Farmers & Merchants Bank of Eureka v. Boland
| Decision Date | 07 December 1943 |
| Docket Number | No. 26277.,26277. |
| Citation | 175 S.W.2d 939 |
| Court | Missouri Court of Appeals |
| Parties | FARMERS & MERCHANTS BANK OF EUREKA v. BOLAND. |
Appeal from Circuit Court, St. Louis County; John A. Witthaus, Judge.
"Not to be reported in State Reports."
Action by Farmers & Merchants Bank of Eureka against Joseph Boland on a note, wherein the defendant filed a cross-petition praying that note be cancelled and that plaintiff be enjoined from assigning and transferring it. From a judgment for plaintiff, defendant appeals.
Affirmed.
Bryan, Williams, Cave & McPheeters, of St. Louis, for appellant.
Walter Wehrle, of Clayton, and James L. Anding, of Pacific, for respondent.
This action was brought by respondent, as plaintiff, against appellant, as defendant, on a promissory note in the sum of $1000, dated September 2, 1939, executed by defendant. Defendant, in his answer, admitted the execution of the note but denied liability thereon because, as he alleged, the note was executed and delivered to plaintiff in lieu of $1000 which defendant had advanced to plaintiff under an agreement between plaintiff and its directors — defendant being one of the directors — wherein the plaintiff bank agreed to return to the directors the amounts deposited and advanced by them when the then impaired capital and surplus of the bank should be remedied and the impairment of the bond account of the bank should be removed; that the note sued on is an accommodation note executed without consideration and was given solely to enable plaintiff bank to remain open and to repair the bank's impaired capital and surplus. The answer of defendant further alleged that the impairment of the capital and surplus of the bank no longer exists; that the bank is a solvent and going concern, and defendant is, therefore, in no wise indebted to plaintiff on the note. Defendant also pleaded the above facts in a cross-petition and prayed the court to annul the note and order it to be canceled and delivered to defendant and that plaintiff be enjoined from assigning and transferring the note.
The reply of plaintiff contained a general denial and specific denials of the allegations of defendant's answer and cross-petition. A trial before the court resulted in a finding and judgment in favor of plaintiff and against defendant in the sum of $1247.21, representing principal and interest on the note sued on and attorney's fee. The court also found against defendant on his cross-petition and denied his prayer for equitable relief. After an unavailing motion for a new trial, defendant appealed.
Defendant contends that the findings and decree of the court under the pleadings and the evidence should have been for defendant on plaintiff's petition, and also for defendant on his own cross-petition.
Peter T. Bienmueller, cashier of plaintiff bank, testified as a witness for plaintiff that on March 2, 1936, he was assistant cashier of the bank; that Henry Heitmann was its president, and defendant was its vice-president; that on said date the witness was in the bank and heard what was said between defendant and Mr. Thee, who was then the cashier of the bank; that defendant said he wanted to borrow $1000 and Mr. Thee said: "All right," and that Mr. Thee prepared a note and handed it to defendant, who signed it; that Mr. Thee then asked defendant what he wanted to do with the money and defendant said: "Put it in my account," which was done.
Plaintiff introduced in evidence, as plaintiff's Exhibit A, the note sued on which was payable on demand after date and dated September 2, 1939. It also introduced in evidence plaintiff's Exhibit B, a $1000 deposit ticket "By Joseph M. Boland" showing a deposit of said sum in the plaintiff bank dated March 2, 1936; also plaintiff's Exhibit C, a sheet from the liability ledger of the bank showing Joseph M. Boland to be indebted to the bank for $1000 beginning March 2, 1936; and plaintiff's Exhibit D, a sheet from the ledger of the bank showing a deposit of $1000 to the account of Joseph M. Boland dated March 2, 1936.
Plaintiff's cashier further testified that the original note for $1000 dated March 2, 1936, was renewed each time it became due until the note of September 2, 1939, the note sued on herein, was given by defendant to the bank.
Plaintiff introduced in evidence plaintiff's Exhibit E, a check drawn on plaintiff bank against defendant's account payable to plaintiff, dated 9/1/39 for $30, signed by defendant. Plaintiff's cashier testified that said check was used by defendant in paying the interest on the prior old note when it was replaced by the note of September 2, 1939, the one sued on herein. Plaintiff also introduced in evidence its Exhibits F, G, H, I and J, entries in the bank's daybook showing payment of interest by defendant on the note dated March 2, 1936, and on subsequent renewals thereof from time to time, the last-named payment of interest being made on September 1, 1939.
It appears from the record of the minutes of the proceedings of the Board of Directors of the Bank, introduced in evidence by plaintiff as plaintiff's Exhibits L, M, N, O, and P, that after the original loan was made to defendant on March 2, 1936, defendant attended meetings of the Board of Directors from time to time up to July 6, 1937, the date of his resignation as a director, and during that period he, with the other directors, approved the loan of $1000 made to him by the bank. The evidence also shows that demand was made for payment of the note sued on, which was due March 2, 1940, but it was not paid; that the interest thereon amounted to $133.83, and attorney's fees amounted to $113.38.
The evidence shows that in September, 1932, there was a total depreciation of the bond account of the bank amounting to $29,663.15; that among the depreciated assets were bonds of the par value of $11,000 which were in default, the depreciation thereon amounting to $9,654.40. It was in connection with said depreciation that the directors contributed to the bank $10,200 in cash and liquid assets, in accordance with the provisions of an agreement introduced in evidence as defendant's Exhibit 4, which we shall refer to later. There was evidence that the defaulted bonds of the par value of $11,000 were removed from the assets of the bank by the directors — defendant being one of said directors at that time, and that the bank did not thereafter have any interest in said removed bonds and that they were never thereafter listed as assets of the bank.
It appears that after the defaulted bonds had been removed from the assets of the bank the directors organized a company known as the Eureka Holding Company, which is not a corporation; that said company thereafter held the bonds that had been removed from the bank's assets. There was evidence showing that the Eureka Holding Company had been dealing in securities from the time of its formation, and that only two of the original issues removed from the bank's assets in 1932 remained in the Holding Company's possession.
The evidence shows that when the bank's bond account was depreciated, as heretofore shown, and the members of the Board of Directors made their contribution of $10,200 to keep the bank open as a going concern, an agreement was executed dated September 21, 1932. Said agreement, defendant's Exhibit 4, is as follows:
and said amount has been deposited on said date with the Farmers & Merchants Bank. It is understood and agreed between said directors named and said Farmers & Merchants Bank that this said sum of Ten Thousand two hundred Dollars has been deposited by above directors for the purpose of taking up depreciation in the bond account of said bank caused by present market conditions of bonds and is to be placed and kept by the Farmers & Merchants Bank in a `Special Guaranty Bond Reserve Account' to be then held until reserve bond account has been increased to a sufficient amount to make up said depreciation so that there is no impairment of capital or surplus of said bank. At the time when said such depreciation is made up and restored it is understood and agreed by said bank and directors that said ten thousand two hundred dollars is to be withdrawn by said directors, their heirs, assigns, or legal representatives in accordance with the sums advanced by each of them.
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