National Bank of Commerce in St. Louis v. Laughlin

• Decision Date: 31 July 1924
• Docket Number: (No. 24093.)
• Parties: NATIONAL. BANK OF COMMERCE IN ST. LOUIS v. LAUGHLIN.
• Court: Missouri Supreme Court

264 S.W. 706

NATIONAL. BANK OF COMMERCE IN ST. LOUIS v. LAUGHLIN.

(No. 24093.)

Supreme Court of Missouri, Division No. 1.

July 31, 1924.

Appeal from Circuit Court, St. Charles County; B. B. Woolfolk, Judge.

Action by the National Bank of Commerce in St. Louis against Henry D. Laughlin, in which defendant filed a counterclaim. Judgment for defendant on his counterclaim, and plaintiff appeals. Modified and affirmed.

Geo. L. Edwards, of Kansas City, and Charles J. Daudt, of St. Charles, for appellant.

Abbott, Fauntleroy, Cullen & Edwards and Rassieur & Long, all of St. Louis, for respondent.

GRAVES, J.

In its origin (taking plaintiff's petition as the origin), this suit apparently involved a simple suit upon a note for $3,000, dated April 24, 1918, payable to National Bank of Commerce, and signed by Henry D. Laughlin. Said note was due and payable on July 23, 1918, and bore interest from such date at 8 per cent. Defendant pleaded by way of answer and counterclaim, which were met by a reply. The simple suit upon the $3,000 note, supra, finally resulted in a verdict of the jury, in these Words:

"We, the jury, find for the defendant on plaintiff's cause of action; and we further find for the defendant on defendant's counterclaim, and assess the amount of his recovery thereon in the sum of $8,381.65 with interest at 6 per cent. Interest, $2,011.59. Total, $10,393.24."

Defendant's answer and counterclaim contain a wealth of detail, but the transactions between the parties to this suit seem to justify the pleading, and there is evidence, upon the part of defendant, tending to show all the well-pleaded facts in his answer and counterclaim. The answer and counterclaim are in these words "(1) Now comes the defendant, and by leave of court, files this his amended answer and counterclaim.

"Defendant denies all and singular the allegations in plaintiff's petition contained, and prays to be hence dismissed with his costs.

"Second Defense.

"(2) And for another and further answer and defense to plaintiff's petition, the defendant says that the note sued on was by him made for the accommodation of the plaintiff and for no other purpose; that it was and is wholly without consideration, and was never given for value received, and only to aid the bank, at its request, to collect the debt of Robert H. Kern to said bank; that no consideration ever passed from plaintiff to defendant, and said note has no consideration to support it. Wherefore, defendant says the plaintiff is not entitled to recover on it.

"Third Defense.

"(3) For another and further answer and defense. defendant says that, prior to February 6, 1908, the National Bank of Commerce, hereinafter called the bank, had loaned to one Robert H. Kern, large sums of money, and at that time, held various notes against the said Kern, which had previously aggregated nearly one hundred thousand ($100,000.00) dollars, but then stood at a less amount; that said Kern was not at that date solvent, and many of the notes held by the plaintiff were not adequately secured by collateral, or otherwise, and the official bank examiners were criticising said bank and its president, and insisting that said notes be either adequately secured or deducted from the assets of the bank; that at that time, the said Kern had title to, and owned, about two thousand (2,000) acres of land in Macon county, Mo., which was incumbered by a deed of trust for about twenty-five thousand ($25,000.00) dollars, and the value of said land over and above said incumbrance was in excess of twenty-five thousand ($25,000.00) dollars.

"(4) That a short time prior to February 6, 1908, B. F. Edwards, who was at that time, and for a long time prior and subsequent to said date, the president of the bank, approached defendant and informed him of the state of affairs between the bank and said Kern, as above stated, and requested the said defendant to take, in his name, for the use of the bank, a note for ten thousand ($10,000.00) dollars, signed by Kern and secured by second deed of trust on the two thousand (2.000) acres of land in Macon county, owned by Kern, and requested that he, the said defendant for the accommodation of said bank, indorse his name on the back of said note and deliver it to the bank, so that said bank could hold same as collateral to secure some of the notes of said Kern, held by it.

"(5) That at said time, the defendant covenanted, represented, and warranted that said Kern owned said land in Macon county; that the same was worth a sum largely in excess of the said second deed of trust for ten thousand ($10,000.00) dollars, and that the said bank could and would make the whole sum of ten thousand ($10,000.00) dollars, and, accumulating interest thereon, out of the second deed of trust on said land, and that the said bank and said Edwards covenanted, warranted, agreed, and guaranteed that the deed of trust was ample to pay the ten thousand ($10,000.00) dollar note, and that the said bank and the said Edwards would warrant and guarantee said state of facts and indemnify the defendant against any loss, whatever, on account of the indorsement and delivery of said note, and further covenanted, guaranteed, and warranted that the indebtedness of Kern to the bank, to secure which said ten thousand ($10,000.00) dollar note should be attached as collateral, would be placed prior to, and ahead of, any other indebtedness of Kern, and be first paid by moneys derived from Kern's properties, and particularly, by money received from the sale of the Kern lands, upon which the deed of trust was to be given.

"(6) Defendant says that, for the sole purpose of accommodating the plaintiff, and in consideration of the bank and Edwards undertaking as aforesaid, the defendant agreed to _permit the note to be taken in his name, secured as aforesaid, and thereupon, the plaintiff caused to be prepared a promissory note. dated February 6, 1908, in the sum of ten thousand ($10,000.00) dollars, and to secure its payment, did cause to be prepared a deed of trust covering all of said lands belonging to Kern in Macon county, to wit: Eighteen hundred fifty-one and 75/100 (1851.75) acres, and thereupon, on the conditions aforesaid, and at the request of the bank, and for its accommodation (but not for the accommodation or at the request of said Kern or any other person), the defendant did indorse and deliver said note for ten thousand ($10,000.00) dollars, to the bank, upon the conditions aforesaid, and relying solely upon the undertakings of the plaintiff and said Edwards, as above set forth; that said bank, having thus obtained the possession of said note, caused said deed of trust to be filed for record in the office of the recorder of deeds for Macon county, and it became the second incumbrance, subject to the prior incumbrance of twenty-six thousand ($26,000.00) dollars, on all of said lands.

"(7) Plaintiff says that after the delivery of the said note for ten thousand ($10,000.00) dollars, the defendant, at the request of said bank, and for its accommodation, executed in lieu thereof, other notes in varying amounts, and at divers times, and defendant avers that the note sued upon is part of the original transaction evidenced by the note dated February 6, 1908, the details of which will be more specifically set forth hereafter.

"(8) Defendant further states that, on or about the 10th. day of August, 1908, while the bank was holding said note, the defendant, at the request of said bank, executed and delivered to said bank a quitclaim deed purporting to release six hundred eighty-two (682) acres of the land covered by the said second deed of trust, in order to enable the bank to cooperate with said Kern, and convert the said land so released into cash or secured notes, by which the debt of Kern, for which the ten thousand ($10,000.00) dollars was held as collateral, could be paid or otherwise secured, and the note of February 6, 1908, released and satisfied.

"(9) Defendant states that, some time prior to October 27, 1910, the plaintiff approached the defendant, and stated to him that Kern was refinancing his affairs; that he had exchanged about four hundred (400) acres of his land in Macon county, Mo., for two hundred (200) acres of land in Cameron county, Tex.; that the Cameron county land was of the value of thirty thousand ($30,000.00) dollars; that he, the said Kern, had about twelve hundred (1.200) acres of Macon county land still in his name, and that he had arranged to borrow thirty-five thousand ($35,000.00) dollars on first deed of trust thereon, and to give to defendant, for the use of the bank, a note for ten thousand ($10,000.00) dollars, secured by second deed of trust on said twelve hundred (1,200) acres in Macon county, and he, the said Kern, had agreed to give the bank a first deed of trust for twenty thousand ($20,000.00) dollars on the two hundred (200) acres in Cameron county, Tex., and that, if defendant would make a full release of the deed of trust dated February 6, 1908, said Kern would execute a new note to defendant, for the use of the bank, for ten thousand ($10,000.00) dollars, in lieu of the note of February 6, 1008, and that, if defendant would indorse and deliver said new ten thousand ($10.000.00) dollar note to the bank, for its accommodation, the bank would hold the Kern note for twenty thousand ($20,000.00) dollars, secured by the Cameron county, Tex., land, as first collateral to secure said new note of ten thousand ($10.000.00) dollars, and that, as soon as any sums were derived from either the Macon county or Cameron county, Tex., deeds of trust, they would be applied as a credit on the new ten thousand ($10,000.00) dollar note, upon which defendant's name would appear as an indorser.

"(10) The said bank and the said Edwards then and there stated, covenanted, warranted, and guaranteed that the second deed of trust on the Macon county land would cover twelve hundred (1.200)...