Bank of Monette v. Hale

• Decision Date: 10 June 1912
• Citation: 149 S.W. 845
• Parties: BANK OF MONETTE v. HALE.
• Court: Arkansas Supreme Court

Page 845

149 S.W. 845

BANK OF MONETTE v. HALE.

Supreme Court of Arkansas.

June 10, 1912.

Appeal from Circuit Court, Craighead County; W. J. Driver, Judge.

Action by the Bank of Monette against G. D. Hale. From a judgment for defendant, plaintiff appeals. Reversed and remanded.

Appellant sued appellee for $375 upon a negotiable promissory note executed by him on April 1, 1909, payable to his order one year after date, with interest, which was indorsed and on the next day transferred and delivered to appellant for a valuable consideration. Appellee admitted the execution and indorsement of the note, denied that it was transferred to appellant for a valuable consideration, or at all, and that it became the owner thereof, and alleged that the president of appellant bank, J. D. Blankenship, solicited appellee to subscribe for five shares of the capital stock of the Mississippi Valley Life Insurance Company, at the time representing that the shares were of the par value of $100 each, and, as an inducement for him to execute the note, agreed that, when the shares of stock were delivered, if appellee did not want them, he would take the shares of stock and pay the note; that he had no knowledge, nor means of knowledge, of the value of said capital stock; that, relying upon the representations of the said Blankenship as to the par value of said capital stock in said insurance company, and upon his (the said Blankenship's) agreement to take said stock when it should be tendered to said defendant, if he (the defendant) did not care to receive said stock, he executed said note; that the said note was obtained through fraud and misrepresentation, and that said Blankenship at the time of its execution was a party to said representation, and made the same, and had full knowledge of all the facts under which said note was executed. It was alleged, further, that the consideration for the note had failed; that no shares of capital stock were ever delivered to him; that he has been informed that the par value of the capital stock of the insurance company was $25 per share, and not $100 per share, and that immediately upon ascertaining that fact he had informed Mr. Blankenship, the president of the bank, in the presence of the cashier of the Bank of Monette, that he would not receive five shares, of the value of $25 per share, in satisfaction of the agreement entered into for the five shares of stock of $100 par value per share; that at no time has any stock, or shares of the capital stock, of said life insurance company been delivered or tendered to this defendant in payment of said note; that said representations made by the said Blankenship were made with the knowledge that the par value of the capital stock of said company was $25 per share, and not $100 per share.

The evidence tends to show that the agents of the life insurance company talked up the sale of its stock to J. E. Blankenship, president of the bank, and that he and the cashier thereof bought some of the stock, paying $75 a share therefor, at the time understanding that it was worth $100 per share, and that Blankenship represented to several others that it was a good investment, appellee among the number, and recommended that they subscribe for some of the stock. Mr. Blankenship stated that he paid the life insurance company $750 for 10 shares of the stock, of the par value of $25 each. He understood, when he bought it, that it was worth $75 per share, and it was represented to him that it would be worth $100 per share shortly, and he thought at the time that he was getting $100 shares, instead of $25 shares, for his $75; that he so understood it until his stock was delivered. He considered the investment a good thing, and had some of his friends take some of the stock. He introduced the life insurance agents to appellee and several others, and said: "I told him that I had a notion to make him the proposition that if he was dissatisfied with his stock, when the note came due, that I believed I would take the stock off his hands and pay the note. I told him: `I believe I will be safe in making you that proposition." I never heard of it after that, and never had the stock directed to me, and thought no more of it. Q. Were you present at the Bank of Monette the morning after this stock was sold to Mr. Hale, and did Mr. Hale come to the bank and talk to you and Mr. Ashby about this note? A. * * * I have no recollection of being present at the bank at that time." He said, further, that he had never written to the insurance company anything about the stock, and had sold his stock to a broker at Little Rock for $40 a share. He had no interest in the sale of the stock to appellee. He represented it as being a good investment, and thought it was at the time, and had nothing whatever to do with the buying by the bank of the note sued on.

Appellee testified that he was a farmer, had worked as a carpenter, and had worked a couple of years for Mr. Blankenship and his partner in their store selling goods; that he had been knowing Mr. Blankenship, president of the bank, for 25 years, and had done business with the bank. He also knew the cashier, Mr. U. O. Ashby. He acknowledged the execution of the note sued on, and stated the circumstances under which it was given, as follows: "I went down town one night, and Mr. Blankenship commenced on me to sell me stock in the Mississippi Valley Life Insurance Company, and we talked 15 or 20 minutes, maybe half an hour. I told him that I did not want the stock and was not able to buy it. We talked on, and he told me he had $750 worth, and Mr. Ashby had $750 worth, and his boys had all taken stock, and Tom Pollard and John Pollard had taken stock. He said it was a money-making thing. He wanted me to take it, and I said I was not able. He said, if I was not, that I could give a note, and when the note came due he would take care of it, if I did not want the stock. He said he wished he had more of it, and that he had $750 worth, and did not care if he had $1,500 of it. He said: `If you will take it, and are not satisfied with it, I will take it off your hands.' He said it was worth $75 then, and in three weeks it will be $100. I still would not take it, and he went off and got the agent. They talked some little bit, and then had this note drawed up. Mr. Blankenship said: `Sign it. You need not be uneasy.' I signed it. Q. Why did you sign it? A. They had it drawed up, and I thought I was getting $100 shares for $75. Q. Did you believe it? A. I could not tell. I thought it was, because they told me. Q. If you had not believed that, would you have signed the note? A. No, sir. Q. Who made the note? A. The man that was selling the stock. Mr. Blankenship made me acquainted with him. Q. What did he do with the note, do you know? A. I think he turned the note over to Mr. Blankenship after it was signed. I don't know what he did with it." He also stated that, on the morning after the note was signed, he found out they were only getting $25 shares for $75, which was not satisfactory, and "I went to town, and Mr. Blankenship and Mr. Ashby were in the bank. I went in and told them that the shares were only $25, and they said, `Yes.' I told them it was misrepresented to me, and I did not want it. I said: `You can pay that note and take it off my hands.' They said it had been misrepresented to them. I asked where the men were, and they said at Manila. I said I would not pay for it. Q. That was the next morning? A. Yes, sir. Q. When? A. I don't remember the time. Q. Did either of them say they owned the note? A. Not at that time. Q. Neither said they had bought it? A. No. Q. How long after that before they told you they had bought it? A. I guess a week or two. Some mail came to the office, and I would not take it out. I told the postmaster, if it was from the insurance company, I didn't want it. I said: `You can turn it over to Mr. Blankenship.' I also told Mr. Blankenship that the stock had...