo. 275; Mellen v. Whippel, 1 Gray 317; Ins. Co. v. Mayer, 8 Mo.App. 18; Blymire v. Boistelle, 6 Watts 183; Merrell v. Greene, 55 N.Y. 270; Sympson v. Brown, 68 N.Y. 355; Bank v. Grand Lodge, 98 U.S. 123; Morrell v. Lane, 136 Mass. 93; Hampton v. Phipps, 108 U.S. 260; Book 27 L. C. P. Ed. p. 719; Garnsey v. Rogers, 47 N.Y. 233. (3) Banking powers to be exercised by corporations must be expressly granted and only those powers can be exercised which are specifically granted by the act of incorporation or are necessary to carry into effect the powers expressly granted. And a bank cannot so deal in promissory notes as to become the purchaser thereof unless authorized by its charter. Bank v. Simpson, 1 Mo. 184; Blair v. Ins. Co. 10 Mo. 560; 2 American and English Encyclopedia of Law, p. 90; State v. Stebbins, 1 Stewart (Ala.) 299; Barnes v. Bank, 19 N.Y. 152; People v. Ins. Co., 15 Johnson (N. Y.) 358; Duncan v. Savings Inst., 10 Gill & J. (Md.) 299; Weckler v. Bank, 42 Md. 581. A bank empowered to discount negotiable notes has no power to purchase such notes. Bank v. Baldwin, 23 Minn. 198; Bank v. Pierson, 24 Minn. 140; Bank v. Baker, 15 Ohio St. 68. (4) On the undisputed facts of this case, plaintiff is not entitled to equitable relief, and the bill should have been dismissed. (a) The rule that equity will not interfere as long as a full and convenient legal remedy exists, applies in full vigor where the aid of the purely equitable and benevolent (Cheesborough v. Millard, 1 Johns. Ch. R. 409) doctrine of subrogation is invoked. Brandt on Suretyship and Guaranty [1 Ed.], sec. 254, and authorities cited; Ibid. sec. 173; Jones v. Bank, 29 Conn, 25; Vail v. Foster, 4 N.Y. 312; Sheldon on Subrogation [1 Ed.], secs. 160, 162; Ibid. sec. 4; Merry v. Freeman, 44 Mo. 518; Almet v. Leeper, 48 Mo. 319; Woolfolk v. Kemper, 31 Mo.App. 421; Turner v. Knight, 46 Mo. 95; McDermat v. Strong, 4 Johns. Ch. 690; Humphreys v. Milling Co., 98 Mo. 542. (b) J. D. Sicher is confessed to be insolvent. If it be conceded for the purpose of the proposition that Brown and F. E. Sicher were also insolvent (which fact was not shown) yet there remained of those originally and primarily bound on the two notes, two solvent parties, Newkirk and Thompson, who, under the facts disclosed in this case, were not even endorsers, but makers, and liable as such to plaintiff. Parties who are neither payees nor endorsees and whose names appear on the back of notes, are, in the absence of extrinsic evidence, presumed to be makers. Perry v. Barrett, 18 Mo. 140; Seymour v. Farrell, 51 Mo. 95; Mammon v. Hartman, 51 Mo. 168; Cohn v. Dutton, 60 Mo. 297; Chaffee v. Railroad, 64 Mo. 193; Semple v. Turner, 65 Mo. 695; Bank v. Dunklin, 29 Mo.App. 442; Schmidt Malting Co. v. Miller, 38 Mo.App. 251; Butler v. Gambs, 1 Mo.App. 466; Boyer v. Boogher, 11 Mo.App. 130. (5) The court erred in not allowing the sureties on the bond a credit for the amount of the depreciation and loss on the value of the mortgaged property after condition broken and which arose from the negligence of the plaintiff in not realizing on the primary security it held and controlled. (a) The appellants, as sureties, on paying the debt, being entitled to receive the securities held by the bank; it results that the plaintiff's relation to the mortgaged property, in equity, was that of trustee for the benefit of all concerned, including appellants. Bank v. Young, 43 N.H. 460; Brandt on Suretyship and Guaranty [1 Ed.], sec. 384, and cases cited; Ibid. sec. 387; Phares v. Barber, 49 Ill. 370; Hayes v. Ward, 4 Johnson Chan. 130. This being the case, plaintiff will be held to the care and diligence of a trustee in dealing with the trust estate. A trustee is responsible for negligence arising from acts, whether of omission or commission, passive conduct and all laches resulting in loss. 2 Perry on Trusts [2 Ed.], 845, 847; 1 Ibid. 438, 440, 441; Noff's Appeal, 57 Pa. St. 91; King v. Talbot, 40 N.Y. 76; 2 Pomeroy's Equity, secs. 1062. 1066, 1067, 1070; Meyers v. Meyers, 98 Mo. 262; Booker v. Armstrong, 93 Mo. 49; Atterberry v. McDuffee, 31 Mo.App. 603; Taylor v. Hite, 61 Mo. 142; Merritt v. Merritt, 62 Mo. 150. (b) After condition broken the mortgagee in a chattel mortgage is regarded as absolute owner. Robinson v. Campbell, 8 Mo. 365; Williams v. Rorer, 7 Mo. 556; Lacy v. Wathen, 36 Mo. 320; Dean v. Davis, 12 Mo. 112; Pace v. Pierce, 49 Mo. 393; Bowers v. Benson, 57 Mo. 26; State ex rel. v. Adams, 76 Mo. 605.

Jackson & Montgomery for respondents.

(1) There was no error in refusing to permit the witness, Shirk to testify as to statements made by Thompson. The evidence was hear-say and not being part of the res gestoe the agency could not be shown by the admissions of Thompson. Mechem on Agency, sec. 99. There was no variance between the notes as pleaded and as offered in evidence. And if there had been, appellant could only have taken advantage of it in the manner pointed out by statutes. Revised Statutes, 1889, secs. 2096, 2097; Fisher v. Max, 44 Mo. 40; Meyer v. Chambers, 68 Mo. 626. (2) The evidence does not bear out the claim of respondent as to usury. The receipt of commissions for discounting a note by an agent does not make the note usurious. 3 Parsons on Contract [7 Ed.], pp. 144, 145. There was no evidence that the parties charged to have received the alleged bonus were agents for any other person than the defendant Sicher. (3) Respondent, as a foreign corporation, had a right to deal in commercial paper, notwithstanding sections 4190 and 4192, Revised Statutes, 1879, were in force at the time. Long v. Long, 79 Mo. 644. (4) The petition sufficiently alleges the execution of the notes, their purchase by respondent and the default in the payment thereof, the execution of the bond and breaches, etc. The bond is copied in the petition in hoec verboe and it contains a full recital of all the facts leading up to the execution and this is sufficient. Bliss on Code Pleading, secs. 307, 316, 210; Joseph v. Holt, 37 Cal. 253; Prindle v. Carruthers, 15 N.Y. 426; Glenny v. Hutchins, 4 How. Pr. 99; Roberts v. Goode, 36 N.Y. 410; Edmonson v. Philip, 73 Mo. 59; Bateson v. Clark, 37 Mo. 24; State ex rel. v. Bush, 77 Mo. 586; State ex rel. v. Williams, 77 Mo. 467. The appellants cannot take advantage of it even if it was objectionable. All the facts requisite to constitute a full and complete compliance are clearly inferable from the pleading in its entirety, and defendant went to trial upon the petition thereby waiving his objection. State ex rel. v. Williams, 77 Mo, 467; Hurt v. Hahn, 61 Mo. 497; Ryan v. Pratt, 39 Mo. 290. (5) No privity of contract is necessary to be shown, and no consideration. The bond sued upon is a direct covenant to pay these notes and plaintiff's remedy upon it was complete when it became the owner of the notes. Ham v. Hill, 29 Mo. 277; Rowsey v. Lynch, 61 Mo. 562; Burnside v. Fetzner, 63 Mo. 110; Moore v. Damon, 4 Mo.App. 111; Sturgess v. Crum, 29 Mo.App. 644; Sedgwick on Damages, sec. 304, p. 166. The case of Manny v. Frazier, 27 Mo. 419, cited by appellant, has been overruled. Meyers v. Lowell, 44 Mo. 329; Rogers v. Gosnell, 58 Mo. 590; Rogers v. Gosnell, 51 Mo. 466; Cross v. Blodgett, 64 Mo. 452; Heim v. Vogel, 69 Mo. 529; Fitzgerald v. Barker, 70 Mo. 687. (6) Plaintiff's proper forum was in a court of equity. It was not necessary for plaintiff to show it has exhausted the remedy at law or that Newkirk and Thompson were insolvent, it being shown that the original maker, Brown, and payee, Sicher, of the notes were insolvent. Sheldon upon Subrogation, secs. 160, 161, 162, 188 and 198, and the other authorities cited by appellants, only hold that where a bond or other security is given to indemnify a surety simply, a creditor cannot have recourse thereon until the surety is shown insolvent. Heim v. Vogel, 69 Mo. 635; Fitzgerald v. Barker, 70 Mo. 687; Crawford v. Edwards, 33 Mich. 360; Jones on Mortgages, sec. 741, 742; Kinsey v. McDearman, 5 Cold. (Tenn.) 396; McMullen v. Bank, 32 Ind. 14; Sheldon on Subrogation, sec. 102; Horner v. Bank, 7 Conn. 486; Moses v. Muraytroyd, 1 Johns. Ch. 228; Russell v. Clark, 5 Cranch 97; Story's Equity [12 Ed.] sec. 502; Carpenter v. Bowen, 42 Miss. 54. (7) Forbearance or delay of the creditor towards the debtor, without any notice to proceed by the surety, does not release the surety. Rucker v. Robinson, 36 Mo. 155; McCune v. Belt, 38 Mo. 292; Headlee v. Jones, 43 Mo. 237; Hosea v. Rowley, 57 Mo. 358; Stillwell v. Aaron, 69 Mo. 541; Ins. Co. v. Havell, 83 Mo. 28. (8) And the same rule applies in the case at bar, as is shown by the authorities hereinafter cited. There is no positive duty incumbent on the creditor to prosecute measures of active diligence against the debtor, and therefore mere delay on his part does not amount to laches. ...