Bank of Dearborn v. Gabbert

• Decision Date: 04 May 1925
• Docket Number: No. 15310.,15310.
• Citation: 274 S.W. 861
• Parties: BANK OF DEARBORN v. GABBERT et al.
• Court: Missouri Court of Appeals

274 S.W. 861

BANK OF DEARBORN v. GABBERT et al.

No. 15310.

Kansas City Court of Appeals. Missouri.

May 4, 1925.

Certiorari Denied July 3, 1925.

Appeal from Circuit Court, Clinton County; W. H. Utz, Special Judge.

"Not to be officially published."

Action by the Bank of Dearborn against D. C. Gabbert, R. H. Bruce, and others. From judgment for defendants Bruce and another, plaintiff appeals. Reversed and remanded.

W. S. Herndon, of Plattsburg, James H. Hull, of Platte City, and Charles W. German, of Kansas City, for appellant.

Eastin & McNeely, of St. Joseph, and Daniel H. Frost, of Plattsburg, for respondents.

ARNOLD, J.

This is a suit to recover upon a promissory note and separate written contract in the sum of $4,100. The petition is in two counts; the first being upon the promissory note and the other upon a contract signed by all the defendants.

Plaintiff is a corporate institution authorized to do a banking business at Dearborn, Platte county, Mo., but at the date of the trial was in the hands of the State Finance Department. Defendant L. C. Gabbert, an attorney of St. Joseph, Mo., was a director in the Bank of Dearborn, plaintiff herein; defendant Bruce is a merchant owning and operating a store at Dearborn; and defendant Nichols is a farmer residing at Dearborn. Defendant W. H. Gabbert, also a resident of Dearborn, was cashier of said bank until its failure on March 10, 1922.

The facts disclosed are that one Frank C. Ives, on August 11, 1919, and for a long time prior thereto, was the owner and publisher of the Dearborn Democrat, a weekly newspaper published in Dearborn. During the months of July and August, 1919, defendant L. C. Gabbert, with certain citizens of Dearborn, including defendants W. H. Gabbert, Bruce, and Nichols, organized a community club for the purpose of advancing the best interests of the town, and of which L. C. Gabbert was the president. It appears that Ives, the owner of the newspaper, was not friendly to the club, and L. C. Gabbert suggested to the other defendants herein the idea of purchasing the newspaper. Gabbert then entered into negotiations with Ives, with the result that the newspaper plant was purchased on August 11, 1919, for the sum of $4,100. In order to raise this amount, a note was executed in favor of the Bank of Dearborn, and the full price of $4,100 was paid to Frank C. Ives and his wife, the bank furnishing the money, and taking therefor the note involved in this suit, secured by a chattel mortgage in which all of the personal property of the newspaper was described, both note and mortgage being signed by all the defendants herein. None of the defendants being familiar with the newspaper business, it became necessary to interest in the enterprise some one acquainted with such business. It appears that it was chiefly through the efforts of L. C. Gabbert that one E. R. Bayley, a student in the department of journalism in Missouri University, was induced to undertake the operation of the paper, and that he took charge thereof, by purchase, about August 21, 1919, and operated the same for a period of about two years.

In payment of the purchase price Bayley executed his promissory note payable to the Bank of Dearborn for $4,100. This note, together with the note and chattel mortgage executed by defendants, as above stated, were pinned together and held as one transaction by the bank. Bayley, being unable to reduce the principal of said note by any payments, and failing to keep up the interest thereon, was advised by L. C. Gabbert to seek other fields and to surrender the newspaper. Bayley refused to surrender possession of the paper unless he were protected in the payment of his said note at the' bank and also all outstanding indebtedness of the newspaper incurred by him. A contract signed by Bayley and all the defendants was entered into on August 14, 1921, wherein it was recited that defendants assumed and agreed to pay Bayley's said note and interest and any and all outstanding claims against the Dearborn Democrat.

After the execution of said contract, Bayley surrendered the newspaper, and thereafter asserted no further claim or interest therein. Operation of the paper then was attempted by various persons but without success. It appears an attempt was made by L. C. Gabbert to sell the plant, and that this attempt was discussed with defendants Bruce and Nichols, but all efforts to that end failed, the lien of the bank under the chattel mortgage was foreclosed, and the property sold in February or March, 1923, for $250. This amount, together with $287 interest paid by Bayley on August 12, 1920, was duly credited on the note involved herein. Upon the failure of the Bank of Dearborn and the taking over thereof by the state finance commissioner, unsuccessful efforts were made to induce defendants to pay the indebtedness. This suit then was instituted, and the signers of the note and contract were made parties defendant.

Plaintiff asked, and the court refused, a peremptory instruction, and the cause was submitted to the jury, which returned a general verdict in favor of defendants Nichols and Bruce, but failed to make any finding as to the Gabberts. A motion for new trial being unavailing, plaintiff appeals.

The petition charges, in the first count, that defendants by their promissory note dated August 11, 1919, for value received, jointly and severally promised to pay plaintiff, one year after date, the sum of $4,100, with 6 per cent. interest from date; that demand for payment had been made; and that no part of the principal or interest had been paid. The second count charges that on August 11, 1919, one E. R. Bayley made and delivered to plaintiff his promissory note whereby he agreed to pay plaintiff the sum of $4,100, with interest at 8 per cent. per annum, compounded annually; that on October 14, 1921, defendants, for valuable consideration moving from Bayley to defendants, did, in writing, assume and agree to pay the $4,-100 note dated August 14, 1919, made as aforesaid by Bayley, together with accrued interest.

The separate answer of defendants Bruce and Nichols charges that the note described in the first count of the petition was without consideration; that plaintiff knew said defendants were not principals on said note; that they had nothing to do with the purchase of said newspaper, and that their signatures thereto were null and void, and constituted no obligation on their part; that defendant L C. Gabbert concealed from them the true relation of Bayley to said paper, and that plaintiff knew this information had been concealed from said defendants; that long subsequent to the execution of the papers in controversy the plaintiff, with full knowledge that the real owners of the newspaper had assets in excess of an amount sufficient to pay the note sued on in the first count of the petition, negligently and carelessly failed to collect the same; that plaintiff, about March 16, 1922, required of W. H. and L. C. Gabbert, the principals and makers of said note, that they turn over to James...