Farmers Bk. of Billings v. Schmidt
| Decision Date | 17 February 1930 |
| Docket Number | No. 4698.,4698. |
| Parties | FARMERS BANK OF BILLINGS, A CORPORATION, APPELLANT, v. FRANK SCHMIDT, RESPONDENT.<SMALL><SUP>*</SUP></SMALL> |
| Court | Missouri Court of Appeals |
Appeal from Douglas County Circuit Court. — Hon. Fred Stewart, Special Judge.
AFFIRMED.
Gordon J. Massey and F.W. Barrett for appellant.
(1) If there is any consideration for a note, it ceases to be accommodation paper, 8 C.J. 255 (97). The presumption is that there was a valuable consideration for a note, and the burden of this proof is on the defendant. Peoples State Bank of Hartville v. Hunter, 264 S.W. 54. The debt of a third person to the payee is a sufficient consideration for the promise of the maker of the note. Brainard v. Oapelle, 31 Mo. 428. The surrender of a note is a good consideration for the making of another. Zuendt v. Doerner, 101 Mo. App. 528; Meyers v. Van Wagoner, 56 Mo. 115, 116. A consideration need not be of any real value to the promissor. It is sufficient if it is any detriment or inconvenience to the promissee or that he changed his relation to or relinquished his supposed right against the promissor, or to a third party, in consequence of such promise. Nelson v. Diffderfer, 178 Mo. App. 48. If one gives his note to a bank for its accommodation, and he receives a note from a third party in consideration therefrom, then such person is liable to the bank on his note. Central National Bank v. Walter Sheed, 222 S.W. 912; Myers v. Hettinger, 94 Fed. 370, 373. A note given to a bank for the interest of a defaulted note held by it, to enable it to pass bank examiner, is not for the bank's accommodation with in the rule that one for whose accommodation a note is given cannot enforce it. And such a note has sufficient consideration to support it. Shaget State Bank v. Moody, 150 Pac. 425; 1916 L.R.A. 1215. When a bank wishes to make an additional loan to a customer, but cannot do so because it has loaned him all the law allows, and for that reason induces another person to give his note for the amount, promising to hold him harmless in the matter; in legal contemplation the borrower, not the bank which pays it out, is the accommodated party. German Amer. State Bank v. Watson, 99 Kan. 686, 163 Pac. 637; Blandel v. Shaw, 115 Kan. 185, 222 Pac. 62. (2) It is not proper to prove a point at issue in the trial of a case by showing that similar acts were transacted between one of the parties to the suit and other persons, although such acts may have arisen out of the same transaction. Pyrtle v. International Shoe Co., 291 S.W. 172; Hefferman v. Neumond, 198 Mo. App. 667, 201 S.W. 645; 22 C.J., sec. 839, pp. 750-751; Paramore v. Lindsey et al., 63 Mo. 63; Van Ravenswaay v. Covenant Mutual Life Ins. Co., 89 Mo. App. 73; Bailey-Ball-Pumphrey Co. v. German, 247 S.W. 483, l.c. 484; Field v. Stubblefield, 85 Mo. 199; Bank of Dexter v. Simmons, 204 S.W. (2) 837.
Farrington & Curtis for respondent.
(1) On trial to court, appellate court must take the testimony of prevailing party as true and allow him all reasonable inferences to be drawn therefrom. Weaver Bros. v. Smith, 13 S.W. (2) 578; Esty v. Walker, 3 S.W. (2) 744; Applegate v. Danciger, 2 S.W. (2) 635; Laughlin v. Grocer Co., 10 S.W. (2) 75; Hunter v. Express Co., 4 S.W. (2) 847. (2) The finding of the trial court must be upheld if there is any substantial testimony in the case upon which it is based and in such event is binding and conclusive upon the appellate court. Surbeck v. Surbeck, 208 S.W. 645; State ex rel. Bank v. Sturgis, 208 S.W. 458; Shepard v. Duncan, 208 S.W. 127; Hastings v. Swindle, 211 S.W. 71; Ketchum v. City of Monett, 226 S.W. 967; Wolfenbarger v. Metcalf, 282 S.W. l.c. 750. (3) Under the evidence in this case, the trial court was warranted in finding that the note sued upon was executed without consideration and wholly for the accommodation of the plaintiff bank. Golden City Banking Co. v. Griesel, 161 Mo. App. 477; Farmers Bank v. Harris, 250 S.W. 946; Central National Bank v. Walterschied, 222 S.W. 912; Chicago Title & Trust Co. v. Brady, 165 Mo. 197; 8 Corpus Juris, 259-260; Nat'l Bank of Commerce v. Laughlin, 264 S.W. 706; Wolfenbarger v. Metcalf, 282 S.W. 749; Peoples Bank v. Yeager, 288 S.W. 954; Farmers Bank Company v. Miller, 8 S.W. (2) 192; St. Louis Union Trust Co. v. Laughlin, 254 S.W. 844; Cox v. Heagy, 184 S.W. 495; Farmers Bank of Billings v. Schmidt, 297 S.W. 156. (4) A note given by a stockholder of a corporation for a debt of the corporation in the absence of discharge, forbearance or other new consideration, is without consideration. Glassbrenner v. Morgan, 296 S.W. 201.
Action upon a promissory note for $965. Trial by the court who found for defendant. Plaintiff appealed.
This is the second appeal in this case. The first is reported in 297 S.W. 156. The petition is in the usual form. The answer admits the execution of the note and pleads want of consideration and that the note was executed for the accommodation of plaintiff. The reply was a general denial coupled with an allegation of specific consideration for the note. Both the answer and reply alleged details to show the facts upon which they relied to support their contentions.
The burden was upon defendant to show want of consideration for the note and the case was tried on that theory. The material facts shown by the evidence are as follows: The Billings Hardware Company, a corporation in which defendant was a stockholder and director, was indebted to plaintiff bank upon notes in the sum of $10,000 and on overdrafts of $4000, making a total indebtness of $14,000. According to defendant's testimony, the cashier of the bank called upon the directors of the hardware company to make some provision by which a showing could be made on the books of the bank by which this indebtedness of the hardware company would be lowered. The directors of the hardware company, five in number, which included defendant, met with the cashier of the bank and he then stated to them the amount of the indebtedness of the hardware company to the bank and stated that the amount was more than the bank was authorized to loan to one person or corporation. That he was expecting a state bank examiner to appear at any time to examine the bank and he was anxious to have the apparent indebtedness of the hardware company reduced before the examiner should arrive. That he thought the hardware company solvent and in order to help him out with the bank examiner, he suggested that each of the five directors of the hardware company execute a note to the bank for $2000 and that would reduce the apparent debt of the hardware company to $4000, the amount of the overdrafts to the bank, and the bank could carry that amount under the law. That he would look to the hardware company for payment of these notes and would not expect payment from any of the parties who signed them. At his request and for the purpose of accommodating the bank by enabling it to pass examination without criticism, the five directors of the hardware company each executed a note to the bank for $2000 at that time. Entries were made on the books of the bank accordingly but the $10,000 in notes of the hardware company to the bank were not at that time marked paid nor were they surrendered to the hardware company. The hardware company executed to each of these directors its note for $2000, which defendant contended, and his evidence tended to show, was done merely to show the transaction and without any expectation that these notes were ever to be paid. The hardware company was to pay their notes to the bank and that would discharge the hardware company's notes to them. That defendant's note was renewed and at each renewal the same promise by the cashier to look only to the hardware company for payment was made. That the hardware company paid interest on these notes and defendant never paid anything and was not asked to pay anything. Later the hardware company made an assessment against the stockholders to raise money to pay its debts. These assessments were paid and with the proceeds all of these notes executed by these directors of the hardware company to the bank except defendant's notes were paid in full and $1045 was paid on defendant's note. This left $955 for which this suit is brought. At the time these payments were made the notes of the hardware company to the bank were marked paid and turned over to the hardware company. On these facts, the court sitting as a jury found for defendant.
The plaintiff asked for and was refused a peremptory instruction to find for it. The court then gave a declaration of law for plaintiff as follows: "That if the court should find that the notes of these directors were given to the bank in order to reduce the indebtedness of the hardware company to the bank and the hardware company accordingly obtained credit on its note to the bank, then the note of defendant was based upon a valid consideration and the court should find for the plaintiff."
The converse of these declarations to the effect that if this note and the notes of the other directors of the hardware company were given solely for the accommodation of the bank and with no other consideration passing to them, then they were without consideration and the finding should be for defendant, were given on behalf of defendant.
If the peremptory instruction to find for plaintiff was properly refused, the other declarations of law that were given were correct.
The appellant relies upon three...
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