Chariton Nat. Bank v. Whicher

• Decision Date: 10 February 1914
• Citation: 145 N.W. 299,163 Iowa 571
• Parties: CHARITON NAT. BANK v. WHICHER ET AL.
• Court: Iowa Supreme Court

163 Iowa 571

145 N.W. 299

CHARITON NAT. BANK

v.WHICHER ET AL.

Supreme Court of Iowa.

Feb. 10, 1914.

Appeal from District Court, Lucas County; C. W. Vermillion, Judge.

The opinion sufficiently states the nature of the case. Affirmed.Frank H. Dewey, of Des Moines, Mayer, Austrian, Platt & Powell, and Roberts & Webber, of Ottumwa, for appellants.

F. Q. Stuart, of Chariton, and J. C. Mitchell, of Ottumwa, for appellee.

WEAVER, J.

H. D. Copeland died in May, 1910. He had for some years been president of the plaintiff bank, was also engaged in other business activities, and was reputed a man of large wealth. The defendants Charles M. Whicher and Howard C. Copeland are the duly qualified administrators of his estate. Within six months after their appointment said bank filed in said probate proceedings eight several claims against said estate, which claims we will mention by number in the order of their statement in the record before us.

(1) In this claim it is alleged that the estate is justly indebted to the bank in the sum of $2,478.50, with interest on a promissory note made by L. P. Pulliam, which is a just, valid, and legal claim against said estate, and of which claim the bank is now the owner. To this is attached a copy of a promissory note which is signed by L. D. Pulliam, as maker, payable to the order of J. C. Copeland (who, it subsequently appears, was the cashier of the bank). No indorsement by J. C. Copeland is shown.

(2) This claim for $2,948.15 is based upon two notes signed by J. H. Roberts; the first being made payable to the order of J. C. Copeland, cashier, and the other to the order of H. D. Copeland. The statement of the claim is in substantially the same form as in the one upon the Pulliam note above mentioned. No indorsement by the payee of either note is alleged.

(3) This claim for $2,000 is upon three promissory notes made by one C. H. Boothroyd; two of them being made payable to the order of H. D. Copeland, and one to the order of J. C. Copeland, cashier, the allegations of the bank's rights in the premises being made as in the other claims above mentioned. The two notes made payable to H. D. Copeland bear his indorsement “without recourse.” The third note is not indorsed.

(4) The fourth claim for $4,467.40 is upon six promissory notes bearing the signature of T. O. Hughes. Of these notes four are made payable to the order of J. C. Copeland, cashier, one to the order of H. D. Copeland, and one to the order of Chariton National Bank, none of which shows indorsement by the payee. Other allegations are like those in the claim first described.

(5) The fifth claim for $900 is upon one promissory note made by R. C. Beamer to the order of J. C. Copeland, cashier, by whom it has never been indorsed. Other allegations of the claim are like those in the claim first described.

(6) The sixth claim for $590 is stated in similar terms upon two promissory notes made by D. B. Custer, each payable to the order of J. C. Copeland, cashier, and unindorsed.

(7) The seventh claim for $300 is stated in similar terms upon a promissory note made by Joel E. Clark, payable to the order of H. D. Copeland, and indorsed by him, without recourse.

(8) The eighth claim for $3,495.52 is stated in similar terms upon three promissory notes made by W. H. Essex. Two of these notes are made payable to the order of H. D. Copeland, and one to J. C. Copeland, cashier. The first note payable to H. D. Copeland for $2,350 is indorsed by him, with waiver of demand and protest. The others are unindorsed.

It will be observed that these claims each and all (except, perhaps, such as are based upon notes payable to the order of the deceased, and indorsed by him in his lifetime) are founded upon promissory notes none of which, upon their face or by written indorsement, indicate any liability or indebtedness on the part of H. D. Copeland or of his estate to the plaintiff bank, and, aside from the very general allegation as a legal conclusion that the administrators of said estate “are justly indebted to plaintiff” upon the notes mentioned, and that the amount thereof “is a just, valid, and legal claim against the estate of said H. D. Copeland, deceased, of which your petitioner is now the owner,” there is nothing revealed showing how or in what manner the notes which apparently evidence the indebtedness of other persons becomes or is evidence of the indebtedness of the estate of the deceased. Later, and after the time for filing of claims of the third class had expired, the bank, by its counsel, filed various amendments to its said claims to supply the omissions above noted. These amendments, stated as briefly as practicable, are to the effect that the said H. D. Copeland was in his lifetime a silent partner with Pulliam in business conducted in the name of Pulliam, and that the note mentioned in claim No. 1 was given for the partnership for moneys with which to carry on the business of the firm, and that Copeland, as silent partner, became individually liable thereon. Substantially the same allegations were made as to the claims numbered 2, 4, and 8, being those which set out the notes made respectively by Roberts, Hughes, and Essex, a partnership relation between Copeland, and the maker being averred in each instance, and that the debt represented by the note was that of the deceased as well as that of the maker. In the matter of the claims numbered 3 and 6, the amendments aver that the notes were in each instance given by the maker for the accommodation of the said H. D. Copeland, and that the consideration therefor moved wholly to Copeland, who promised and undertook to pay and discharge the said notes. With reference to claim No. 7, on the note of Clark it was averred that for a valuable consideration Copeland had assumed the obligation of said note, and agreed to pay the same. The claim made upon the Beamer note being afterwards disallowed by the court, and there being no appeal taken from said order, it will not be further traced or considered.

By the time these amendments were filed, the administration of the estate had so far developed its condition as to make it apparent that the assets would be wholly insufficient to pay all the claims against it, thus exciting a natural rivalry among creditors to secure for their several claims a place among those of the third class, and to exclude therefrom as many as possible of their competitors. Among these creditors were several banks in Iowa and Illinois who appeared in the proceedings and contested the right of the plaintiff bank to amend its claim, and disputed the sufficiency of the amendments so pleaded.

Of the various objections raised, the one on which the contesting creditors principally rely is that the amendments are in substance and effect the statements of new claims or causes of action, and, being filed after the time for presentation of claims of the third class had expired, they should be allowed, if at all, as of the fourth class, and not entitled to payment until all the claims of the third class are satisfied. Upon final hearing in the district court it was found and held that plaintiff's allegation of partnership relations between the deceased, Pulliam, Hughes, and Essex had been established by the evidence, and that the claims presented against the estate upon the promissory notes signed by said makers should be allowed to the following extent: The Pulliam note in full; the Hughes notes in full, except one for $1,000, withdrawn by plaintiff upon the trial, and one for $747.27, which was disallowed; and the Essex notes in full. The court further found that claim based upon the alleged accommodation notes made by Boothroyd had been established as to two of said instruments, and the similar claim upon the Custer notes was also allowed in full. The claim on the two Roberts notes was allowed upon the theory that they had been given in part for a partnership transaction, and in part as an accommodation to the deceased, who undertook to pay both obligations. The claim upon the Beamer note was rejected entirely, and that upon the Clark note allowed in full. Each of the claims so established was given rank in the third class. From these rulings, the administrators and contesting creditors have appealed.

In this court, after a considerable fencing over the perfection of the record the parties have entered into a stipulation which in effect eliminates all question of the sufficiency of the evidence to sustain the court's findings concerning the real nature of the transactions in which the several promissory notes had their origin and the nature of the deceased's relation thereto, except it is still insisted that in any event the allowance made upon the Hughes notes is excessive by a matter of something more than $700. Except as to this item, the stipulation removes from the realm of dispute all question of the propriety of the allowance of said claims against the estate, and leaves for our consideration the single inquiry whether the court erred in giving them standing or rank in the third class.

Appellants' position is: (1) That the claims as originally filed state no cause of action, and that an allowance thereof in such form would be reversible error. (2) That the amendments set up entirely new and independent matter constituting other and different causes of action, and that, if allowed at all, they should be treated as claims filed at the date of the amendments, and therefore as claims falling within the fourth class.

[1] Let us consider the soundness of the first proposition. Is it correct to say that, had plaintiff gone to trial upon its claims as originally filed, their allowance by the court would have necessarily been erroneous? None of these claims were attacked by demurrer or by motion for fuller or more specific statement. In each instance they declare that the estate of the decedent is indebted to the bank upon a specified promissory note, and...