Federal Deposit Ins. Corp. v. Cloonan

• Court: Kansas Supreme Court
• Writing for the Court: PARKER, Justice.
• Citation: Federal Deposit Ins. Corp. v. Cloonan, 165 Kan. 440, 196 P.2d 195 (Kan. 1948)
• Decision Date: 10 July 1948
• Docket Number: 37083-37085.
• Parties: FEDERAL DEPOSIT INS. CORPORATION v. CLOONAN et al. (three cases).

196 P.2d 195

165 Kan. 440

FEDERAL DEPOSIT INS. CORPORATION v. CLOONAN et al. (three cases).

Nos. 37083-37085.

Supreme Court of Kansas

July 10, 1948

Appeal from District Court, Labette County; Larue E. Goodrich Judge.

Two actions by the Federal Deposit Insurance Corporation against H. J. Cloonan on promissory notes, and action by Federal Deposit Insurance Corporation against H. J. Cloonan and another on a promissory note. From judgments sustaining demurrers to the amended petitions plaintiff appeals, and defendant Helen M. Cloonan in the third action appeals from a judgment overruling her demurrer to the amended petition. Actions consolidated for appellate purposes.

Syllabus by the Court

1. Under the negotiable instruments law of this state (G.S 1935, 52-218) no person is liable on a promissory note whose signature does not appear thereon unless liability is expressly imposed by other provisions of such law.

2. The amended petitions in three actions involving liability on as many promissory notes examined, and it is held, the trial court did not err in holding that such pleadings failed to state a cause of action against a defendant whose signature did not appear upon the instruments sued on.

3. The amended petition in Case No. 37,083 examined, and held, to state a cause of action against a defendant who had signed the note involved in that action.

A. L Foster, of Parsons, for appellant and appellee Federal Deposit Insurance Corporation.

Elmer W. Columbia, of Parsons (John B. Markham and Herman W. Smith Jr., both of Parsons, on the brief), for appellee H. J. Cloonan and appellant Helen M. Cloonan.

PARKER Justice.

In these three actions, consolidated in this court for appellate purposes, the plaintiff is attempting to recover a judgment against the defendant, H. J. Cloonan, on three promissory notes. The plaintiff appeals from a judgment sustaining such defendant's demurrers to its amended petitions.

Case No. 37,083 presents one additional issue. Helen M. Cloonan joined with her husband H. J. Cloonan, as a party defendant in that action appeals from a judgment overruling her demurrer to the amended petition. No further attention will be given this phase of the appeal until the issue common to all cases has been outlined and determined. Until it is discussed the words 'defendant' or 'appellee' have reference to H. J. Cloonan only and the word 'appellant' signifies the plaintiff corporation.

The theory on which plaintiff bases its right of recovery against the defendant cannot be clearly visualized except by a detailed recital of the allegations set forth in one of the involved pleadings. Therefore we feel impelled to quote at length from the amended petition in case No. 37,084 which, omitting formal matters and other allegations not deemed material, reads:

'3. That defendant H. J. Cloonan is a resident of Labette County, Kansas, his post office address being 4250 Main Street, Parsons, Kansas. That the residence or whereabouts of defendant H. M. Blankenship is at this time unknown to plaintiff.

'4. That from on or about the month of December, 1938, defendant H. J. Cloonan was engaged in the automobile and garage business in the City of Parsons, Kansas. * * *

'5. The Exchange State Bank of Parsons, Parsons, Kansas, was a corporation duly created, organized and existing under and by virtue of the laws of the State of Kansas and at all times mentioned herein carried on a banking business at 1817 Main Street, Parsons, Kansas, until June 21, 1941, when it closed its doors. During the interim of time from December 1938 to June 21, 1941, said defendant was a patron of said Bank.

'6. That said Bank, from August 23, 1935, to June 21, 1941, the date upon which it closed its doors, was an insured bank of and in Federal Deposit Insurance Corporation of United States, as evidenced by Certificate No. 11,773.

'7. That on or about January 3, 1941, one Harold Evert Reece was a director, officer, agent, and employee of and at said time was holding the office of Cashier of said Bank. He continued in such official capacity until April 5, 1941, when he became President of said Bank, which office he held until May 31, 1941, when he resigned.

'8. That on or about January 3, 1941, one William Adelbert Smith was a director, officer, agent and employee of and at said time was holding the office of Assistant Cashier of said Bank. He continued in such official capacity until April 5, 1941, when he became Cashier of said Bank, which office he held until June 21, 1941, when said Bank closed its doors.

'9. That on March 27, 1941, H. J. Cloonan was indebted to said Bank in the sum of $11,850.00 for money which he had received out of the funds of said Bank. That said sum of money and the various portions thereof constituted excess loans and was in excess of any amount which said Bank could legally loan to said H. J. Cloonan at the time the same were made, and was obtained wrongfully and unlawfully in violation of law thereinafter cited; and was part and parcel of the conspiracy hereinafter alleged.

'10. That on March 27, 1941, when said H. J. Cloonan was insolvent and heavily indebted to said Bank and when the said Harold Evert Reece and William Adelbert Smith was each a director, officer, agent and employee of said Bank and holding the office of President and Cashier, respectively, and while so acting had access and control of all the records, funds, moneys and credits of said Bank, the said Harold Evert Reece, William Adelbert Smith and H. J. Cloonan, with the intent to cheat, injure, defraud, and deceive said Bank, its depositors, the bank examiners of the State of Kansas, Federal Deposit Insurance Corporation and its examiners, schemed, planned, and conspired together to conceal the fact that said sum of money had been so turned over to said defendant H. J. Cloonan as such excess loans and that he and no other owed said obligation to said Bank; that in furtherance of said scheme, plan and conspiracy directed and caused one H. M. Blankenship to make, execute, and deliver to said Bank his promissory note in writing, dated March 27, 1941, due May 26, 1941. That said instrument was numbered 38058 in said Bank and shown therein as an asset thereof. * * * That said instrument, in truth and in fact, evidenced the indebtedness of said H. J. Cloonan and was for money which the said H. J. Cloonan had so received from said Bank in excess of any sum or sums which said Bank could legally have loaned to him. That said instrument was so made for the purpose of deceiving the corporation and persons aforesaid and to induce them to believe that said instrument was the obligation of H. M. Blankenship and not the defendant H. J. Cloonan. That said H. M. Blankenship was insolvent and was without assets or credits with which to pay said note or any material portion thereof at said time and did not intend to pay the same, all of which was well known to said conspirators, who knew that said instrument was not what it purported to be--a good and valid note of H. N. Blankenship--but was being used for the purpose of deceiving, injuring and defrauding the corporations and persons aforesaid. That in furtherance of said conspiracy said defendant H. J. Cloonan and his said co-conspirators, on May 28, 1941, caused a renewal note thereof to be made by said H. M. Blankenship, numbered 38541 and carried on the records of said Bank as an asset thereof. * * *

'11. That said promissory note, to-wit: Exhibit A. was by the said H. J. Cloonan and his co-conspirators caused to be made, executed and delivered and entered upon the books and records of said Bank falsely and fraudulently with the intent to cheat, injure, defraud and deceive said Bank, its depositors, Federal Deposit Insurance Corporation, its officiers, agents and examiners, wrongfully and unlawfully and in violation of law, to-wit: 12 U.S.C.A. § 592; 12 U.S.C.A. § 264(s), and in furtherance of the scheme,

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