American Forest Co. v. Hall

• Decision Date: 09 July 1919
• Citation: 216 S.W. 740,279 Mo. 643
• Parties: AMERICAN FOREST COMPANY, Appellant, v. JOSEPHINE R. HALL et al., Administrators of Estate of JOHN C. HALL
• Court: Missouri Supreme Court

216 S.W. 740

279 Mo. 643

AMERICAN FOREST COMPANY, Appellant, v. JOSEPHINE R. HALL et al., Administrators of Estate of JOHN C. HALL

Supreme Court of Missouri, First Division

July 9, 1919

Rehearing Denied 279 Mo. 643 at 660.

Appeal from Jackson Circuit Court. -- Hon. Harris Robinson, Judge.

Affirmed.

George H. Williams and John A. Hope for appellant.

(1) The pledgees, had they so elected, could have proceeded in their own names. 3 R. C. L. sec. 202, p. 994; 21 R. C. L. secs. 29 and 31, pp. 666 to 669; Logan v. Smith, 62 Mo. 455; White v. Phelps 100 Am. Dec. (Minn.) 190. (2) But having the consent of the pledgees, plaintiff American Forest Company, pledgor, also had the right to proceed in its name alone. Under the facts and circumstances above stated, this action was and is properly prosecuted in the name of American Forest Company as sole plaintiff. (a) Plaintiff is a trustee with respect to the rights of its pledgees of the notes. And the Code expressly sanctions the prosecution of such an action in the name of the trustee without joining the beneficiary. Sec. 1730, R. S. 1909. West Plains Bank v Edwards, 84 Mo.App. 469; Springfield to use. v. Weaver, 137 Mo. 670. The same principle is applied in Beattie v. Lett, 28 Mo. 596; Guerney v. Moore, 131 Mo. 668; Carter v. Butler, 264 Mo. 325. (b) Section 1730, is said to have been copied from the New York Code, Harrigan v. Webb, 49 Mo.App. 504. The Court of Appeals of New York has held that the pledgor may maintain the suit if there is such recognition of him by the pledgee as will "protect the defendant upon a recovery against him from a subsequent action by the assignor." Hays v. Hathorn, 74 N.Y. 504. Under the circumstances, payment by the defendants of any judgment rendered against them in this action would bar any subsequent action by the pledgees. And this is as far as defendants have any right to inquire. Jolly v. Huebler, 132 Mo.App. 686; Hutchings v. Reinhalter, 23 R. I. 520; Dyer v. Sebrell, 135 Cal. 598; Greene v. McAuley, 70 Kan. 607. (c) It is the universal rule, independent of the above statutory provision (Sec. 1730), that the pledgor, having as in this case the acquiescence of the pledgee, may sue in his own name for the benefit of himself and his pledgee, and recovery should not be denied on the ground that the note is pledged or that only the pledgee can sue. 21 R. C. L. sec. 31, p. 669; 3 R. C. L. sec. 200, p. 991; 2 Daniel on Negotiable Instruments (6 Ed.), secs. 1181a, 1191, 1192, 1200 and 1201. (d) The following further authorities support our contention that plaintiff can proceed in its own name: Nicolay v. Fritschle, 40 Mo. 67; Barber v. Straub, 111 Mo.App. 585; Hovey v. Sebring, 24 Mich. 232; Titonic Bank v. Bagley, 68 Me. 250; McCallum v. Driggs, 35 Fla. 288; Jump v. Leon, 192 Mass. 513; Fay v. Hunt, 190 Mass. 378; Lowell v. Bickford, 201 Mass. 545.

Chas. H. Winston for respondents.

(1) The payee of the notes cannot sue on the notes already indorsed and transferred by such payee, nor can such payee lawfully collect the notes. R. S. 1909, secs. 10001, 10002, 10003, 10021, 10027 and 10174; Overall v. Ellis, 32 Mo. 327. The indorsements and delivery of the notes had the same effect to transfer the entire legal title to the assignees, and left nothing in the assignor but a right to demand an accounting upon certain contingencies. Overall, Admr. v. Ellis, 32 Mo. 327, 38 Mo. 209; Lee v. Turner, 89 Mo. 489; Neuhoff v. O'Reilly, 93 Mo. 169; Turner v. Hoyle, 95 Mo. 346; Keim v. Vette, 167 Mo. 399; Wright Inv. Co. v. Frisco Realty Co., 178 Mo. 80. (2) Neither the probate court, nor the circuit court on appeal, has any power or jurisdiction to allow any equitable claim or demand of assignor or pledgor or indorser of the four notes held by the bank and trust company whether as assignees, pledgees or indorsees of said notes; nor has the probate court, or the circuit court on appeal, any jurisdiction to allow appellant any conditional right or claim or demand before the happening of the condition, if any, upon which such conditional right or claim or demand shall have become absolute, if at all, and so be a legal right, claim or demand, and not a mere equitable or conditional right, claim or demand. Tenny v. Lasley, 80 Mo. 664; Stevens v. Stevens, 172 Mo. 37; R. S. 1909, sec 10174; Jeffers v. Oliver, 5 Mo. 433; Langham to use of Ortley v. Lebarge, 6 Mo. 355; Davis v. Christy, 8 Mo. 570; Wooden v. Butler, 10 Mo. 718; Webb v. Morgan, 14 Mo. 430; Boeka v. Nuella, 28 Mo. 180; Beattie v. Lett, 28 Mo. 596; Bennet v. Pound, 28 Mo. 598; Brady v. Chandler, 31 Mo. 28; Hutchings v. Weems, 35 Mo. 285; Simmons v. Belt, 35 Mo. 461; Thomas v. Wash, 1 Mo. 665. "Our statute of assignments clearly requires the legal owner to sue in his own name." Boeka v. Nuella, 28 Mo. 180; Beattie v. Lett, 28 Mo. 596; Bennet v. Pound, 28 Mo. 598; Simmons v. Belt, 35 Mo. 461.

GRAVES, J. Blair, P. J., concurs; Bond, J., concurs in result; Woodson, J., not sitting.

OPINION

GRAVES, J.

There is a mass of record in this case, and a brief for respondent (we mean designated as Statement, Brief and Argument) of 198 pages. The pertinent facts are within a small compass, as also are the legal questions involved.

On December 1, 1910, the Chicot County Cotton-Alfalfa Farm Company (a Missouri corporation) made and executed four notes of $ 15,000 each to the "American Forest Company" (a New York corporation). These four notes were secured by deed of trust on some lands in the State of Arkansas. The maker of these notes, as appears on the face thereof, was the Farm Company supra. On the back of each note appeared the names of Wallace Estill, John C. Hall and Odon Guitar, Jr. We take it from the record that such was the condition of the paper when delivered to the American Forest Company. The notes were due respectively in three, four, five and six years. Before the maturity of either of said notes, the American Forest Company indorsed the note due in three years, by signing its name on the back thereof, and delivered the same to the Broadway Bank, of St. Louis, as collateral security for its note to such bank for some $ 15,000. In like manner the other three were indorsed and delivered to the St. Louis Union Trust Company, as collateral security to a note of large proportions held by that company, and executed by the American Forest Company.

There is a long history preceding the giving of the four $ 15,000 notes, signed as aforesaid, but most of it is immaterial to the real issues here. So far as material (if at all) it will be left for the proper points in the opinion. The notes upon their face referred to the deed of trust aforesaid, and the deed of trust contained a provision as follows:

"It is expressly agreed and understood that failure to pay the interest upon said notes, or any of them, annually, when due and continuance in such default for a period of thirty days, shall cause all of said notes to become immediately due and payable, though not then due by the tenor, terms and effect thereof."

The deed of trust, in describing the four notes which it was given to secure, says:

"Whereas, the said Chicot Co. Cotton-Alfalfa Farm Company is indebted to the said party of the third part, the American Forest Company, in the sum of sixty thousand dollars, evidenced by four certain negotiable promissory notes of even date herewith for the sum of fifteen thousand dollars each, and due and payable respectively in three, four, five and six years from their date, with interest at the rate of five per cent per annum from date until paid, interest being payable upon said notes annually, and each of said notes being indorsed by Wallace Estill, of Estill, Mo., Odon Guitar, Jr., of St. Louis, Mo., and John C. Hall, of Kansas City, Mo., and all of said notes being payable at the office of said American Forest Company in St. Louis, Mo."

Both the notes and the deed of trust referred to in the face of the notes placed the signers upon back thereof in the capacity of indorsers, as we formerly understood that term.

July 30, 1913, John C. Hall died intestate, and his widow and son were made the administrators of his estate in the Jackson County Probate Court. On July 20, 1914, the American Forest Company presented a demand against the John C. Hall estate, in which it sought an allowance of $ 57,919.73 in its behalf, alleging that:

"The said John C. Hall during his lifetime, to-wit, on the first day of December, 1910, made, executed and delivered, at the city of Kansas City, Missouri, for value received, his four certain negotiable promissory notes for the sum of fifteen thousand dollars each, payable on or before three, four, five and six years, respectively, after said December 1, 1910, to the order of American Forest Company, with interest at the rate of five per cent per annum from date; copies of which said notes are hereto attached and marked Exhibits 'A,' 'B,' 'C' and 'D,' respectively."

And further pleading the deed of trust the said demand avers the maturity of all the notes, and the ownership of the notes in form as follows:

"And this claimant avers that the recitals in said deed of trust were made a part of each of the several notes hereinbefore referred to, as made, executed and delivered by said John C Hall, by recital and reference in each of said notes to said deed of trust, as will more fully appear by the copies of said notes hereto attached.

"Claimant further avers that it still is the legal holder and owner of all said notes.

"Claimant further avers that the first of the aforesaid notes is overdue and unpaid, according to the face and reading thereof, and the three remaining notes have been duly and legally declared due by the undersigned as the holder thereof, because of the failure...