Citizens Trust Company v. L. C. Going
| Decision Date | 23 June 1921 |
| Citation | 232 S.W. 996,288 Mo. 505 |
| Parties | CITIZENS TRUST COMPANY, Receiver, Appellant, v. L. C. GOING |
| Court | Missouri Supreme Court |
Appeal from Dunklin Circuit Court. -- Hon. W. S.C. Walker, Judge.
Affirmed.
Orville Zimmerman and C. G. Shepard for appellant.
Ward & Reeves for respondent.
(1) If Going gave his note directly to the bank for the purpose of procuring funds with which to buy for the lumber company the north half of Section 8, did the bank have the right to take the proceeds of this note and credit same to the account of the Pemiscot Lumber Company without the consent of Going? This question must be answered in the negative. If Going received no part of the proceeds of the note and if he never authorized the bank to deposit the proceeds to the credit of the Pemiscot Lumber Company, then there has been a total failure of consideration. (2) If Tindle by reason of his agreement with Going, was liable to the bank, did the agreement between Cunningham, as trustee, and Tindle on July 12, 1913, taken into connection with the trust deeds of May 15th and May 30th, constitute a merger and a resultant satisfaction of the direct and indirect indebtedness of Tindle to the bank including the note sued on? This issue was submitted by the court to the jury upon instruction 4. The instruction accurately declared the law upon this issue. Ordinarily a conveyance by the mortgagor to the mortgagee of the fee in mortgaged lands results in a merger of the legal and equitable titles and the resultant satisfaction of the entire debt secured by the mortgage. 27 Cyc. 1378B; Wallen v. Huff, 5 Humph. 91; Jackson v Evans, 44 Mich. 510; Howe v. Woodruff, 12 Ind 214; Pearson v. Bailey, 180 Mass. 229; National Investment Co. v. Nordm, 50 Minn. 336. (3) Did the agreement between Going upon the one hand, and Reynolds and Cunningham, as agents and trustees of the bank, upon the other, that Going would surrender his claim of $ 6000 against the lumber company in consideration of the release of the note sued on, constitute a settlement and satisfaction of same? It is seriously contended by appellant that receivers appointed by the court are simply agents of the court and derive their power and authority to act under and in pursuance of its orders and that a receiver cannot lawfully compromise or settle a claim due the estate in litigation for less than the face value of the same without permission of the court. This is true, but if Going's contention is correct, and he had the right to have his contention submitted to the jury, then the receivers did not sacrifice any legitimate claim of the bank. If the agents of the bank in collecting its assets acquired the capital stock of the lumber company, then that capital stock was a part of the bank assets, charged, however, with the indebtedness of the lumber company, and if the lumber company was solvent and owed Going $ 6000 and Going owed the bank $ 6000 and the bank owned the lumber company, the situation presented was just exactly like Going says Reynolds and Cunningham declared it to be, that is, "It's as broad as it's long; if you pay us, we will have to pay you the same sum," so there was in effect no cancellation, no compromise and no settlement of an indebtedness to the bank for less than the face value of same.
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 $ 6000 made by the defendant, Going, to said bank. The answer admits the execution of the note, but 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. 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 six thousand dollars 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 fifteen hundred 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 asserts 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 whom 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 six thousand dollars in cash for the Pemiscot Lumber Company to apply to the payment of the half section of land. Tindle's deposition...
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