Bank of Mountain View v. Winebrenner

• Citation: 189 S.W.2d 429
• Decision Date: 28 August 1945
• Docket Number: 6498
• Parties: BANK OF MOUNTAIN VIEW v. WINEBRENNER et al
• Court: Court of Appeal of Missouri (US)

189 S.W.2d 429

BANK OF MOUNTAIN VIEW v. WINEBRENNER et al

No. 6498

Court of Appeals of Missouri, Springfield

August 28, 1945

'Not to be published in State Reports.'

Wm. D Roberts, of West Plains, for appellant.

A. W Landis, of West Plains, and Embry & Embry, of California, for respondents.

OPINION

BLAIR

A rehearing was granted in this case, after an opinion was written by me at the October Term, 1944, of this Court. The case was argued at the March Term, 1945, of this Court, and again was assigned to me. I have not changed the opinion I had at the October Term, 1944, and now reproduce that opinion, without the use of quotation marks.

This was a suit on a note. Certain of the defendants in the original suit filed their pleas in abatement. The jury found for those defendants on such pleas in abatement. After unsuccessful motions for new trial, the bank (plaintiff) has appealed. While the bank is appellant and such defendants are respondents in this Court, the parties will hereafter be referred to as plaintiff and defendants, as below.

The controversy is whether or not the note sued on was the only and original obligation of defendants, or whether a certain note signed by defendants between September 1 and September 12, 1939, was the real contract between plaintiff and defendants, and whether the obligation of defendants was several or joint. If joint, each of the defendants was liable for the face of the note sued on, and the pleas in abatement should not have been sustained. If said obligation was several, each of the defendants was only liable for his pro rata share, and the note actually given constituted a cause of action not sued on in this case, and the pleas in abatement were properly sustained.

It seems that, on and after September 1, 1939, each of the answering defendants, and others, signed a note payable six months after date, with eight per cent interest, to the order of the Mountain View Live Stock Market for $ 1,500, endorsed on the back thereof in the name of the payee by 'P. M Ritchie, Chairman of the Board of Trustees.' It is the contention of plaintiff that this note was put up and merely used as collateral, with other property, to the note in suit, which, on its face, was a regular six months' note at eight per cent interest of the Mountain View Walker Auction Club, by Wm. Winebrenner, manager, and provided that there was attached thereto as collateral security 'one note $ 400.00, one $ 196.66 and one $ 1500.00.'

There is no controversy, as we understand the case, that the $ 1,500 note, described in the note sued on, is the $ 1,500 note signed by about seventeen individual members of the Mountain View Live Stock Market between September 1, 1939, and September 12, 1939, and that such Market is the same organization as the Mountain View Walker Auction Club, regardless of the differences in names, or when or why such name was changed. Nor is it disputed that it was contemplated that the members of the Auction Club expected to incorporate with shares in said to be formed corporation, in accordance with units each held in the Auction Club, and formerly held in the Mountain View Live Stock Market. Nor is it in controversy that such incorporation not having been effected, as yet, the individuals doing business as a Club, are liable as partners, if at all.

With the underbrush thus out of the way, the question for us to determine is whether or not the trial court properly permitted the jury to determine whether the defendants were liable on a note sued on jointly, or whether they were liable, if at all, on the several note, dated September 1, 1939. If the case was properly submitted to the jury on this issue, under sufficient evidence, the judgment should be affirmed, if there was no other error; and, if we conclude that defendants were liable jointly, the judgment should be reversed and the cause remanded with directions to try the case on its merits, regardless of other questions in the record.

Plaintiff has made a number of assignments of error, but it does not seem necessary to consider many of them. In fact, we think the appeal can be sufficiently disposed of by consideration of one assignment.

Was the knowledge of the cashier, and possibly the president, interested in the proceeds of the note of September 1 to September 12, 1939, knowledge of the Bank? If this question cannot be answered in favor of the judgments rendered by the jury, its verdict and the judgments thereon should be reversed, regardless of any other question in the case. We do not say this is all of the questions raised on this record, but, if that question should be answered in the negative, we feel that we would be entirely safe in reversing the judgment below and remanding the case for trial on its merits.

Was it proper for the jury to hear all that took place between P. M. Ritchie, who was cashier of plaintiff at the time the $ 1,500 note of September 1, 1939, was prepared and signed by the members of the Mountain View Live Stock Market? Ritchie testified that the individual members of the Mountain View Live Stock Market were willing to sign a note, where each member would be liable only for his share, and not willing to sign a joint note, whereby each member would be liable for the whole of the note. Winebrenner testified that, when the Mountain View Live Stock Market note for $ 1,500 was presented to plaintiff, the then cashier of plaintiff (Ritchie himself) stated to Winebrenner, who presented it for the Mountain View Walker Auction Club, that the Bank Examiner would not permit the bank to take a several note (Record, page 46) and that he thereupon executed to the bank the $ 1,500 joint note in suit, and it was Winebrenner's definite understanding with such cashier that the liability was under the several note and not the joint note.

The note of September 1, 1939 (Exhibit 1) was for $ 1,500 and provided that 'if and when it becomes necessary for the signers of this note to pay off, each shall be liable for a pro rata portion of the amount due on the note in the same ratio as units held compare to the total amount of units outstanding.'

As Exhibit 1 concededly was not signed by all unit holders of the Mountain View Live Stock Market, and further provided that if the signers thereof should 'not pay their portion, then and in that case the remainder of the signers of this note shall share as above stated in the payment of this portion,' it is manifest that Exhibit 1 did not carry an agreement of all of the unit holders of the Mountain View Live Stock Market to pay to said Market $ 1,500 in any event. The note of September 1, 1939, was for less than $ 1,500, while there is no controversy that such Mountain View Walker Auction Club owed plaintiff the sum of $ 1,500 or was given total credit for that amount.

There was abundant testimony admitted, if properly admitted, showing that Ritchie agreed with the signers of Exhibit 1, the note of September 1, 1939, that they would only be liable severally, and there was some evidence that N. L. Landrum, president of plaintiff bank, also knew that the signers of such Exhibit 1 should only be liable severally. In other words, Ritchie, cashier, and possibly Landrum, president, unit holders of the Mountain View Live Stock Market, or its successor, the Mountain View Auction Club, according to defendant's testimony, permitted the Mountain View Auction Club to have a credit for $ 1,500 on a note not worth $ 1,500.

If Ritchie, and possibly Landrum, purportedly representing the bank, permitted the bank to take Exhibit 1 (the note of September 1, to Mountain View Live Stock Market) and thereby caused the bank to take a note for less than $ 1,500 for a credit of $ 1,500 at said bank, they were doing the bank a distinct disservice. We do not think that, when an officer of a bank permits another concern, in which he is interested financially, to take advantage of the bank in that way, the bank should be held to have the knowledge that such officer has. In other words, in such circumstances, such person is a representative of such concern and not a representative of the bank. His interests are then adverse to the bank.

In the former opinion, I cited Bank of Noel v. Chamberlain, 14 S.W.2d 48, and quoted from the opinion of Judge Cox, then Presiding Judge, at page 50 of said volume, wherein he had said: 'The conceded facts are that Kistler, as an officer and stockholder of the Jersey company, was an adverse party to the bank in securing the loan. Also that knowledge of Kistler, relative to the organization of the Jersey company corporation, was acquired by him when acting in his own private interest for purposes of his own which had no connection with the bank of which he was cashier. Under such circumstances, it is well settled that his knowledge of any facts so secured is not imputable to the bank of which he was cashier.'

Judge Cox then cited a number of cases, among which was Merchants National Bank of Kansas City v. Lovitt, 114 Mo. 519, 525, 21 S.W. 825, 35 Am.St.Rep. 770. I have examined that case very carefully and it holds that, as Dickinson, who was vice-president and an officer of the bank, had knowledge of the frailty of the instrument presented to the bank for discount, his knowledge was not imputed to the bank, because his interests were adverse to the interests of the bank.

Among other things, Black, then Chief Justice of the Supreme Court of Missouri, in 21 S.W. at page 826, said: 'The law is well settled that when an officer of a corporation is dealing with it in his individual interest the corporation is not chargeable with his uncommunicated knowledge of facts derogatory to his title to the property which is the subject of the transaction.'

Judge Black,...