Apperson v. Security State Bank

• Decision Date: 07 December 1974
• Docket Number: No. 47381,47381
• Citation: 215 Kan. 724,528 P.2d 1211
• Parties: Boyd APPERSON, Individually, et al., Appellees and Cross-Appellants, v. SECURITY STATE BANK, a corporation, Appellant, Floyd Dotson and Joe R. Bailey, Defendants.
• Court: Kansas Supreme Court

Page 1211

528 P.2d 1211

215 Kan. 724

Boyd APPERSON, Individually, et al., Appellees and Cross-Appellants, v. SECURITY STATE BANK, a corporation, Appellant, Floyd Dotson and Joe R. Bailey, Defendants.

No. 47381.

Supreme Court of Kansas.

Dec. 7, 1974.

Syllabus by the Court

1. A party may not assign as error the giving or failure to give an instruction unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the ground of his objection, unless the action taken by the court is clearly erroneous.

2. Orders entered at pretrial conference have the full force of any other orders of the court and, unless modified to prevent manifest injustice, they control the subsequent course of the action.

3. K.S.A. 62-250(b) was enacted to facilitate the orderly administration of justice. It permits the trial to proceed to the conclusion of the case and authorizes the trial judge to reconsider a motion for a directed verdict upon a posttrial motion made for judgment notwithstanding the verdict.

4. On appellate review of a trial court's ruling on a motion for a directed verdict, an appellate court is governed by the same standards as those applicable to the trial court's consideration of the motion.

5. An agreement to do or the doing of that which a person is already bound to do, does not constitute a sufficient consideration for a new promise.

6. Consent to an assignment is not necessary to bind a debtor with notice.

7. Damages claimed which were not the proximate result of the breach of a contract and those which are remote, contingent and speculative in character cannot serve to support a judgment.

8. In an action brought by cattle owners against a creditor of the operator of a feed lot, wherein their cattle were being fed, for damages suffered to their cattle alleged to have been caused by the creditor's breach of an oral contract to relend money to the operator or create a special fund for the purpose of purchasing feed for their cattle upon receipt of assigned payments due the operator from the cattle owners, the record is examined and it is held: (1) The oral contract made under circumstances set forth in the opinion is unenforceable for lack of evidence showing consideration therefore; and (2) the damages sued for are not shown to be the proximate result of the breach of such oral contract.

Forrest E. Short, Fort Scott, argued the cause, and Joel B. Short, Short & Short Fort Scott, was with him on the brief for appellant.

Walter B. Patterson, Fort Scott, argued the cause and was on the brief for appellees and cross-appellants.

KAUL, Justice:

This action stems from a controversy over the application of funds to a payment on a promissory note executed by Joe R. Bailey (defendant) and payable to Security State Bank of Fort Scott (defendant-appellant).

In 1966 defendant Bailey was the operator of a feed lot near Fort Scott, Kansas. In the fall of 1966 Bailey had 4,000 head of cattle in his feed lot, which were costing him $70,000.00 a month to feed. In addition to feed costs, Bailey testified he had expenses for help, equipment and upkeep. He was receiving $50,000.00 a month from the owners of the cattle-in other words, Bailey was losing money at the rate of more than $20,000.00 per month. In the spring of 1966 Bailey became hard pressed to continue his feed lot operations. He had borrowed to the loan limit from the Citizens National Bank of Fort Scott and had other substantial indebtedness. In April 1966 Bailey secured his first loan from defendant Security State Bank (hereafter referred to as Bank). This loan was paid off shortly thereafter. On May 4, 1966, Bailey borrowed $32,282.00 from Bank; signed a six month promissory note (due November 4, 1966) in that amount; and executed a security agreement upon 257 head of cattle which Bailey had previously shown to Floyd Dotson, who was president of Bank. In the early part of September 1966 Bank discovered Bailey did not own 176 head of the cattle covered by the security agreement. Bank confronted Bailey with a demand for immediate payment of the May 4 note. Bailey responded by offering Bank a security interest in a substantial amount of farm machinery, which Bailey claimed he owned free and clear. Dotson, for Bank, inspected the machinery and on Bailey's assurances a new security agreement was executed on September 8, 1966, by which Bailey gave Bank a security interest in the machinery. Thereafter Bank discovered that Bailey did not, in fact, own some of the machinery and, further, the part which he did own was encumbered by a prior security agreement. When Bank made this discovery Bailey was again confronted with a demand for immediate payment of his note. This time Bailey responded by suggesting he could assign certain accounts owed to him by owners who had placed cattle in his feed lot. At this time plaintiffs-appellees had 1,036 head of cattle in Bailey's feed lot. Plaintiffs' cattle were owned one-half by plaintiff Apperson, individually, and one-half by Apperson and his son-in-law, William Langley, doing business as the J & J Cattle Company, a copartnership. For convenience the plaintiffs-appellees will hereafter be referred to as Apperson or plaintiffs. Plaintiffs operated a cattle business and resided near Miami, Oklahoma.

Bailey informed Dotson that he was feeding plaintiffs' cattle under an agreement whereby plaintiffs would pay him $14,000.00 on the first of each month as partial payment against the total feed bill, which was finally to be computed on a basis of twenty-three cents per pound of weight gained by the cattle while they were being fed by Bailey. The $14,000.00 payments were not payments in advance, but were due the first of each month following a month's feeding by Bailey. Plaintiffs' cattle were delivered to Bailey's feed lot in August of 1966 and according to Apperson would have been fed out in January 1967. There is no substantial dispute concerning the arrangements between plaintiffs and Bailey regarding the feeding of the cattle and payments to be made therefore.

The upshot of Bank's last confrontation with Bailey was that Bank drew the two identical assignments in question-one assigning the payments to be made to Bailey by Apperson, individually, and the other assigning payments to be made by Langley. The assignments were executed by Bailey on October 25, 1966. Bank prepared and appended to the assignments a paragraph entitled 'Acceptance Of Assignment.' Thereafter Bank mailed the assignments to plaintiffs' bank in Miami, Oklahoma.

Omitting the acknowledgement and notarization of Bailey's signature, the assignment of the Apperson feed bill by Bailey and the acknowledgement of the notice and acceptance by Apperson reads as follows:

'ACCEPTANCE

'Existing and future loans to me shall be considered as revolving credit funds and the assignment made herein is collateral security for all indebtedness now existing or which may hereafter exist between me and said Bank. Boyd Apperson, Welch, Okla., is hereby directed to make all payments jointly to Joe R. Bailey and Security State Bank of Fort Scott, Kansas to be applied Seventy-five Hundred dollars ($7,500.00) due November 1, 1966 and Nine Thousand Five hundred eighty-seven an 23/100 dollars ($9,587.23), for which Joe R. Bailey is indebted to bank at this date and to be applied to loan made subsequent to this date by him, and balance due December 1, 1966. Witness my hand this 25th day of October, 1966.

'/s/ Joe R. Bailey

'ACCEPTANCE OF ASSIGNMENT

'Receipt is hereby acknowledged of a signed original of the foregoing assignment; said assignment is accepted this _ _ day of October, 1966, and I agree to abide by the terms of said assignment insofar to make all payments jointly to Joe R. Bailey and Security State Bank of Fort Scott, Kansas and to pay over funds to the above mentioned parties, November 1, 1966 Seventy-five hundred dollars ($7,500.00) and December 1, 1966, Nine Thousand five hundred eighty-seven and 23/100 dollars ($9,587.23), for funds due Joe R. Bailey for feed bills.

'Boyd Apperson'

An identical assignment of the moneys owed by Langley was executed by Bailey and acknowledged and accepted by Langley.

It is to be noted that the total of the sums set out in the two assignments amounted to $34,176.46, which was stipulated to be the amount of Bailey's loan plus interest due on December 1, 1966.

The exact date of signing the acceptances by Apperson and Langley is not shown in the record, but was apparently done on November 7, 1966, after a telephone conversation between Apperson and Dotson. The acceptances were signed before the payments due Bailey on November 1 were made.

On November 7, 1966, checks were written by Apperson and J & J Cattle Company payable to Bank and Bailey in the amount of $7,000.00 each. The checks were delivered to Bank which credited the sum on Bailey's loan reducing it by $14,000.00.

Bank received no part of the December 1 payments which were made directly to Bailey. Sometime early in December Dotson telephoned Apperson and made inquiry concerning the December 1 payments. In this connection Apperson testified:

'I told him I give them to Joe. He wanted to know how come and I told him he didn't do what he agreed on the others and I wasn't going to give him any more money.'

Apperson made several trips to the Bailey feed lot during November and December. Apperson testified that he visited the lot about the middle of December when Bailey told him he was having a hard time getting corn. Apperson observed that Bailey did not have very much corn. On New Year's Day (January 1, 1967) Apperson and Langley returned to the feed lot. They described the cattle as having shrunk, were in poor condition, and on this occasion they also observed that Bailey was out of corn and had very little silage. Following the New Year's Day inspection Apperson and Langley moved their cattle to the Jarboe...