Brandt v. Farmers Bank of Chariton County

• Decision Date: 06 December 1943
• Docket Number: No. 20341.,20341.
• Citation: 177 S.W.2d 667
• Parties: BRANDT v. FARMERS BANK OF CHARITON COUNTY et al.
• Court: Missouri Court of Appeals

177 S.W.2d 667

BRANDT v. FARMERS BANK OF CHARITON COUNTY et al.

No. 20341.

Kansas City Court of Appeals. Missouri.

December 6, 1943.

Rehearing Denied January 31, 1944.

Appeal from Circuit Court, Saline County; Chas. Lyons, Judge.

Action by C. H. Brandt against the Farmers Bank of Chariton County and others to recover an amount advanced to defendant bank for reduction of an excess loan. Judgment for plaintiff, and from an order granting a new trial on defendants' motion, plaintiff appeals.

Order set aside, and cause certified and transferred to the Supreme Court.

Louis J. Rasse of Marshall, John D. Taylor, of Keytesville, and J. A. Collet, of Salisbury, for appellant.

L. E. Merrill, of Brunswick, Jerome Walsh and Roy W. Rucker, both of Kansas City, and Johnson & Bacon, of Marshall, for respondents.

BLAND, Judge.

This is a suit against the Farmers Bank of Chariton County, in liquidation. It is to recover a sum of $2,927.50, with interest, alleged to have been advanced to the Bank, while a going concern, for the purpose of reducing an excess loan held by it. There was a verdict and judgment in favor of plaintiff in the sum of $2927.50. The judge who tried the case, having died, and his successor judge being disqualified, a special judge was called in to hear the motion for a new trial filed by defendants. The special judge assigned no reason for his action in the order granting the new trial. However, he wrote an opinion, not made a part of the record, stating his reason therefor. The opinion discloses that he granted the motion because he held that the plaintiff was estopped from asserting his claim. The pleadings were not before the judge when he wrote the opinion. Of course, the opinion is not binding upon this court. Weis v. Wanstrath, Mo.App., 149 S.W.2d 442.

The facts show that on June 25, 1927, the plaintiff, together with E. A. Carter, A. W. Zillman, and John D. Taylor, were directors of the Bank; that on that date the Bank held notes aggregating the sum of $22,134.70, executed by John Welch and his daughter, secured by a deed of trust upon 440 acres of land in Chariton County and owned by the makers of the notes. The loans evidenced by the notes had been criticised by the Finance Commissioner and they were the subject of concern on the part of the Board of Directors. An arrangement was made whereby the daughter deeded her interest in the land to Welch, and each of said directors paid the Bank the sum of $2,927.50, or a total of $11,710, which, with other funds, was used to reduce the Welch indebtedness to $10,000, for which latter sum Welch executed his note payable to the Bank. To secure this note Welch executed a deed of trust to the Bank upon the 440 acres of land. The old notes were cancelled and surrendered to Welch. Thereafter, Welch, on the same day, deeded the land to said Carter who, contemporaneously therewith, executed a declaration of trust reciting:

"That while the record title to said land is vested in me absolutely, I hereby declare that I hold said title for myself, A. W. Zillman, Henry Brandt and John T. Taylor; that we jointly own the same in equal shares and I agree to convey said land at any time that the said parties or any two of them may direct me. I further declare that I have this day executed and delivered to the cashier of the Farmers Bank of Chariton County my deed in blank conveying said land and I authorize the cashier of said Bank at anytime to insert the name of any one of the above named persons, or of any person that they, the above named persons, may direct, and to deliver the said deed upon the terms and conditions to be designated by the said Zillman, Brandt and Taylor and myself, if living."

The deed mentioned in the declaration of trust was deposited with the Bank.

According to plaintiff's evidence, on August 18, 1931, plaintiff and Carter sought a settlement with the Bank, but the Bank, not being in a financial condition to pay plaintiff and his associates the sums advanced by them, a new contract was entered into and signed by plaintiff and his associates, also by the cashier and the assistant cashier of the Bank; all being stockholders and the owners of the majority of its stock. In this contract it was recited that the Welch land had been conveyed to Carter to be held by him for the Bank; that the land was to have been sold when possible and plaintiff and his associates were to be reimbursed for the sums advanced by them; that such arrangement was to continue from the date of the contract until the land could be sold; that when it should be sold if any of the parties should suffer any loss because of the payment by them of the sums of money advanced by them, or, the then Board of Directors should fail or refuse to reimburse them out of other funds of the Bank, that the matter should be submitted to the stockholders for action at a stockholders' meeting, and that the parties to the contract jointly and severally pledged themselves to cast their votes according to their stock in the Bank in favor of reimbursing said four persons for any loss that they might sustain.

No record of any of the above transactions was ever made on the books of the Bank; nor was any of the sums paid out by said four directors ever listed on any books of the Bank as an obligation of the Bank. They were not reflected, as an obligation or obligations, in any financial statements made and published by the Bank pursuant to law and regulations of the State Finance Department. On December 5, 1934, the Bank suspended business and its Board of Directors placed its assets and affairs in the hands of the State Finance Commissioner.

This is the third case to reach this court involving claims against the Bank of the members of the Board of Directors in question, and involving similar facts. See Carter v. Farmers Bank of Chariton County et al., 232 Mo.App. 705, 108 S.W.2d 152; Taylor v. Farmers Bank of Chariton County et al., Mo.App., 135 S.W.2d 1108; Taylor v. Farmers Bank of Chariton County et al., 349 Mo. 407, 161 S.W.2d 243. Additional facts concerning the controversy may be found stated in the opinions in those cases. There was nothing new developed in the case at bar, except there was a showing of three financial statements made to the Department of Finance by the Bank some of which were signed by the plaintiff. These financial statements showed that on January 28, 1928, the Board of Directors placed the value of the Welch land at $30,000; on January 6, 1930, at $26,000, and on February 21, 1932, at $21,000.

Defendants' theory, as shown by their answer and in their conduct of the trial, was that, instead of the members of the Board of Directors advancing $2,927.50 each, as an accommodation to the Bank, the money was invested by them in the land, they buying the land, subject to the indebtedness against it, after paying off said sum of $11,710, to which they contributed equally.

Defendants also sought to plead estoppel against plaintiff asserting his claim against the Bank, alleging that plaintiff and his associates, as directors of the Bank, made frequent reports to the Commissioner of Finance and in said reports did not list or show any indebtedness due plaintiff on account of the matters alleged in the petition; but represented, in effect, that there was none; and that in response to a letter from the Commissioner of Finance to the President of the Bank, plaintiff, together with his associates, wrote the Commissioner, in May, 1933, representing that the Bank had no liabilities on account of the Welch transaction, and that the Bank's only interest therein was that it held a secured note in the amount of $10,000; that, "These defendants further allege that the Commissioner of Finance, in his official capacity and as the representative of the depositors and creditors of said Farmers Bank of Chariton County, relied upon the said representations of this plaintiff and his associates as above set out and the said Commissioner of Finance relying upon the truth of said representations so made by plaintiff and his associates, permitted said Farmers Bank of Chariton County to remain open and receive deposits and consented that said Bank might issue capital notes in the amount of $35,000, and reported to Federal Deposit Insurance Corporation, in reliance upon the representations aforesaid, that the financial condition of said Bank was such that it was entitled to become a member of the Fund under the provisions of the law creating the Federal Deposit Insurance Corporation.

"Defendants further state that to permit plaintiff to recover under the facts herein, would be unjust and unequitable to the depositors in and creditors of said Bank and that by reason of his representations to the Commissioner of Finance as herein above set forth, plaintiff is estopped from claiming that any liability on the part of said Bank to plaintiff for money received by said Bank arose out of or on account of the said Welch transaction as hereinabove set forth".

Defendants insist that the court properly sustained their motion for a new trial for the reason that it erred in refusing to give their instruction in the nature of a demurrer to the evidence and in failing, thereafter, to give their instruction submitting to the jury the issue of estoppel.

If there were insufficient assets of the Bank to satisfy the claims of the general creditors plaintiff, under the facts in this case, would be estopped to prosecute his claim (see Taylor v. Farmers Bank of Chariton County, supra), providing the matter was made an issue at the trial. Whether it was an issue depends upon whether the answer stated facts, as distinguished from conclusions, raising such an issue. There was some evidence that the Bank was insolvent but we are of the opinion that the answer did not plead sufficient facts to raise such an issue. It will be noted that the answer, while rather full, does not plead insolvency of the Bank, or facts...