Banking House of Wilcoxson & Company v. Rood

• Decision Date: 28 January 1896
• Citation: 33 S.W. 816,132 Mo. 256
• Parties: Banking House of Wilcoxson & Company v. Rood, Administratrix, Appellant
• Court: Missouri Supreme Court

33 S.W. 816

132 Mo. 256

Banking House of Wilcoxson & Company v. Rood, Administratrix, Appellant

Supreme Court of Missouri, First Division

January 28, 1896

Appeal from Carroll Circuit Court. -- Hon. W. W. Rucker, Judge.

Reversed and remanded.

Pattison & Sebree for appellant.

(1) The Wilcoxsons being stockholders, and the officers of the plaintiff corporation, were not competent witnesses. R. S 1889, sec. 8918. (2) Witnesses who would be benefited by their testimony are as equally incompetent as if they were parties to the record. Meier v. Thieman, 90 Mo. 334. (3) Any other rule would give litigants interested in a corporation an undue and unfair advantage over any other individual, and would constitute them a highly privileged class. Corporations are defined to be individuals. R. S 1889, sec. 6568; Shockley v. Fisher, 75 Mo. 498. The case of Bates v. Forcht, 89 Mo. 121, does not militate against this view, for the reason that that case is not applicable to the case at bar. In the Bates case, the bank, from which the plaintiff derived title, was not a corporation, but a mere partnership, and there being surviving members of the partnership, to which Sharp, the dead man, belonged, preserved fully the equality between them, notwithstanding the death of Sharp, one of the copartners. (4) Corporations can, of necessity, contract only by, and through, their agents, and in this sense a stockholder is an agent as effectually as one acting for it and having no beneficial interest in the property of the corporation. The contract of executing the note in suit, while virtually in the name of the ideal plaintiff, was really made with the Wilcoxsons theoretically, as agents of plaintiff corporation. And suppose, in such event, the Wilcoxsons, in this case, were each or all dead, Rood, if alive, would be an incompetent witness. Williams v. Edwards, 94 Mo. 447. Certainly the converse is true that if the principal on one contracting side should be deceased, the contracting agent on the other side is incompetent by analogy and comparative reasoning. Vide, 94 Mo., supra. It can not be successfully contended, that if the note in suit had been made payable to the Wilcoxsons, individually, that either would be competent to testify in the circumstances of this case. Now, the title to the note in suit was derived to the plaintiff corporation by the acts and consent of the Wilcoxsons, hence the Wilcoxsons are incompetent to testify in the cause, under the amendment to Revised Statutes, 1879, section 4010, and Revised Statutes, 1889, section 8918. See Laws, 1887, page 287. This amendment was evidently designed to obviate whatever force and effect the decision in 89 Mo., supra, may import. Leeper v. Taylor, 111 Mo. 313; Ford v. O'Donnell, 40 Mo.App. 63. (5) J. I. Wilcoxson, the affiant, in support of the claim in the probate court, does not disclose his agency or authority to make the affidavit, nor does he state in the affidavit that he had any peculiar or special knowledge of the transaction. See R. S. 1889, sec. 195. It will not be contended, probably, by counsel for respondent, that this section was ever substantially complied with. The affidavit required by this section is jurisdictional. The lower courts had no jurisdiction to allow this claim upon such a defective affidavit. Peter v. King, 13 Mo. 102; Baldwin v. Whitcomb, 71 Mo. 651.

Hale & Son for respondent.

(1) James M. and Harrison Wilcoxson were competent witnesses notwithstanding they were stockholders in the bank. Bates v. Forcht, 89 Mo. 121. (2) The affidavit filed in the probate court with the claim is sufficient; if defective, a motion filed in the probate court and directed against the defect would have been the proper remedy.

OPINION

Macfarlane, J.

Plaintiff, a banking corporation, presented to the probate court for allowance against the estate of N. P. Rood, deceased, a note for $ 515. On appeal to the circuit court plaintiff recovered judgment and defendant appealed.

On the trial James M. Wilcoxson and Harrison Wilcoxson, both stockholders in the bank, the former its cashier and the latter its president, were permitted to testify as witnesses. Defendant objected to their competency on the ground that they were both interested in the result of the suit, and Rood, the other party to the note, was dead. These witnesses testified that the name signed on the note was the proper signature of deceased, and also that they saw him write it.

In the opinion of the Kansas City court of appeals, to which the appeal was first taken, these witnesses were incompetent to testify to any fact on account of their interest, but one of the judges being of the opinion that the decision is in conflict with the decision in the case of Bates v. Forcht, 89 Mo. 121, 1 S.W. 120, the appeal was certified to this court.

There can be no doubt that these witnesses would have been incompetent under the general rule at common law. The rule is correctly given in the opinion of the court of appeals, which is sustained by the authorities therein cited. In that opinion Ellison, J., says:

"At common law whoever had a legal, direct, and certain interest in the event of a cause, however small the interest was, or an interest in the record for the purpose of evidence, was disqualified. Starkie Ev., 23, 24; 1 Greenleaf Ev., sec. 386; Nichols, Shepard & Co. v. Jones, 32 Mo.App. 657. Stockholders in a bank have a direct and certain interest in the result of the litigation in which the bank may be engaged, and they have never been considered competent witnesses at the common law. Starkie says, page 131, that 'previously to the passing of this statute [Lord Denman's act] in an action by or against a corporation or other body, the members of which were not mentioned by name on the record, a member having any private interest in the result was not competent as a witness on behalf of the body on account of that interest.' Phillipps on Ev., volume 1, page 39, says: 'The same principles which render parties to the record incompetent, when suing or sued in their individual capacities, were formerly held [prior to Lord Denman's act] to apply to members of a corporation suing or sued in its corporate name.' Meighen v. Bank, 25 Pa. 288, and cases cited; Maysville v. Shultz, 33 Ky. 10, 3 Dana 10; Methodist Church v. Wood, 5 Ohio 283; Grayble v. York, etc., Turnpike Co., 10 Serge. & Rawle 269; Bank v. Ridgely, 1 Harr. & Gill. 408; Bank v. McWilliams, 25 Ky. 256, 2 J.J. Marsh. 256."

A class of cases excepted out of the general rule, on the ground of convenience and necessity, "is that of agents, carriers, factors, brokers, and other servants, when offered to prove the making of contracts, the receipt or payment of money, the receipt or delivery of goods, and other acts done within the scope of their employment." 1 Greenlf. Ev., sec. 416.

Under this exception the opinion in the Bates case, supra, includes a cashier and teller of a bank, and holds that at common law they were competent witnesses "to charge the defendant on a promissory note, or for money lent or overpaid or obtained from the officer without the security he should have received." It is questionable, as seen, whether the exemption would apply at common law in case the cashier was also a stockholder in the corporation and directly interested in the result of the litigation. "But," says the court, "whatever the rule is at common law as to the interest of a witness disqualifying him, it is superseded by section 4010 [now sec. 8918], Revised Statutes, which declares that no person shall be disqualified as a witness by reason of his interest in the event of a suit as a party or otherwise. The rejected evidence was clearly competent under our statute, if not under the rule at common law."

As the witness in the Bates case was not only the cashier of the bank, but also a stockholder therein, it is clear that the opinion of the court of appeals is directly in conflict with that decision.

But counsel challenge the correctness of the decision in Bates v. Forcht, and claim that it is not consistent with subsequent decisions of this court.

The statute declares that no person shall be disqualified as a witness in any civil suit by reason of his interest in the event of the same as a party or otherwise, "provided, that in actions where one of the original parties to the contract or cause of action in issue and on trial is dead * * * the other party to such contract or cause of action shall not be admitted to testify."

This court has ever undertaken to conform its decisions to the spirit rather than to the strict letter of this statute. Orr v. Rode, 101 Mo. 387, 13 S.W. 1066. The primary object and purpose of the law, evidently, was to remove the disabilities by which parties to the record and parties interested were at common law rendered incompetent to testify. The exception was intended to prevent the injustice that would arise in permitting one party to the contract or cause of action to testify when the lips of the other are sealed in...