Garrett v. Bank of Chelsea

• Citation: 241 S.W. 87,211 Mo.App. 238
• Parties: H. C. GARRETT, Respondent, v. BANK OF CHELSEA, Appellant
• Decision Date: 22 May 1922
• Court: Court of Appeals of Kansas

241 S.W. 87

211 Mo.App. 238

H. C. GARRETT, Respondent, v. BANK OF CHELSEA, Appellant

Court of Appeals of Missouri, Kansas City

May 22, 1922

Appeal from the Circuit Court of Jackson County.--Hon. Willard P Hall, Judge.

AFFIRMED.

Judgment affirmed.

J. T Jennings, Watson, Gage & Ess, and S. A. Horton for respondent.

Vern E Thompson and Halbert H. McCluer for appellant.

OPINION

BLAND, J.

This is an action for conversion of corporate stock of the admitted value of $ 2000. The case was tried before the court without the aid of a jury. At the close of all the evidence the court declared the law to be "that plaintiff is entitled to recover the reasonable value of the stock at the time of conversion, November 5, 1919, with six per cent interest from that date." There was a verdict and judgment in favor of plaintiff in the sum of $ 2170 and defendant has appealed.

The facts show that on August 14, 1918, plaintiff at Miami, Oklahoma, executed a promissory note in the sum of $ 1062.50 in favor of the Black Eagle Mining Company of that place and as collateral security for the payment of the note deposited with the mining company 200 shares of stock of that company. These are the shares alleged to have been converted by defendant. On October 15, 1918, the note was renewed for $ 1,000 and the mining company's shares remained deposited with the mining company as security for the payment of the debt. This latter note, which was due ninety days after date, became the property of defendant, the collateral going with it, and on February 19, 1919, plaintiff renewed the note with the defendant agreeing to pay the same on May 15, 1919. The note recites that plaintiff had deposited and pledged with defendant bank as collateral security for the payment of the note said mining shares. The note then provides--

"In the event of the non-payment of this note at maturity said Bank, its President or Cashier, is hereby authorized to use, endorse, collect, transfer, hypothecate, sell or convey said collaterals, or any collaterals substituted for or added to the above, or any part thereof, or cause the same to be done, at public or private sale, with or without notice or demand of any sort, at such place and on such terms as said bank may deem best, and said bank is authorized to purchase any collaterals when sold, and the proceeds of such collection, sale, transfer or hypothecation shall be applied to the payment of this note, together with all protests, damages, interest, costs and charges due upon this note or incurred by reason of its non-payment when due, or in the execution of this power. All collateral held by said bank to secure this note may, after the payment of this note, be applied as herein provided to the payment of any other obligation or indebtedness due by the maker hereof to said bank or the holder of this note. The surplus, if any, after the payment of this note and any other and all indebtedness due by the undersigned to said bank, together with all costs as above stated, shall be paid to the maker of this note. If the proceeds of such collection or sale shall not be sufficient to pay this note, costs and all other indebtedness, the maker agrees on demand to make good the deficit."

On November 5, 1919, this note was paid and surrendered to the plaintiff but defendant refused to surrender the shares of stock, claiming that it had the right to hold the same for other indebtedness due it from plaintiff. This indebtedness consisted of a note dated Chelsea, Oklahoma, August 15, 1918, and provided that on demand after date plaintiff agreed to pay to the defendant the sum of $ 1200 with interest. This note had never been paid.

The answer pleads the provision of the note of February 19, 1919, and that by reason of said note defendant had a right to hold the stock as security for the amount due under the note and also as security "for any and all other indebtedness" due from plaintiff herein to the defendant. The answer also pleads the following statute of the State of Oklahoma--

"A bank has a general lien, dependent on possession, upon all property in his hands belonging to a customer, for the balance due to him from such customer in the course of business."

The answer pleads the fact that there is a $ 1200 note and interest thereon due the defendant and that defendant had a right to hold the collateral deposited as security for said note.

Defendant does not dispute that the bank had no right under the common law to hold the collateral deposited to secure the $ 1000 note as security for the $ 1200 note in the absence of an agreement between the parties that that might be done, or lacking the statute of the State of Oklahoma quoted supra, but maintains that that part of the note that we have italicized shows that it was agreed between the parties that the bank might hold the collateral as security for the $ 1200 note.

We do not think that the entire agreement contained in the $ 1000 note bears out this contention. The clause relied upon by the defendant is not complete within itself but provides that the collateral may be applied "after the payment of this note" "as herein provided." It is apparent that the agreement has to do with the proceeds of the sale of the collateral in case of non-payment of the $ 1000 note in accordance with its terms. The agreement goes on to say that the $ 1000 note shall be first paid, in case of the sale of the collateral, and the "surplus, if any after the payment of this note and any other and all indebtedness due by the undersigned to said bank, . . . shall be paid to the maker of this note." It then provides that if there is not enough money to pay the $ 1000 note and costs and all other indebtedness, "the maker agrees on demand to make good the deficit." The words, "as herein provided" contained in the clause of the note relied upon by the defendant refer to the other...