Cantwell v. Johnson
| Decision Date | 12 July 1911 |
| Parties | HARRY J. CANTWELL, Plaintiff in Error, v. JAMES BROOKS JOHNSON |
| Court | Missouri Supreme Court |
Rehearing Denied 236 Mo. 575 at 607.
Error to St. Louis City Circuit Court. -- Hon. Matt G. Reynolds Judge.
Affirmed.
R. E Rombauer for plaintiff in error.
(1) The court tried the case under an erroneous theory as to the issues involved. McDaniels v. Lee, 37 Mo. 204; Woodard v. Mastin, 106 Mo. 324; Reyburn v. Mitchell, 106 Mo. 365; Savings Inst. v. Colonius, 63 Mo. 292; Greenway v. James, 34 Mo. 326; Northup v. Ins. Co., 47 Mo. 443; Musser v. Adler, 86 Mo. 445; Smalley v. Hale, 37 Mo. 102. (2) The decree of the court is against equity. It is against the evidence and weight of the evidence. Reilly v. Cullen, 159 Mo. 322; Chance v. Jennings, 159 Mo. 544; Bresnehan v. Price, 57 Mo. 422; Murphy v. Smith, 86 Mo. 333; Forester v. Moore, 77 Mo. 651; Moore v. Ringo, 82 Mo. 472. (3) The court erred in excluding legal and competent evidence offered by the plaintiff, and in admitting illegal and incompetent evidence offered by the defendant. Stewart v. Severance, 43 Mo. 322; Burgert v. Borchert, 59 Mo. 80; Dickson v. Kempinsky, 96 Mo. 252; McClurg v. Trust Co., 137 Mo. 106; Frederick v. Allgaier, 88 Mo. 598; Smalley v. Hale, 37 Mo. 102; Bank v. Donnell, 172 Mo. 384; Storage Co. v. Glasner, 169 Mo. 38.
John A. Gilliam for defendant in error.
OPINION
Equity. Suit to enjoin the enforcement of a judgment in favor of defendant and certain executions issued thereon, for an account and for the redemption of certain corporate stock and bonds.
A temporary injunction issued, nisi, which was dissolved on final hearing and the bill dismissed. Unsuccessful in his motions for a new trial and in arrest, Cantwell saved his exceptions in a bill settled and allowed, and, on due steps, brings error, giving a supersedeas bond by our leave.
The Pleadings:
Summarized, the bill alleges that at a certain time (in 1902) Johnson loaned Cantwell $ 4000, taking as collateral security 500 shares of stock in the Columbia Lead Company and $ 3000 of bonds issued by the Topozark Orchard Company, all of a par value of $ 8000 and of an actual value in excess of the loan. That subsequently, Cantwell paid $ 800 on the loan, and thereafter (it being due) Johnson, having an eye to the consummation of a fraudulent scheme outlined further on, "falsely" represented to Cantwell that he, Johnson, was in "need of money," and thereby persuaded Cantwell to borrow the money on the same collateral from the National Bank of Commerce, and repay him -- promising at the same time that he would indorse Cantwell's note by way of renewal from time to time in the bank until such time as he was able to struggle out of his financial embarrassment and pay the bank's debt. That such indorsements were to be put upon a paying basis, something for something, a quid pro quo, viz., $ 50 apiece. That the note was executed to and discounted by said bank for $ 3200, running for four months. That it bore Johnson's said indorsement (paid for at the agreed price) and was secured by said collaterals. That when the note to the bank became due, Cantwell was still in financial embarrassment, and Johnson, violating his agreement to indorse, fraudulently taking advantage of Cantwell's necessities in order to obtain the collateral deposited with the bank, declined to indorse, though requested to do so by Cantwell, and "fraudulently urged" the bank to foreclose in order that he might buy. That the bank, so urged by Johnson, gave Cantwell notice of foreclosure of the pledge, and in July, 1904, sold the collaterals to Johnson for the grossly inadequate price of $ 800, though worth at the time more than the bank loan for which they stood pledged, as Johnson well knew. Thereupon, Johnson, responding to his obligation as indorser, paid the bank the amount due on Cantwell's note after the bank credited thereon the proceeds of the sale, and obtained an assignment of the note and collaterals. That, subsequently, in December of that year, Johnson and Cantwell entered into an agreement, in form a resale of the collaterals, but in effect in equity a renewal of the pledge of them, whereby Cantwell was given an option in consideration of $ 200 paid down to repurchase them at any time prior to February 16, 1905. That Johnson failed to credit the $ 200 on the note, but retained the same as usurious interest, whereby his lien on the collaterals became extinguished by virtue of the statute in that behalf. That said agreement further provided that on payment of a further sum of $ 500 such option to repurchase might be exercised by Cantwell at any time within four months after January 15, 1905. That in violation of said promise on February 21, 1905, Johnson sued Cantwell in the St. Louis Circuit Court on said assigned note, his petition "fraudulently asserting" that the amount due was $ 2569.61 with interest from July 8, 1904. That thereafter Cantwell called Johnson's attention to his inequitable and oppressive conduct, whereupon he agreed for $ 500 (then paid him by Cantwell) to continue said suit from "time to time," and that (he being amply secured) Cantwell should have the right to redeem the collaterals at any time by paying the residue of the debt with interest. That, subsequently, in October of that year, Cantwell being then in New York on important business preventing his immediate return, said suit was set for trial, and Johnson, taking advantage of Cantwell's absence, wired him he would not continue the suit unless Cantwell paid him a certain amount on the debt, a certain brokerage fee, his attorney's fee and certain taxes paid. That Cantwell submitted to the imposition and paid the money -- $ 651.96 -- no part of which was credited on the note, but all of which was appropriated by Johnson as usury. That in April, 1906, the cause was again set for trial and Cantwell insisted upon a continuance at the hands of Johnson to which the latter agreed, the day before the trial day. In violation of that agreement, on the next day, April 23, 1906 (the day on which the suit was set down for trial), Johnson notified Cantwell he would not agree to a further continuance but insisted on a trial. That relying on Johnson's agreements and obligations as set out, Cantwell had filed in that suit only a "general denial" and had not set up his many special defenses, shown in the facts heretofore stated, and was wholly unprepared for trial; in that, on the spur of the moment, he could not collect the data to make his special defenses even if the court had permitted him to file his answer. That on the next day, April 24th, in violation of his obligation, and in the absence of Cantwell, Johnson took a judgment for $ 2668.80, being $ 1200 in excess of the amount due, "and plaintiff charges that defendant was guilty of fraud in the procurement of said judgment." Subsequently, in time, Cantwell applied to have that judgment vacated, which application was refused. Subsequently, he tendered Johnson in cash $ 2750 -- a sum in excess of all due -- and demanded in connection with the tender a return of the stock and bonds, which tender Johnson oppressively declined and refused to deliver the stock and bonds. That subsequently, in 1907, Johnson caused executions to issue on his judgment and caused "grossly excessive, fraudulent and oppressive" levies to be made that will "wreck" plaintiff unless enjoined. It is further alleged that all the recited acts are fraudulent, oppressive and contrary to equity and good conscience and that plaintiff has no adequate remedy at law.
Johnson answered admitting he obtained the judgment, admitting the executions and the levies, but denying fraud in the procurement of the judgment, denying the levies were excessive or fraudulent, denying all other allegations of fraud, etc., and asking the injunction be dissolved.
So much for the pleadings.
The trial:
To make his case, plaintiff put Mr. Cowan, assistant cashier of the National Bank of Commerce, on the stand, and by him proved that plaintiff's note at the bank, secured by the stocks and bonds mentioned, matured June 8, 1904, was protested for non-payment and witness notified defendant, Johnson, as indorser, to take it up. Johnson "had some conversation with our president, who thereupon ordered us to sell out the collaterals." The sale was duly advertised, was regular in all respects and realized the net amount of $ 664.67, credited on the note. Johnson was the purchaser and the balance, $ 2559, was paid by him to the bank. The sale of collaterals was July 8, one month after the dishonor of the note.
The note was in two parts. First, a straight note in ordinary form, bearing interest at 8 per cent from maturity, dated February 5, 1904, and due in four months, for $ 3200, signed by Cantwell and indorsed across its back: "J. B. Johnson." Second, another part, also signed by Cantwell, evidenced the contract of pledge. It set forth the execution of the note, a desire to secure the same, and pledged to the bank as collateral security said stock and bonds, describing them; and provided that in case of default the bank was authorized to sell the collaterals at public or private sale at the Merchants Exchange or elsewhere, at its option, and apply the proceeds, first, to the expenses of the sale and, next, to the discharge of Cantwell's liability. The final clause runs: "In case of a sale of said collaterals, said bank . . . may become the purchaser thereof without any right of redemption on my part."
Cantwell took the stand in his own behalf, testifying he was a "lawyer and miner" and Johnson was "by profession a money lender."
At the outset an attempt...
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