Citizens' Trust Co. v. Going

• Decision Date: 23 June 1921
• Docket Number: No. 22632.,22632.
• Citation: 288 Mo. 505,232 S.W. 996
• Parties: CITIZENS' TRUST CO. v. GOING.
• Court: Missouri Supreme Court

232 S.W. 996

288 Mo. 505

CITIZENS' TRUST CO. v. GOING.

No. 22632.

Supreme Court of Missouri, Division No. 2.

June 23, 1921.

Appeal from Circuit Court, Dunklin County; W. S. G. Walker, Judge.

Suit by the Citizens' Trust Company, receiver, against L. C. Going. From judgment for defendant, plaintiff appealed to the Court of Appeals, which affirmed the judgment (224 S. W. 1019), and the case was certified to the Supreme Court. Judgment affirmed.

C. G. Shepard, of Caruthersville, for appellant.

Ward & Reeves, of Caruthersville, for appellee.

WALKER, J.

The receiver of the Pemiscot County Bank brought this suit in the circuit court of that county to enforce the payment of a promissory note for $6,000 made by the defendant, Going, to said bank. The answer admits the execution of the note, tut pleads in defense estoppel, settlement, and payment. There was a verdict for the defendant, and from the judgment rendered thereon the plaintiff appealed to the Springfield Court of Appeals, which affirmed the judgment of the circuit court. 224 S. W. 1019. One of the judges of the Court of Appeals dissented on the ground that the majority opinion conflicted with certain rulings of the Supreme Court and certified the case here for review.

The following facts are pleaded in the answer: The making of the note is admitted, and that when it was executed and prior thereto one A. C. Tindle was the cashier of the Pemiscot County Bank and was also the president of the Pemiscot Lumber Company, an Arkansas corporation. Defendant was the attorney for the lumber company. At Tindle's request defendant executed the note for $6,000 to the bank, the proceeds of same to be used in the purchase of a tract of land in Arkansas, and in turn Tindle agreed to and did execute a note for a like amount by the lumber company to the defendant to secure him against loss on account of the note given by him to the bank. At Tindle's request, the bank discounted defendant's note to provide funds to purchase for the lumber company a half section of land in Arkansas, which was the purpose for which the note had been given. The proceeds arising from this transaction were placed by the bank to the credit of the lumber company, and defendant received no part of same. With these proceeds the lumber company paid for the land, and defendant's note, was regarded by the bank as the note of the lumber company. Defendant was not notified by the bank that the note had not been paid, and no demand was made upon him for Its payment; that but for the conduct of the bank the defendant could and would have proceeded to enforce the payment of the note given to him by the lumber company which was then solvent, but which subsequently became bankrupt. That by reason of the foregoing facts, the bank as well as the plaintiff, its receiver, is estopped from prosecuting this cause. That in June, 1913, the Pemiscot County Bank was found to be insolvent and was taken in charge by the state banking department, and later was placed in the hands of two of the bank's directors as trustees. That it was then discovered that Tindle, its former cashier, owed the bank large amounts of money, and in an effort to pay the same he transferred to one of the said trustees much personal and real property, among which was the stock of the Pemiscot Lumber Company. That preparatory to the conveyance of this property to the trustees for the bank the defendant was employed by said trustees to represent the bank in said conveyance. That it was discovered that about 1,500 acres of land in Arkansas had been purchased by the lumber company, but that the deeds thereto had been taken in the name of Tindle and one Elder, and that Tindle had conveyed all of said lands to Elder, and that the title to same was in him. That these lands included the half section which had been paid for with the proceeds of the note given by the defendant to the bank. That the trustees thereupon employed defendant to divest Elder of his title to said land and vest the same in trustees for the bank and, that said service was successfully performed by the defendant. That before this was effected defendant informed both of the trustees for the bank that the proceeds of his (defendant's) note, which is now being sued on, had been used to pay for the half section of the land for the lumber company, and notified them of his intention to have an equitable lien declared against said land to protect him from the payment of said note. That said land was worth at the time more than the amount due on said note. That the said trustees, as agents for and representatives of the bank, then and there agreed with the defendant that in lieu of the satisfaction of his note they would take, accept, and receive for the bank the title to said half section of land, and, in pursuance of this agreement, defendant abandoned his right to enforce his lien against said land, and caused the title to same to be vested in the trustees for the bank, and abandoned his right to proceed against the lumber company on the note given by it to him to protect him against the payment of the note sued on; that the bank, after securing the title to the half section of land aforesaid by silence and acquiescence, lulled the defendant into a sense of security until after the title to the half section had been adjusted, the lumber company had gone into bankruptcy, and the half section of land was listed as a part of the company's assets, when the bank sought to hold said land as a preferred creditor for the satisfaction of the note it is now seeking to compel the defendant to pay. That by reason of said facts plaintiff is barred and precluded in good conscience and in equity from maintaining this action.

The reply denies the new matter, and that the representatives of the bank did not make the agreement to release the defendant's note, and, if such agreement was made, it was void for lack of authority, because the bank had failed and its affairs were in the hands of the State Bank Commissioner.

It was admitted that the plaintiff trust company was the receiver of the bank, and that it sued as such.

Plaintiff introduced the note and rested. Defendant testified along the lines of and in support of his answer. In addition he introduced in evidence contracts, deeds, etc., from Tindle to one of the trustees of the bank to show that the note sued on had been paid by Tindle. Tindle's deposition was read on behalf of the defendant and supported the latter's testimony. Among other things, Tindle stated that he explained the transaction in regard to the making of the two notes to both of the trustees, as representatives of the bank, one of which was then a director and the other the president of the bank, and told them the purpose for which the note sued on had been given by the defendant, the same being to enable him (Tindle) to secure $6,000 in cash for the Pemiscot Lumber Company to apply on the payment of the half section of land. Tindle's deposition corroborated the testimony of the defendant in other particulars, which, if necessary to be stated in detail, will be found in the opinion. The trustees denied that they had made any agreement with the defendant releasing the note sued on, but admitted that defendant assisted them in removing the cloud from the title to the half section of land to which Elder held the deed. They also denied that defendant's note was satisfied by the settlement made by them with Tindle for the bank.

I. It is contended that the circuit court erred in submitting this case to a jury. The action was at law. The defenses thereto may to a certain extent be equitable in form, but the interposition of an equitable defense in the absence of a prayer for affirmative relief based thereon does not convert the action into one in equity. This ruling has been attested in numerous cases. Hayes v. McLaughlin, 217 S. W. loc. cit. 264; Koehler v. Rowland, 275 Mo. loc. cit. 581, 205 S. W. 217, 9 A. L. R. 107, and cases; Toler v. Edwards, 249 Mo. loc. cit. 168, 155 S. W. 26; Lee v. Conran, 213 Mo. 404, 111 S. W. 1151; Minor v. Burton, 228 Mo. loc. cit. 563, 128 S. W. 964.

In the Lee-Conran Case, the distinction between the two classes of cases as regards the right of trial by jury is thus defined:

"If the issue joined entitled the parties to an ordinary judgment at law, then, under the Constitution and the laws of the state, the parties are entitled to a trial by jury; but, if the issues tendered are equitable in their nature and call for equitable relief, then the cause is triable before the chancellor."

In that case the action was one at law. The answer, among other defenses, as at bar, pleaded estoppel. This was held in the absence of a prayer for affirmative relief, not to convert the action into one in equity.

In the Toler-Edwards Case we said further in this regard:

"It has long been settled in this state that a purely legal action, such as ejectment, is not converted into one in equity simply by the interposition of equitable defenses thereto, unless there is a prayer for affirmative relief based on those defenses."

An epitome of the defenses pleaded in the answer will demonstrate whether any equitable right was thereby sought to be established or if a demand was made for the application of an equitable remedy. The answer alleged that the proceeds of the note had been diverted from its purpose or transferred to another without authority, and that the defendant had derived no benefit therefrom; that the note was given for a specific purpose with the knowledge and approval of the bank officials, and that the Pemiscot Lumber Company was, in fact, the maker and the real beneficiary; that the note had been paid by Tindle, and, if not paid, that it had been settled in the surrender by defendant to the bank of the note for a like amount which had been given to him by the lumber company. These were questions of fact for the determination of the jury in an action...