Bank v. Richmond

• Citation: 139 S.W. 352,235 Mo. 532
• Parties: MILAN BANK, Appellant, v. HENRY RICHMOND
• Decision Date: 01 July 1911
• Court: United States State Supreme Court of Missouri

139 S.W. 352

235 Mo. 532

MILAN BANK, Appellant, v. HENRY RICHMOND

Supreme Court of Missouri, First Division

July 1, 1911

Appeal from Macon Circuit Court. -- Hon. Nat M. Shelton, Judge.

Reversed and remanded.

Calfee & Painter, Harber & Knight, Guthrie & Franklin for appellant.

(1) There is no averment in the petition that the plaintiff had a right to believe the alleged statements or that he acted prudently in believing them. McNealey v. Baldridge, 106 Mo.App. 11; Funding Co. v. Heskett, 125 Mo.App 531; Davis v. Ins. Co., 81 Mo.App. 267; Cahn v Reid, 18 Mo.App. 115; Lovelace v. Suter, 93 Mo.App. 438; Bank v. Trust Co., 179 Mo. 648. (2) The evidence fails to show any ground or reason authorizing the defendant, Richmond, to trust the alleged representations but shows his complete opportunity to make investigations. (3) The evidence fails to show any wilful fraud on the part of the plaintiff. Green v. Warren, 83 Mo.App. 574; Bank v. Trust Co., 179 Mo. 648. (4) Defendant's instructions are erroneous and prejudicial. Authorities supra; Mires v. Summerville, 85 Mo.App. 183. Slaughter v. Gerson, 13 Wall. 379; Andrus v. Smelting & Refining Co., 130 U.S. 643; Farnsworth v. Daffner, 142 U.S. 43; Mabardy v. McHugh, 202 Mass. 148, 132 Am. St. 484; Chase v. Rusk, 90 Mo.App. 25; Remmers v. Remmers, 217 Mo. 541; Ins. Co. v. Wolfson, 124 Mo.App. 286; Text-Book Co. v. Lewis, 130 Mo.App. 158; Laclede Co. v. Tie Co., 185 Mo. 25; Cummings v. Kent, 44 Oh. St. 92, 58 Am. Rep. 796; Gridley v. Dole, 4 N.Y. 486. Mansur-Tibbets Co. v. Ritchie, 143 Mo. 587; Norman v. Oberle, 90 Mo. 666; Muenks v. Bunch, 90 Mo. 500; Henry v. Buddecke, 81 Mo.App. 360; Redpath v. Lawrence, 48 Mo.App. 428.

A. W. Mullins, Wilson & Clapp, Wattenbarger & Bingham for respondents.

(1) The plaintiff offered no objection to the defendant's instructions, neither did it object to the court's giving the instructions. It is therefore precluded from objecting to them in the appellate court. Merely excepting to the action of the trial court in giving them is not sufficient. Sheets v. Ins. Co., 226 Mo. 613; State v. Reed, 128 S.W. 4. (2) Defendant's instructions properly declare the law. Brokerage Co. v. Gates, 190 Mo. 391; Bank v. Gay, 114 Mo. 208; Nauman v. Oberle, 90 Mo. 666; Chase v. Rusk, 90 Mo.App. 25; Miller v. Rankin, 136 Mo.App. 430; Cottrill v. Krum, 100 Mo. 397; Brolaski v. Carr, 127 Mo.App. 286; Leach v. Bond, 129 Mo.App. 315; White v. Reitz, 129 Mo.App. 307; Lucher v. Keeney, 98 Mo.App. 394. (3) The evidence discloses that McCallister, the cashier, had charge of the fiscal affairs of the Bank, and had the power to pass on all notes taken by the Bank. His acts were therefore the acts of the Bank and appellant is bound thereby. Bank v. Dick, 73 Mo.App. 354; Young v. Hudson, 99 Mo. 107; Bank v. Hughlett, 84 Mo.App. 268; Powers v. Woolfolk, 132 Mo.App. 354. (4) The evidence of the defendant that he relied on the representations of McCallister were admissible. 6 Ency. Ev. 69; Ackman v. Jasper, 179 Pa. St. 463; Baker v. Mathew, 115 N.W. 15. (5) Evidence as to the general reputation of McCallister was not admissible. He had been contradicted, not impeached. Berryman v. Cox, 73 Mo.App. 67; Browning v. Railroad, 118 Mo.App. 449. (6) The court did not err in giving instructions. This transaction being conceived in fraud, the bank can not now be heard to say that the agreement so made with Moran and Ford was merged in the note and thereby exclude this evidence and deny us of our defense. As between the parties to the note, want of consideration or fraud can always be set up as a defense to defeat a recovery on the note. Culp & Co. v. Powell, 68 Mo.App. 238; Remmers v. Remmers, 217 Mo. 541. Moran and Ford could have defeated a recovery on the note sued on in excess of $ 250 as to each of them -- and this the bank conceded by the dismissal of this suit against them; and if the note was invalid as to them by reason of fraud in obtaining their signatures to the note, then Henry Richmond, being a surety, could not have enforced contribution from them as co-sureties, and it would have operated as a release as to him as surety on the note. The question in this case is fraud on the part of plaintiff bank and a note so obtained can not be enforced. This is not a question of varying the terms of a note or a written contract. If fraud is attempted to be perpetrated of course such fraud is never set out in any provision of the note. A note is simply an instrument for the absolute and unconditional payment of money, but the right to defend against it on the grounds of fraud has never been denied by the courts of this State. The plaintiff does not admit that it made any of the representations charged in defendant's answer, but positively denies each and all of them. The jury believed the testimony of Henry Richmond, Joe P. Moran and Alec Ford and returned into court the verdict for defendant. If Moran and Ford were told by McCallister and Orear that they would only be liable on the note for $ 250 each and signed the note with that express understanding, then a court of equity in a proper proceeding brought by them would reform the contract. Hence this evidence was admissible in the suit by the Bank against Richmond, who signed with the express understanding that Moran and Ford would sign the note and thus become jointly liable with him to the extent of whatever property they owned, not for $ 250 only.

BLAIR, C. Brown, C., concurs.

OPINION

BLAIR, C.

In January, 1906, the Milan Bank sued respondent on a note for seven thousand dollars signed by respondent and four others. The answer admitted the bank's incorporation and that respondent signed the note, but averred that he did so as surety for his son and was induced to sign by false representations of the bank officials to the effect that (1) the principal had put up collateral notes of the value of $ 3800, and that among these was one note for $ 3585, "which was good;" (2) the bank had taken a mortgage on seventy-six head of steers which they knew belonged to the principal; (3) the note sued on would also be signed before delivery by Amon Richmond, Joe P. Moran and J. A. Ford, and (4) that Moran was the owner of three hundred and twenty acres of land unincumbered.

The answer negatives the truth of these representations, avers that the signatures to the $ 3585 note were forged, that the seventy-six head of steers were not the property of the principal, that Moran owned but two hundred acres of land and that was incumbered, and Moran otherwise indebted, and that though Moran and Ford signed as sureties the note in suit, yet they did so by reason of the bank's agreement to hold them liable for but $ 250 each.

In support of his defense respondent detailed the following conversation with the officers of the bank:

"He [McCallister, the cashier] was in the front part of the bank. He was not inside of the rail, but on the outside. We went back to Orear's office; when we went back there he asked me or told me that Henry is overdrawn in the bank, and is behind seven thousand dollars. He has got two notes in here, five thousand dollars with some payment on it, and we would put the notes together and would make a seven-thousand-dollar note, and he said one of those notes you had ought to know something about. He said, 'Your brother Amon will sign it, Alex. Ford and Joe Moran.' He said, 'You know what Amon and Alex are worth, and Joe Moran,' he said, 'has got three hundred and twenty acres of land all clear.' I said, 'Joe, I could not sign a note like that. I could not begin to pay it without selling my home, I don't want to do that.' He said, 'Henry has got thirty-eight hundred dollars of notes here, and one is on the Peters Commission Company. This company is as good as gold, and I am ready to say that the note is all right.' Mr. Orear spoke up and said, 'That will leave thirty-two hundred dollars.' Joe then said, 'We have got a mortgage on seventy-six head of two-year-old steers we know belong to Henry, and will release the mortgage as soon as the note is signed up and delivered to the bank,' and I said, 'Well, Joe, if that is all right I reckon I can sign it,' and he said, 'That is just the way it is. I will give you ninety or one hundred and twenty days for the notes to come due, and turn his cattle and it will put him right on his feet.' I said 'I will go and see Henry.' I went and seen Henry, and found him on the east side of the square. I talked with him a little bit, about that note."

On returning to the bank with his son, respondent without further ado signed the note in suit.

There was testimony to the effect that Moran and Ford signed with an "understanding" that they would be responsible for no greater sum than two hundred and fifty dollars each. This "understanding" was not based upon any direct promise of the bank officials to that effect, but rather upon statements to that effect made by Ford and Moran themselves to the bank officials.

The names of the payers on the three thousand five hundred and eighty-five dollar note mentioned in the answer are indicated by the evidence to have been forged by W. H. Richmond. There is no evidence that the persons whose names appeared on this note were insolvent.

The cattle referred to in the answer were sold by W. H. Richmond to one McCullough in March, 1905, and simultaneously repurchased under an agreement whereby McCullough was to retain possession of the cattle until October, 1905, when he was to be paid the purchase price and one dollar per month per head in addition thereto. Richmond paid McCullough one hundred dollars down on this account. It does not directly appear whether McCullough had paid Richmond for the cattle or whether the contract was merely one for pasturage. One Ryan,...