Bank of Noel v. Chamberlain

• Decision Date: 20 February 1929
• Docket Number: No. 4440.,4440.
• Citation: 14 S.W.2d 48
• Parties: BANK OF NOEL v. CHAMBERLAIN.
• Court: Missouri Court of Appeals

14 S.W.2d 48

BANK OF NOEL v. CHAMBERLAIN.

No. 4440.

Springfield Court of Appeals. Missouri.

February 20, 1929.

Appeal from Circuit Court, Jasper County; S. W. Bates, Judge.

Action by the Bank of Noel against S. G. Chamberlain. Judgment for defendant, and plaintiff appeals. Reversed and remanded.

Ray Bond, of Joplin, and Leo H. Johnson, of Neosho, for appellant.

J. A. Sturgis, of Pineville, for respondent.

COX, P. J.

Action by plaintiff, the payee in a note executed by the McDonald County Jersey Company, a corporation, to plaintiff. The action against defendant is based on the allegation that the maker of the note is insolvent, and that defendant was a stockholder in the Jersey company, and had not paid for his stock, and was for that reason liable to plaintiff as a creditor of said corporation. The trial was by the court, who found for defendant.

It will not be necessary to review the evidence in detail. The contention of plaintiff was to the effect that while the McDonald County Jersey Company received a charter and was technically a legal corporation, yet, as a matter of fact, it was in reality only a paper corporation, and the capital stock of the incorporators was never in fact paid for by the stockholders. This was denied by defendant, but at the close of the evidence counsel for plaintiff and defendant agreed that there were but two questions for the court to determine, to wit: (1) "Is the plaintiff precluded from recovering in this case on account of any knowledge which the court may find that Mr. Kistler, Cashier of the plaintiff bank when the note sued on was made, had, relative to the methods of organizing the McDonald County Jersey Company?" (2) "Does the fact that a certain chattel mortgage taken by plaintiff from said McDonald County Jersey Company after the note was executed was released thereafter affect plaintiff's right to recover?"

The first question submitted for the determination of the court impliedly assumes that there was something irregular in the organization of the McDonald County Jersey Company as a corporation that would render defendant liable, unless the plaintiff had notice of the irregularity at or before the date it loaned money to the said corporation and took from it the note in suit. It also assumes that, if plaintiff had notice, such notice came to it by reason of the knowledge possessed by Mr. Kistler, the cashier of plaintiff bank. The fact, that knowledge of the bank is to be confined to knowledge possessed by Mr. Kistler, the cashier of the bank, is in effect an admission that none of the other officers of the bank had such knowledge.

There was no evidence tending to prove that any officer of the bank, except its cashier, had any knowledge at all relative to the organization of the McDonald County Jersey Company as a corporation. This probably accounts for the agreement of counsel that notice to plaintiff, if it had notice, must depend on the effect to be given to the knowledge acquired by Mr. Kistler, the cashier, as to the formation of the McDonald County Jersey Company corporation.

The evidence shows that Mr. Kistler attended a meeting of the stockholders of the McDonald County Jersey Company at about the time or immediately after its incorporation, and became a stockholder of the corporation, and was elected its treasurer, and knew all about the manner in which the corporation was formed and the manner in which the stock in this corporation was pretended to be paid for. Mr. Kistler, as treasurer of the Jersey cattle company corporation, represented that company in securing the loan from the bank, and the note in suit was signed "McDonald County Jersey Company, By: R. W. Tener, President, A. W. Kistler, Treasurer."

At the close of the testimony, the court made and filed a finding of facts as follows:

"This is an action brought by the Bank of Noel as the owner and holder of a certain promissory note made by the McDonald County Jersey Company, a corporation, to the plaintiff bank on October 24th, 1922, in the sum of $2,000.00. This suit is brought against the defendant, S. G. Chamberlain, on his unpaid stock subscription as a stockholder in the said McDonald County Jersey Company.

"There is no fraud charged in this case. Counsel for both plaintiff and defendant by their agreement at the conclusion of the trial in this court, submitted but two questions for determination by the court:

"1. Is the plaintiff precluded from recovering in the case on account of any knowledge which the court may find that Mr. Kistler, cashier of the plaintiff bank when the note sued on was made, had, relative to the methods of organizing the McDonald County Jersey Company?

"2. Does the fact that a certain chattel mortgage, taken by plaintiff from said McDonald County Jersey Company after the note was executed, was released thereafter, affect plaintiff's right to recover?

"The court finds the facts to be that A. W. Kistler was cashier of the plaintiff bank on October 24th, 1922; that he had full knowledge of all the facts and circumstances surrounding the organization of the McDonald County Jersey Company; that his knowledge was the knowledge of the bank, and he acted for and in behalf of the bank in his official capacity in making the loan to the aforesaid Jersey Company; that same was approved by the Board of Directors...