Citizens' Savings Bank v. Marr

• Decision Date: 04 February 1908
• Parties: CITIZENS' SAVINGS BANK OF CEDAR FALLS, IOWA, v. MARR.
• Court: Missouri Court of Appeals

107 S.W. 1009

129 Mo. App. 26

CITIZENS' SAVINGS BANK OF CEDAR FALLS, IOWA, v. MARR.

St. Louis Court of Appeals. Missouri.

February 4, 1908.

Rehearing Denied February 18, 1908.

1. PRINCIPAL AND AGENT — UNAUTHORIZED ACT OF AGENT — LIABILITY OF PRINCIPAL.

Defendant's intestate gave six notes to M. and another, copartners; three of the notes being indorsed by them to plaintiff bank's assignor and three to another bank. None of the notes being paid on maturity, the other bank gave its notes to M. to collect from the maker or to have them secured, and upon execution of a deed by the maker to M.'s firm for a tract of land the three notes held by such other bank were canceled, and M. agreed, in writing, to procure and deliver for cancellation the notes held by plaintiff bank. Held that, as plaintiff bank had no knowledge of the transaction by which the deed was given in consideration of the cancellation of the notes held by it and the other bank, the agreement was not a payment of the notes held by it, unless such agreement was subsequently ratified.

2. SAME — LIABILITIES AS TO THIRD PERSON — RATIFICATION — KNOWLEDGE OF FACTS.

The subsequent acceptance by the two banks of a deed to the land from M.'s firm, with knowledge of the contents of the deed to the firm from defendant's intestate, under which the banks took possession of the land, collected rents, etc., was not a ratification by plaintiff bank of the collateral agreement by M. to accept the land in payment of all the notes, where plaintiff had no knowledge of the collateral agreement between M. and the maker of the notes.

Appeal from Circuit Court, Monroe County; David H. Eby, Judge.

Action by the Citizens' Savings Bank of Cedar Falls, Iowa, against Phillip G. Marr, administrator. From a judgment for defendant, plaintiff appeals. Reversed and remanded, with direction to enter judgment.

Ragland & McAllister, for appellant. J. M. Crutcher, R. N. Bodine, and Jas. P. Boyd, for respondent.

BLAND, P. J.

H. H. Clay and T. F. Murray in 1902 were partners dealing in horses, under the firm name of Clay & Murray, in Cedar Falls, Iowa. On January 18, 1902, Douglas S. Gibson, of Monroe county, Mo., bought two horses of Clay & Murray for the sum of $2,500, for which he executed to said firm his three promissory notes, dated January 18, 1902 — one for $834, due August 1, 1903, and two for $833 each, due August 1, 1904, and August 1, 1905, all of which notes drew interest from date at the rate of 6 per cent. per annum. Immediately after receiving the notes Clay & Murray indorsed and sold them to the Cedar Falls National Bank. On February 10, 1902, Gibson bought two other horses from Clay & Murray for $2,500, and gave the firm his three promissory notes for the purchase price — one for $800, due August 1, 1904, one for $800, due August 1, 1905, and one for $900, due at an earlier date. These notes also bore 6 per cent. interest per annum from date, and were immediately indorsed by Clay & Murray and sold to the State Bank of Cedar Falls, Iowa. Later on this bank, with its assets, including the three notes, was taken over by the Citizens' Savings Bank of Cedar Falls, the plaintiff herein. On November 23, 1903, Gibson, Clay, and Murray appeared at the Cedar Falls National Bank, and took up the note for $834, dated January 18, 1902, and paid the interest on the other two notes of the same date by Gibson executing a new note for $1,066.50, payable to Clay & Murray, which was indorsed and delivered to the bank. Their indorsement was required to continue their liability as indorsers on the original note. On the same day Gibson went to the State Bank of Cedar Falls, and took up the note of February 10, 1902, for $900, and paid the interest on the two $800 notes of the same date, by executing two new notes for $583.97 each, due in 30 and 60 days. These notes were also made payable to Clay & Murray, and were indorsed by them so as to continue their liability as indorsers. These two renewal notes and the two notes for $800, each dated February 10, 1902, are the notes in controversy. Gibson failed to pay these notes, or the notes held by the Cedar Falls National Bank, when they matured. In October, 1905, the Cedar Falls National Bank placed the three notes it held in Murray's possession and instructed him to go to Missouri, where Gibson resided, and collect the notes or get them secured. Murray came to Missouri and entered into negotiations with Gibson which resulted in Gibson going to Cedar Falls, where he delivered to H. H. Clay and T. F. Murray the warranty deed of Roy Gibson and wife, conveying to Clay & Murray 320 acres of land in Monroe county, Mo., subject to two deeds of trust, one for $8,500, the other for $2,700. The deed to Clay & Murray recited that the grantees assumed the payment of these two deeds of trust. The consideration recited in the warranty deed from Gibson to Clay & Murray is $17,600. On the execution and delivery of this deed, Murray marked the three notes held by the Cedar Falls National Bank "Paid," and delivered them to Gibson, and contemporaneously with the execution and delivery of the deed the following agreement was entered into: "This contract made and entered into by and between D. S. Gibson and H. H. Clay and T. F. Murray, witnesseth: That the said Gibson having this day delivered a deed to said Clay and Murray for three hundred twenty acres of land in Monroe county, Missouri, in satisfaction of certain indebtedness due from him to the said Clay & Murray, it is agreed that the said Clay & Murray shall within thirty days deliver to the said D. S. Gibson his three certain promissory notes, aggregating about twenty-nine hundred dollars, canceled. Whereas, the...