Childs v. McGirk State Bank

• Decision Date: 20 January 1928
• Docket Number: No. 4337.,4337.
• Citation: 2 S.W.2d 123
• Parties: CHILDS v. McGIRK STATE BANK et al.
• Court: Missouri Court of Appeals

2 S.W.2d 123

CHILDS v. McGIRK STATE BANK et al.

No. 4337.

Springfield Court of Appeals. Missouri.

January 20, 1928.

Appeal from Circuit Court, Camden County; C. H. Skinker, Judge.

Action by W. L. Childs against the McGirk State Bank and another. From a judgment on a directed verdict for defendants, plaintiff appeals. Reversed and remanded for new trial.

Ira H. Lohman, of Jefferson City, for appellant.

S. C. Gill and Embry & Embry, all of California, Mo., for respondents.

BAILEY, J.

This is an action upon a certificate of deposit in the sum of $2,000, dated May 27, 1921, due 6 months after date with interest at 4 per cent. alleged to have been executed and delivered by the McGirk State Bank, signed by its cashier, C. T. Moore, payable to the order of L. O. Thompson and indorsed by him to L. L. Childs, from whom plaintiff claims to have purchased same before maturity of the instrument. At the close of the whole case the trial court directed a verdict for defendants. From the resulting verdict and judgment, plaintiff has appealed.

The facts and circumstances shown by the record in this case and the legal principles involved have, for the most part, been thoroughly set out and expounded in the several decisions of the appellate courts in which the affairs of the McGirk State Bank, and the actions of its cashier in particular, have been reviewed. The facts leading up to the issuance of the time certificate of deposit in question are fully set forth in the case of W. J. Howey & Co. v. Cole, 219 Mo. App. 34, 269 S. W. 955; State ex rel. v. Trimble, 307 Mo. 57, 269 S. W. 959, and Howey & Co. v. Cole (No. 4336) decided by this court at this term (not officially reported). Substantially the same state of facts is revealed in Newton County Bank v. Cole (Mo. App.) 282 S. W. 466, and Guaranty Bank & Trust Co. v. McGirk State Bank et al. (Mo. App.) 294 S. W. 456.

The additional facts necessary to an understanding of this case may be briefly stated. The plaintiff in this case is a brother of L. L. Childs who obtained the certificate of deposit from the payee, L. C. Thompson, by whom it was indorsed. L. L. Childs testified that shortly after the execution of the certificate of deposit numbered 107, sued on, he obtained same from Thompson in payment for certain oil well drilling work performed by him for Thompson, the amount of which he does not reveal; that he acted in good faith and accepted the certificate "without notice of any controversy whatsoever with respect to said certificate of deposit"; that he sold the certificate to plaintiff, his brother, for the sum of $1,500. Plaintiff himself likewise testified that he purchased the certificate from L. L. Childs for the said sum of $1,500, and that at the time "he knew of no contention being made on the part of said bank, or any other person, as to the validity of said certificate"; that he purchased the certificate in good faith and is still the legal owner and holder of said certificate. It appears that the testimony of both these witnesses was by deposition, and that they were not subjected to cross-examination. The certificate of deposit was indorsed, as heretofore stated, by both L. C. Thompson, the payee, and L. L. Childs; there is a further indorsement as follows:

"For collection only. Pay to the order of any bank, banker, or trust company, November 23, 1921. First National Bank, F. E. Russell, Cashier, Houston, Tex."

It also appears that the McGirk State Bank failed, and that A. B. Cole was appointed deputy commissioner of finance and took charge of the bank's affairs about September 22, 1921. The time for filing claims against defendant bank expired, under the statute, on January 30, 1922, which date was four months from the date legal notice had been given to creditors or claimants by the commissioner. No claim was filed by plaintiff himself, in this case. However, a claim was presented to the deputy commissioner based on time certificate No. 107, on December 3, 1921, by the First National Bank of Houston, Tex., and rejected by the commissioner February 6, 1922. This time certificate bears the same number as the time certificate upon which plaintiff has sued and in all other respects appears to be identical.

Error is first assigned because of the action of the circuit court in refusing plaintiff's peremptory instruction. In support of this contention it is urged that there is no plea of fraud, and that the only issue raised by the pleadings in the case concerns the question of consideration; that absence of consideration in the procurement of the certificate does not destroy the presumption that the holder is a holder in due course, and therefore the burden of evidence was not shifted to plaintiff to show his good faith. It is defendant's contention that in this case, as well as in all the other similar cases involving the McGirk State Bank heretofore referred to, plaintiff tried the case on the theory that fraud was pleaded, and that he should be held to the same theory on appeal. The Kansas City Court of Appeals touched upon this point in the case of Guaranty Bank & Trust Co. v. McGirk et al. (Mo. App.) 294 S. W. loc. cit. 457, supra, wherein it was stated that:

"We are doubtful as to whether the answers plead any fraud in the execution of the certificate, but the case was tried on the theory that such matter was pleaded and is briefed in this court on the theory that fraud is involved in the case."

Plaintiff was therefore held to the theory adopted in the trial court. No point was made in that case on the pleadings, which appear to be the same in so far as the answers are concerned, as in the case at bar. Whether or not the language used by the Court of Appeals in the Trust Company Case, supra, suggested the point to plaintiff's able counsel in the present case, we are unable to say, but the record clearly shows this case was tried by plaintiff on the theory that fraud was an issue, and that he was required to prove his good faith in purchasing the time certificate sued on. The testimony tending to prove fraud was admitted with no objection that fraud had not been pleaded. Objection was made to the testimony on the specific ground that "plaintiff had already proved that he was an innocent holder for value." The depositions taken by plaintiff before the trial undertook to prove plaintiff had no knowledge of any defect in...