Bank of Mountain View v. Winebrenner

• Citation: 195 S.W.2d 486,355 Mo. 79
• Decision Date: 10 June 1946
• Docket Number: 39716
• Parties: Bank of Mountain View, a Corporation, Appellant, v. Wm. Winebrenner et al
• Court: United States State Supreme Court of Missouri

195 S.W.2d 486

355 Mo. 79

Bank of Mountain View, a Corporation, Appellant, v. Wm. Winebrenner et al

No. 39716

Supreme Court of Missouri

June 10, 1946

Appeal from Howell Circuit Court; Hon. Gordon Dorris Judge.

Reversed and remanded.

Wm D. Roberts for appellant.

(1) The notes in question are separate and independent contracts and they so show on their face. (2) The terms "collateral" and "collateral security" are words used to designate a pledge of negotiable paper or other separate obligation, such as shares of stock and the like, attached to another contract to guarantee its performance. Words and Phrases (1st Series), p. 1248; Words and Phrases (2nd Series), p. 753; Words and Phrases (3rd Series), p. 138; 11 C.J., p. 961. (3) "When a note is delivered by the payor to the payee of the principal note, as security for such note, it is necessary pledging it for the payment of the latter note. . . . Collateral security is something additional to the principal obligation. The words necessarily indicate something additional to the principal obligation and running along with it as security therefor." Winfrew v. Strother, 128 S.W. 849; Central Missouri Trust Co. v. Smith, 247 S.W. 241; Amick v. Empire Trust Co., 296 S.W. 793. (4) The note signed by the defendants in their individual names being given as collateral security for the payment of the note sued on, is a complete entity or independent contract, and plaintiff bank has the right to rely on the unconditional promise to pay the note sued on according to its terms irrespective of the collateral security note, and the provisions of the latter note can not be read into the promise to pay as provided in the note which it secures which is the note sued on. The Missouri rule is stated in 8 C.J., p. 200, sec. 331; Kennedy v. Broderick, 216 F. 137; 132 C.C.A. 381, L.R.A. 1915B, 472; Southern Missouri Trust Co. v. Crow, 272 S.W. 1040. (5) The admission of oral testimony to prove that the provisions of the said collateral security note were, or should be, read into the promise to pay as provided in the note sued on was a violation of the parol evidence rule. First Natl. Bank & Trust Co. v. Limpp, 288 S.W. 957; Mutual Life of Illinois v. McKinnis, 15 S.W.2d 935. (6) Plaintiff bank being the holder and owner of the note sued on had the right to sue thereon, irrespective of the collateral note securing same. Southern Missouri Trust Co. v. Crow, 272 S.W. 1040; Allen v. Dermott, 80 Mo. 56; Columbian Natl. Life Ins. Co. v. Dubinsky, 160 S.W.2d 727. (7) Where the written contract is a promissory note, it is presumed to embody the entire agreement of the parties and parol evidence of any prior or contemporaneous agreement is inadmissible to show that the maker was not to pay the note according to its terms. Fischman-Harris Realty Co. v. Kleine, 82 S.W.2d 605; Farmers' Bank of Weatherby v. Redman, 24 S.W.2d 235; Hackett v. Dennison, 19 S.W.2d 541. (8) The defendants having admitted the execution and delivery of the note sued on and that there was a valuable consideration therefor, should not be permitted to show by oral testimony that prior to or at the time of such execution and delivery, it was agreed that they need not or would not pay the note sued on according to its terms. Main Street Bank v. Ennis, 7 S.W.2d 391; Hackett v. Dennison, supra; First Natl. Bank & Trust Co. v. Limpp, supra; Fischman-Harris Realty Co. v. Kleine, supra; Farmers' State Bank of Greentop v. Sloop, 200 S.W. 304. (9) The oral testimony of the defendants as to prior and contemporaneous agreements nullifying and substituting a new contract for the contract sued on and tending to vary, modify and change the terms thereof being inadmissible, the court erred in permitting counsel for the defendants in his opening statement to the jury to state and detail what the evidence would be as to such prior and contemporaneous oral agreements. Shields v. Kansas City Rys. Co., 264 S.W. 890; Buck v. St. Louis Union Trust Co., 185 S.W. 208. (10) The oral testimony of the defendants of prior and contemporaneous agreements between them and defendant P.M. Ritchie which tended to and did vary, change, modify and nullify the terms of the collateral security note (Defendants' Exhibit 1) was inadmissible and the admission of this testimony was in violation of the parol evidence rule. Bros v. Stancliff, 240 S.W. 1090; Stephens v. Bell, 106 S.W.2d 19. (11) The defendants being members of an unincorporated association organized and doing business for profit were in legal effect partners, and as such are liable for the debts of the association contracted in the trade name of the association. The note sued on was contracted in the trade name of defendants' association and the defendants are liable on said note jointly and severally. Ferris v. Thaw, 72 Mo. 446; Richardson v. Pitts, 71 Mo. 128; Stone v. Guth, 102 S.W.2d 738.

A. W. Landis and Embry & Embry for respondents Wm. Winebrenner, A. C. Pottle, W. E. Johnson, P. M. Ritchie, J. L. Bay, J. E. Shandy and V. E. Clemmons.

(1) Even if the individually signed note be said not to be the real and only contract between the parties, the two notes were delivered to appellant bank at the same time to accomplish a given purpose together they constituted but one contract and both should be read together to arrive at the intention of, and contract between, the paries regardless of references to the individually signed note as "collateral." Advertising Co. v. Publishing Co., 146 Mo.App. 90; Farmers Bank v. Schmidt, 223 Mo.App. 1098, 25 S.W.2d 525.

(2) If the note set out at pages 28-29 of the Abstract, as distinguished from the note sued on, was the real contract between the parties, or if the two notes together constituted the contract, then, because of the provisions of the note set out at pages 28-29 of the Abstract for a prorata liability, and liability of the respondents was several and not joint. Western Wheel Scraper Co. v. Locklin, 58 N.W. 1117; Buster v. Fletcher, 125 P. 226. (3) And, therefore, the defendants could not be sued jointly. 10 C.J.S., p. 1181, sec. 555; 13 C.J., p. 574, sec. 556; 47 C.J., p. 67; Haseltine v. Messmore, 184 Mo. 298; 1 Houts Mo. Pl. & Pr., sec. 10. (4) Appellant being the original payee of the note sued on was not a holder in due course. Dickherber v. Turnbull, 31 S.W.2d 234. (5) All of such evidence and, therefore, the portions of the opening statement made by counsel for respondents, which the appellant complains of, was admissible to show that the "several" note, and not the note sued on, was the real contract and that the note sued on was given for the accommodation of the appellant bank, or that the two notes together constituted the contract so that the note sued on would have to be construed in the light of the other note. Farmers Bank v. Schmidt, 223 Mo.App. 1098, 25 S.W.2d 525; Dickherber v. Turnbull, 31 S.W.2d 234; Massa v. Huehnerhoff, 59 S.W.2d 723; Natl. Bank of Commerce v. Laughlin, 305 Mo. 8, 264 S.W. 706. (6) If taking the view most favorable to appellant, there was any ambiguity as to what the contract (consisting of the two instruments) really was, then oral evidence was properly admitted to aid in the interpretation of the contract. Linseed Co. v. Paint Co., 190 Mo.App. 1; Linseed Co. v. Paint Co., 273 Mo. 433; Paramore v. Campbell, 245 Mo. 287.

Hyde, J. All concur except Gantt, J., not sitting.

OPINION

HYDE

This case was transferred from the Springfield Court of Appeals upon dissent of one of the Judges. [Bank of Mountain View v. Winebrenner, 189 S.W.2d 429.] Reference is made to the opinion filed in the Court of Appeals for a full statement of the pleadings and evidence.

Plaintiff sued on the following note:

Plaintiff's Exhibit "A".

"$ 1500.00.

Mountain View, Mo., Sept. 12, 1939.

"Six months after date, for value received, I, we, or either of us, promise to pay to the order of the

BANK OF MOUNTAIN VIEW, at its office in

Mountain View, Mo.

Fifteen Hundred and no/100 Dollars

with interest at the rate of eight per cent, per annum, from date until paid.

"Interest payable annually, and defaulting interest to draw same rate of interest as principal. The makers, endorsers and guarantors of this note guarantee to pay all costs of collecting, including a reasonable attorney's fee if suit is brought hereon. We hereby severally waive presentment of payment, notice of non-payment, protest and notice of protest, and diligence in bringing suit against any party hereto, and sureties consent that time of payment may be extended without notice hereof. To secure the payment of this or any other liability or liabilities of ours to said Bank, due or to become due, or that may hereafter be contracted we have hereto attached as collateral security, the following: one note $ 400.00, one $ 196.66 and one $ 1500.00. All dividends and maturing coupons pending life of this loan shall be paid to holder of this note.

"The above collateral has a market value of $ 2000.00. If in the judgment of the holder of this note, said collateral depreciates in value, the undersigned agrees to deliver when demanded additional security to the satisfaction of said holder; otherwise, this note shall mature at once. Any assignment or transfer of this note, or other obligations herein provided for, shall carry with it the said collateral securities and all rights under this agreement.

"And we hereby authorize his assigns, or the legal holder hereof, on default of payment of note or any part hereof, according to the terms hereof, to sell said collateral or any part thereof, at public or private sale and with or without notice, and by such sale the pledger's right of redemption shall be extinguished.

"MOUNTAIN VIEW WALKER AUCTION CLUB,

"P.O. Address .

By Wm....