Citizens' Trust Co. v. Ward

• Decision Date: 16 December 1916
• Docket Number: No. 1812.,1812.
• Citation: 190 S.W. 364,195 Mo. App. 223
• Parties: CITIZENS' TRUST CO. v. WARD.
• Court: Missouri Court of Appeals

190 S.W. 364

195 Mo. App. 223

CITIZENS' TRUST CO. v. WARD.

No. 1812.

Springfield Court of Appeals. Missouri.

December 16, 1916.

Appeal from Circuit Court, Pemiscot County; Sterling H. McCarty, Judge.

Action by the Citizens' Trust Company, a corporation, as receiver of the Pemiscot County Bank, a corporation, against J. M. Ward. From a judgment for plaintiff, defendant appeals. Judgment reversed, and cause remanded.

R. L. Ward, of Caruthersville, for appellant. C. G. Shepard, of Caruthersville, for respondent.

FARRINGTON, J.

The plaintiff (respondent) recovered a judgment for $6,141.65, which represents the balance due on the principal sum of a promissory note with interest thereon, which note had been signed by the Missouri Cotton Oil Company, a corporation, as principal, and the defendant herein, together with five others, as accommodation indorsers.

The amended petition alleged that plaintiff is the duly appointed receiver of the Pemiscot County Bank; that the Missouri Cotton Oil Company on January 25, 1912, executed this note payable to itself in the sum of $10,000; that Ward and others indorsed their names on the back guaranteeing its payment; that the note was delivered by the Missouri Cotton Oil Company, indorsed, to the American Trust Company, and a copy of the note is set out showing the indorsers thereon; that on October 24, 1912, there was remaining a balance due and unpaid on said note amounting to $5,025; that the American Trust Company was the owner and legal holder of the note; that one A. C. Tindle was at that time the acting cashier of the Pemiscot County Bank, and was at the same time the president of the Missouri Cotton Oil Company; that this note was forwarded by the American Trust Company to the Pemiscot County Bank for collection, that is, it was indorsed on the back, "Pay to any bank or banker"; that on receipt of the note by the Pemiscot County Bank the said Tindle caused the amount due thereon to be drawn out of the funds of the Pemiscot County Bank by drawing a draft and forwarding the same to the American Trust Company; that neither the Missouri Cotton Oil Company nor any of the indorsers or signers of said note ever paid the balance due on the note either to the American Trust Company or to the Pemiscot County Bank; that the action of the Pemiscot County Bank in paying its funds to the owner of said note constituted it the owner and holder of the note entitled to collect the same from the maker and indorsers of the same, one of whom is the defendant.

The defendant answered by a general denial, and by special pleas (1) that the Pemiscot County Bank never became the owner of the note, and (2) that the amount that was paid by the Pemiscot County Bank was not its own funds, but that the payment was out of funds on deposit in said bank belonging to the Missouri Cotton Oil Company. The first of these special pleas raises a question of law; the second, one of fact.

If the contention of the defendant based on the first of these pleas is well taken, that is, that the Pemiscot County Bank could not become the purchaser of this note even though it did forward its own funds because the note was sent to it for collection and not negotiation, plaintiff's case must fail entirely, and we will therefore take up the consideration of that contention.

Following the defendant's (appellant's) reasoning, it must be admitted that the indorsement on the note, "Pay to any bank or banker," is an indorsement for collection, and that an indorsement for collection does not transfer title. Bank of Indian Territory v. First National Bank, 109 Mo. App. 665, 83 S. W. 537; National Bank of Rolla v. First National Bank of Salem, 141 Mo. App. 719, 125 S. W. 513.

Appellant contends, relying on the fact that the note was in the hands of the Pemiscot County Bank for collection and for no other purpose, that when it sent the money to the owner and holder of the note the same thereby became extinguished and the signers and indorsers thereby discharged on that obligation, in support of which he cites the case of People's & Drovers' Bank of Washington v. Craig, 63 Ohio St. 374, 59 N. E. 102, 52 L. R. A. 872, 81 Am. St. Rep. 639. That case clearly sustains appellant in his contention, and the facts of that case are so like the facts in the case at bar as to make it an authority. Appellant also cites the case of Eastman v. Plumer, 32 N. H. 238, which, however, is not an authority on the question before us, because in that case the maker of the note, when called upon for payment, borrowed the money from a third party and took it to the holder of the note, paying it over to him and receiving the note from the holder; and it was held that the note was paid and discharged and was not kept alive for the benefit of the person from whom the maker borrowed the money with which to pay it off. Likewise, in the case of Lancey v. Clark, 64 N. Y. 209, 21 Am. Rep. 604, cited by appellant, Lincoln was primarily liable for the payment of a certain note. He took some money belonging to the plaintiff in that suit and paid that money to the holder of the note. He then sent the note to the man from whom he had obtained the money, and in an action by the latter it was held that, when Lincoln had taken the note up, from the holder, he being primarily liable, the note was discharged; that, had Lincoln brought suit on the note when he took it up, there could be no recovery by him, and, as the note was past due, the plaintiff in the case, acquiring or getting it from Lincoln, merely stood in Lincoln's shoes.

If the Ohio case, supra, had been a decision by the Supreme Court of this state, we would hold that the plaintiff in this case has no cause of action.

But the question, what is the relation of a stranger or third party to commercial paper when he puts up his money and acquires possession of the paper, is one, under many authorities, of intention; the same to be ascertained from all the facts and circumstances and the condition of the parties surrounding the transaction.

In 7 Cyc. 1025, we find that, if a note is paid after its maturity by a stranger, it will generally be held to be a purchase and not a payment of the instrument, and that whether it is a purchase or a payment is a question of intention to be determined from the facts, acts, and declarations of the parties, and surrounding circumstances, citing a great number of decisions from nearly all the states.

In the case of Swope v. Leffingwell, 72 Mo. 348, it is held that, if a stranger to a note takes it up with his money, the presumption is that it was a purchase and not a payment, and that the question whether it was a purchase or a payment is one of intention. See, also, Kyne v. Erskine, 7 Mo. App. 591; Vansandt v. Hobbs, 84 Mo. App. 628; Allen v. Dermott, 80 Mo. loc. cit. 59; Lipscomb v. Talbott, 243 Mo. 1, 147 S. W. 798; Prather v. Hairgrove, 214 Mo. 142, 112 S. W. 552.

The case of Harbeck v. Vanderbilt, 20 N. Y. 395, was cited with approval and quoted from in the case of Swope v. Leffingwell, 72 Mo. 348, loc. cit. 358-360. In the case of Harbeck v. Vanderbilt it was held, in dealing with this question, that, where the amount due upon a judgment is paid wholly or in part by one who is not a party to nor bound by it, the judgment is...