Union Nat'l Bank v. Hunt

• Decision Date: 31 October 1882
• Citation: 76 Mo. 439
• Parties: THE UNION NATIONAL BANK v. HUNT, Appellant.
• Court: Missouri Supreme Court

76 Mo. 439

THE UNION NATIONAL BANK

v.HUNT, Appellant.

Supreme Court of Missouri.

October Term, 1882.

Appeal from St. Louis Court of Appeals.

REVERSED.

This is an action on a promissory note made by the defendant, Theodore Hunt, and indorsed by Charles L. Hunt. There is an allegation that the indorser waived demand and notice. As to this the jury found for the indorser, and as to his liability nothing more need be said. The petition alleges that the defendant Theodore Hunt purchased of Aull & Pollard one hundred shares of stock in the bank of the corporation plaintiff, at eighty cents on the dollar, in consideration of which, a note at four months for $8,000, made by Theodore and indorsed by Charles Hunt, was given to Aull & Pollard, and the stock transferred to Theodore Hunt; and the note was assigned to plaintiff for value, before maturity, by Aull & Pollard; that at the maturity of that note, defendants requested an extension, and in consideration thereof executed the note in suit, which is dated June 4th, 1873, and is for the same amount and time as the note of which it is a renewal.

The defendants admit the execution and indorsement of the note in suit, and that plaintiff was a banking corporation under the laws of the United States; and deny the other allegations of the petition, and set up two distinct grounds of affirmative defense. First, they say that the plaintiff had purchased seven hundred and eighty shares of the stock of its own corporation, in violation of the act of Congress, which prohibits such a bank to purchase or hold its own shares, or to make a loan upon them, except such security or purchase shall be necessary to prevent loss of a debt previously contracted in good faith; and that, having and illegally holding these shares, plaintiff contrived that one hundred of these shares, should be regarded as the property of Theodore Hunt, and that he should borrow from the bank $8,000 on such shares, and deposit them as collateral security for his notes; and the note sued on was a renewal of the note given to carry out this illegal transaction, and represents a discount made by the bank on the security of its own shares, in violation of law. The second affirmative defense is, that the note was obtained by false and fraudulent representations, and that the consideration has failed. The particulars of this defense are set out in the answer with great detail.

The testimony of Charles Hunt was to the effect that he is the father of his co-defendant, Theodore Hunt; that he was on terms of intimacy with Aull, the president, and with Pollard, the vice-president of the plaintiff, and with some of the directors; that he kept his account in plaintiff's bank; that his son Theodore, a man of about thirty years of age, had a separate estate, owned five shares in plaintiff, and kept his account in plaintiff's bank; that Pollard, in the presence of Aull, represented to witness that the bank had been compelled to purchase from the estate of O'Fallon & Hatch, in bankruptcy, a large number of its own shares; O'Fallon & Hatch being very heavily indebted to the bank. Pollard said that he was desirous to sell these shares to friends of the directory; and mentioned two or three men who would take one hundred shares each. The bank, Pollard said, was in a flourishing condition, making money; its shares were selling at eighty-two, and were worth a hundred, and would soon be sought for at that price. Pollard requested witness to get his son Theodore to take one hundred shares, out of friendship for the officers of the bank; the dividends would pay the interest. Pollard said that Theodore would never be called upon to pay the note; that if he did not wish to hold the shares, they would find some one to take them off his hands. This conversation was repeated by witness to Theodore, word for word, without advising him in regard to the matter. Witness told his son that if he desired to comply with Pollard's request, he, witness, would indorse the note. From his intimate friendship with Pollard, witness believed that he was not deceiving him in these statements. The note was executed and indorsed; the certificates of stock were assigned by Theodore in blank, and the note and stock were rolled up together and put away in the vaults of the bank by Aull & Pollard, with the remark that if Theodore wanted the stock at any time for sixty or ninety days, to raise money on it, he could have it.

The testimony of Theodore Hunt corroborated that of his father. He said that he relied implicitly on Pollard's statement; that he did not want the stock, and had no idea of buying it, except to accommodate his friend Pollard; that the statement that the stock would soon be worth a hundred did not influence him, except so far as it went to show that there was no risk. When the first note matured, he had a considerable sum in plaintiff bank, and Pollard asked him whether he would pay anything on the note. Theodore said of course he would not. Pollard said, “All right. I thought perhaps you might wish to do so.” The note was then renewed by the note in suit. Theodore paid accrued interest by his checks on plaintiff. He did this anticipating a dividend. The dividend was credited to him. He voted the stock on one occasion, when the question was as to the bank's going into liquidation. The bank failed in October, 1873, just before the maturity of the note sued on. Pollard died about a month after the failure.

There was evidence in the case from which a jury might infer that this stock, at the time of the...