Central Missouri Trust Co. v. Smith

• Decision Date: 29 January 1923
• Docket Number: No. 14557.,14557.
• Citation: 213 Mo. App. 106,247 S.W. 241
• Parties: CENTRAL MISSOURI TRUST CO. v. SMITH.
• Court: Missouri Court of Appeals

247 S.W. 241

213 Mo. App. 106

CENTRAL MISSOURI TRUST CO. v. SMITH.

No. 14557.

Kansas City Court of Appeals, Missouri.

January 29, 1923.

Appeal from Circuit Court, Callaway County; David H. Harris, Judge.

Action by the Central Missouri Trust Company against Flnettie Smith, executrix of the estate of E. C. Smith, deceased. Judgment for plaintiff, and defendant appeals. Reversed.

Ira H. Lohman and David W. Peters, both of Jefferson City, and Baker & Baker, of Fulton, for appellant.

Dumm & Cook, of Jefferson City, for respondent.

TRIMBLE, P. J.

This suit, orginating in the probate court, is in the form of a demand against the estate of E. C. Smith, deceased, based on a promissory note for $2,-850, dated January 20, 1920, due 60 days after date, purporting to be signed by E. C. Smith, payable to L. C. Smith and indorsed in blank by him. L. C. Smith is a son of E. C. Smith. After C. judgment in plaintiff's favor, the case was appealed to the circuit court, and there tried de novo before a jury. Verdict and judgment was in plaintiff's favor, and the defendant has appealed.

The note forming the foundation of the demand was originally pledged by L. C. Smith, the payee, to plaintiff as collateral security on L. C. Smith's note to plaintiff for $2,300, dated January 23, 1920, and was thereafter held by plaintiff as collateral security on it and various other notes of C. Smith, which were finally merged into a note of $22,000, dated December 4, 1020, due 30 days after date, and the $2,850 note sued on was then held as collateral security on the $22,000 note.

It appears from the evidence of plaintiffs own witnesses that, in addition to interest at 8 per cent. on the $2,300 note, an additional charge of $23 was exacted; that charges over and above legal interest were made on the various other notes which, with the $2,300 note, were afterward merged into the $22,000 note; and that when the $22,000 note was made, a further charge of $303.93 above legal interest was charged. So that usury tainted the $2,300 note for which the note sued on was originally held as collateral, but the same taint was in the various notes which afterward went into the $22,000 note, for which the note sued on was subsequently held as collateral, and said $22,000 note was also independently and otherwise affected with the same taint. One of the defenses raised, therefore, is that the pledge is void under section 6496, R. S. 1919. This, of course, does not mean that the note itself is void, but that the pledging of the note and the rights created under that pledge are void.

There is no question but that"the delivery of a promissory note as collateral security for the payment of the principal note is a pledge. Winfrey v. Strother, 145 Mo. App. 115, 128 S. W. 849. And, as the pledge was to secure a note tainted with usury, plaintiff obtained no rights whatever to the $2,850 note thus pledged, as the pledge was void. Western, etc., Co. v. Glasner, 169 Mo. 38, 38 S. W. 917; Holmes v. Schmeltz, 161 Mo. App. 470, 143 S. W. 539; Sheridan v. Post, 140 Mo. App. 96, 119 S. W. 500. When the note in suit was thus pledged as collateral security for a note tainted with usury, L. C. Smith, payee in the pledged note, by replevining it, could take the pledged note from plaintiff. Smith v. Mohr, 64 Mo. App. 39. Plaintiff obtained no interest in, lien upon, or title to, the note by reason of the pledge. Kelm v. Vette, 167 Mo. 389, 401-401, 67 S. W. 223.

But the plaintiff says the above can have no application, since the suit is not to enforce a pledge but is a straight suit upon the note itself by the plaintiff as the owner of the note. This claim is based upon the following facts:

After the demand herein had...