Clapper v. Gamble

• Decision Date: 28 September 1928
• Docket Number: No. 8084.,8084.
• Citation: 28 F.2d 755
• Parties: CLAPPER et al. v. GAMBLE.
• Court: U.S. Court of Appeals — Eighth Circuit

28 F.2d 755 (1928)

CLAPPER et al. v. GAMBLE.

No. 8084.

Circuit Court of Appeals, Eighth Circuit.

September 28, 1928.

Harry J. Libby, of Shelbina, Mo. (James H. Whitecotton, of Moberly, Mo., and William W. Barnes, of Paris, Mo., on the brief), for plaintiffs in error.

Ezra T. Fuller, of Hannibal, Mo. (George A. Mahan and Dulany Mahan, both of Hannibal, Mo., and James P. Boyd, of Paris, Mo., on the brief), for defendant in error.

Before VAN VALKENBURGH and BOOTH, Circuit Judges, and POLLOCK, District Judge.

BOOTH, Circuit Judge.

This is a writ of error to a judgment entered upon a directed verdict in favor of R. R. Karraker, as receiver of the Drovers' National Bank, who was plaintiff below, but has been succeeded by Joseph A. Gamble, defendant in error. The action was brought to recover on two promissory notes, claimed to be part of the assets of the insolvent bank.

The complaint was in two counts. The first count alleged that the Drovers' National Bank of East St. Louis, Ill., was organized under the laws of the United States, and that R. R. Karraker was the duly appointed and acting receiver of said bank; that the defendants were all citizens and residents of the state of Missouri; that the Old Bank of Stoutsville, Mo., was a banking corporation organized and existing under the laws of the state of Missouri; that on the 3d of May, 1924, and long prior thereto the Old Bank of Stoutsville was indebted to the Drovers' Bank in the sum of more than $10,000; that in addition the Drovers' Bank held a note for $9,500 signed by James H. Dooley, dated December 20, 1923, due 180 days after date. The complaint further alleged:

"That on the 3d day of May, 1924, the defendants, J. P. Clapper, J. P. Sohlinger, Lambert Buckman, E. S. Kelly, John M. Dixon, and J. H. Dooley, together with R. E. Crump and A. C. Jordan executed and delivered to J. H. Dooley, a certain promissory note whereby for value received, said defendants and said R. H. Crump and A. C. Jordan, they or either of them, promised to pay to the order of said J. H. Dooley at the Old Bank of Stoutsville, one year after the date of said note, the sum of $5,000, together with interest thereon from the date thereof at the rate of 8 per cent. per annum, payable annually; * * * that thereafter, and prior to May 3, 1925, the said J. H. Dooley for value received, duly indorsed, transferred and delivered said note for $5,000 to the Drovers' National Bank of East St. Louis, Illinois, without recourse, it being then and there understood and agreed by and between the said J. H. Dooley and the Drovers' National Bank of East St. Louis, Illinois, that said note for $5,000, so executed on said 3d day of May, 1924, should stand and be held by said Drovers' National Bank of East St. Louis, Illinois, as collateral security to the obligations of the Old Bank of Stoutsville, Missouri, including overdrafts, rediscounts, bills payable and the note of J. H. Dooley for $9,500; that said note for $5.000 bore the following indorsement on the back thereof: `Assigned to Drovers' National Bank of East St. Louis, Illinois, as collateral security to obligations of Old Bank of Stoutsville, Stoutsville, Missouri, including overdrafts, rediscounts, bills payable and note of J. H. Dooley, for $9,500 without recourse on me. Signed J. H. Dooley.'"

The complaint further alleged that said note was owned by the receiver; that it was due and unpaid, though demand had been made for payment; that the debts to which the note was collateral were also due and unpaid. The second count contained similar allegations based upon another note of the same amount, bearing the same date, executed by the same parties, due 14 months after date, and bearing a similar indorsement. Judgment was demanded against the defendants on both notes.

Though diverse citizenship was alleged in the complaint, apparently as a ground of jurisdiction, yet there exists grave doubt whether lack of jurisdiction on that ground was not disclosed on the face of the complaint by reason of the "assignee clause" contained in section 24 (1) Judicial Code (U. S. C. tit. 28, § 41 (1); 28 USCA § 41 (1). However, jurisdiction clearly exists under section 24 (16) Judicial Code (U. S. C. tit. 28, § 41 (16); 28 USCA § 41 (16), relating to certain suits involving national banks. In re Chetwood, 165 U. S. 443, 17 S. Ct. 385, 41 L. Ed. 782; Auten v. U. S. Nat. Bank, 174 U. S. 125, 19 S. Ct. 628, 43 L. Ed. 920; Armstrong v. Trautman (C. C.) 36 F. 275; Price v. Abbott (C. C.) 17 F. 506; McDonald v. Nebraska, 101 F. 171 (C. C. A. 8); Guarantee Co. of N. D. v. Hanway, 104 F. 369 (C. C. A. 8); McCartney v. Earle (C. C. A.) 115 F. 462; Studebaker Corp. v. First Nat. Bank (D. C.) 10 F.(2d) 590.

Copies of the notes sued upon were attached to the complaint. The first note read as follows:

"No. ______. $5,000. Stoutsville, Mo "May 3, 1924.

"One year after date, we or either of us as principal, promise to pay to the order of J. H. Dooley, at the Old Bank of Stoutsville, Mo., five thousand and no/100 dollars for value received, with interest after date at the rate of 8% per annum which interest shall be due and payable annually and if the interest thereon be not paid annually or when due the same shall, when due, be added to and become a part of the principal, and bear interest at the same rate. The makers and indorsers hereof, waive demand, notice and protest.

"______ Postoffice. "Signed "J. P. Clapper. Lambert Buckman. "R. H. Crump. E. S. Kelly. "J. P. Sohlinger. John M. Dixon. "A. C. Jordan. J. H. Dooley. "Date ______. "Extended to ______. "Extended to ______. "Extended to ______. "Extended to ______."

And on the back thereof, appeared the following:

"Assigned to Drovers' National Bank East St. Louis, Illinois, as collateral security to obligations of Old Bank of Stoutsville, Stoutsville, Missouri, including overdrafts, rediscounts, bills payable, and note of J. H. Dooley for $9,500.

"Without recourse on me. "Signed J. H. Dooley."

Of the eight signers of the notes, six were made defendants in the action. All of these, except Dooley, made joint answer. They admitted the citizenship of the parties as alleged in the complaint, denied that they signed the note set out in the first count of the complaint, but admitted that they signed a paper reading as follows:

"No. ______. $5,000.00. Stoutsville, Mo "May 3, 1924.

"One year after date, we or either of us as principal, promise to pay to the order of the Old Bank of Stoutsville, Mo., five thousand and no/100 dollars for value received, with interest after date at the rate of eight per cent. per annum, which interest shall be due and payable annually and if the interest be not paid annually or when due, the same shall when due be added to and become a part of the principal and bear interest at the same rate. The makers and indorsers hereof waive demand, notice and protest."

They denied that the writing as signed had ever been delivered to the Old Bank of Stoutsville, alleged further "that said writing being so executed as aforesaid was afterwards, with the full knowledge and consent of the Drovers' National Bank aforesaid, materially altered and changed by erasing from said writing the words `order of the' and adding before the words `Old Bank of Stoutsville, Mo.,' the words `order of J. H. Dooley at the,' thereby materially altering said note, which by said change being materially altered with the knowledge and consent of said Drovers' National Bank with such knowledge, was received by the said Drovers' Bank and placed among its assets." They alleged, further, that the alterations in said writing were made without their knowledge or consent. They denied that either they or the Old Bank of Stoutsville was indebted to the Drovers' National Bank.

Similar answer was made to the second count.

Defendant Dooley made separate answer. He admitted the citizenship of the parties as alleged in the complaint; admitted the indebtedness of the Old Bank of Stoutsville to the Drovers' National Bank as alleged in the complaint; also that the Drovers' Bank held a note signed by him for $9,500; but he alleged that this was made on behalf of the Old Bank of Stoutsville; that it received and retained the money thus obtained from the Drovers' National Bank. Defendant Dooley in his separate answer further alleged that the note set up in the first count of the complaint was signed by himself and the other defendants, and by Crump and Jordan, with the understanding that the note should be used by him as cashier of the bank or by the assistant cashier as accommodation paper to secure further loans or the existing indebtedness of the Old Bank of Stoutsville. The answer further alleged that he was duly authorized by the signers of said note to use the note as aforesaid, and further specifically averred that at the time the defendants signed said note it was not dated, nor was the time of payment inserted therein, but that the note was left in the hands of himself and said A. C. Jordan with the authority to fill in said blanks at any time it became necessary, for securing obligations for the Old Bank of Stoutsville, Mo., and to make such other alterations as was in his judgment necessary to negotiate the same, and that he prepared the said note in its present form, presented the same to plaintiff bank, and negotiated it in good faith as collateral security. Similar answer was made by Dooley to the second count.

The plaintiff, in his reply to the answer of the defendants, except Dooley, denied the allegations of the answer, and alleged affirmatively, in substance, what was alleged by Dooley in his answer. The defendants, other than Dooley, moved to strike out the reply of plaintiff. The motion was denied. They also demurred to the separate answer of Dooley. The demurrer was overruled.

The case went to trial before the court and a jury. At the close of all the evidence both sides moved for a directed verdict. By...