Finch v. Heeb
| Decision Date | 24 July 1939 |
| Docket Number | No. 6035.,6035. |
| Citation | 131 S.W.2d 146 |
| Parties | FINCH v. HEEB et al. |
| Court | Missouri Court of Appeals |
Appeal from Circuit Court, Scott County; Frank Kelly, Judge.
"Not to be published in State Reports."
Action on a note by Virginia Finch against J. W. Heeb and others. From a judgment for the plaintiff, defendant appeals.
Reversed.
Ray B. Lucas, of Benton, and Dearmont, Spradling & Dalton, of Cape Girardeau, for appellants.
J. Grant Frye, of Cape Girardeau, for respondent.
This is a suit on a note for $300 by Virginia Finch, an indorsee, against J. W. Heeb, L. C. Bisplinghoff and J. C. Wylie. The note is dated August 1, 1928, and is payable to Fannie Belk.
The history of the note is that in 1926 Fannie Belk loaned the Chaffee Lodge No. 735, I. O. O. F., $1,000. She sold the note to her father-in-law, Thomas G. Belk. When Mr. Belk died the note was inventoried as an asset of his estate. The administrator of the Belk estate was unable to collect the note and in order that it might be divided among the Belk heirs ten new notes aggregating principal and interest were executed. Nine of the notes were for $100 each and one was for $300. The $300 note was payable to Fannie Belk, who was the guardian of Virginia Finch, a minor, and one of the Belk heirs. When Virginia was twenty-one Fannie Belk transferred the note to her and was discharged as her guardian. In June, 1935, Virginia Finch instituted suit on the note.
The note is as follows:
On the first trial of the case the court directed a verdict for the plaintiff on the theory that there was no ambiguity on the face of the note and that the three individuals were conclusively bound as principals and therefore parol evidence was inadmissible to explain their signatures and the capacity in which they had signed. In other words the trial court was of the opinion that the defendants could not show by parol that they had signed for and on behalf of the lodge and were not to be personally liable. On appeal to this court (Finch v. Heeb et al., 231 Mo.App. 591, 107 S.W.2d 962) we held that parol evidence was admissible to show the capacity in which the defendants had signed the note for the reason that adding an official capacity, (the word "Trustee"), to the signature created an ambiguity which might be explained by parol and reversed and remanded the case.
The respondent now argues that the word "trustee" in ink and typewritten is merely descriptive of the person and that by so signing the note the appellants are bound as principals and she asks that we now correct our first opinion if we find it to be in error. Regardless of whether or not our former opinion is the law of this case and regardless of whether we have a right to change our former opinion, we think the ruling on the previous appeal was correct.
The problem turns on the interpretation to be placed on Section 20 of the Negotiable Instruments Law (Sec. 2649, R.S.Mo. 1929, Mo.St.Ann. § 2649, p. 654). That section is as follows: "Where the instrument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words describing him as agent, or as filling a representative character, without disclosing his principal, does not exempt him from personal liability."
This section has always been the subject of acrimonious legal debate. Even prior to the adoption of the Uniform Negotiable Instruments Law there were two views as to whether or not parol evidence was admissible on the question of personal liability on a note when the signature was followed by a word or abbreviation which might be either descriptive of the person or indicative of the party bound or the character or capacity in which the signer acted. For example, see the exhaustive annotation in 42 L.R.A.,N.S., 1; most of the cited cases having been decided prior to the adoption of the Negotiable Instruments Law.
As soon as the law was drafted Professor James Barr Ames made an attack on this section as a part of the famous Ames-Brewster controversy. The debate was reviewed by Charles L. McKeehan and Mr. Arthur Cohen, Q. C. The articles containing the discussions are reprinted from the Harvard Law Review and American Law Register in the 3rd edition of Brannon's "Negotiable Instruments Law," pp. 418-549.
So far as agency is concerned, Mr. Mechem had this to say of the section, 1 Mechem, Agency, Sec. 1127, p. 814:
Unfortunately Mr. Mechem's hope for uniformity by judicial interpretation has not resulted. As Judge Fulbright pointed out in our former opinion there are two views today as to whether or not parol evidence is admissible to show the capacity in which one signed a note when he added words which might indicate that he was not personally liable. For an exhaustive collection of the cases see Bieser v. Irwin, 101 Colo. 210, 72 P.2d 271, 113 A.L.R. 1364, the notes to Vol. 5, Sec. 20, Uniform Laws Annotated, and Sec. 20, Brannon's "Negotiable Instruments Law", 5th ed.
Usually the cases have turned on whether or not the "agent", "trustee", etc., signed for a disclosed principal. If a note is signed by one in an apparently representative capacity and the note so indicates or discloses a principal Missouri has adopted the view that an ambiguity is created and parol evidence is admissible to show the agent's authority and whether or not he was personally bound. In addition to the cases cited in our former opinion see and compare the following: Smith v. Alexander, 31 Mo. 193; McClellan v. Reynolds, 49 Mo. 312; Turner v. Thomas, 10 Mo.App. 338; Myers v. Chesley, 190 Mo.App. 371, 177 S.W. 326; Washington Mutual Fire Ins. Co. v. St. Mary's Seminary, 52 Mo. 480.
and the court held that in addition to construing the whole instrument to determine whether or not the parties were to be bound individually parol evidence was admissible to show the capacity in which they signed.
It will be observed that the Supreme Court of Missouri has not passed on this question since the adoption of the Uniform Negotiable Instruments Law but there is no question but that our appellate courts have adopted and followed the view that when the instrument shows that one signs in some representative capacity and there is something about the instrument indicating a principal parol evidence is admissible for the purpose of showing the capacity in which it was signed.
Entertaining these views the question then arises as to who had the burden of proof and the effect to be given the testimony presented on the second trial in accordance with our former opinion.
The plaintiff brought suit against Chaffee Lodge No. 735, I. O. O. F., a voluntary fraternal insurance association, and "the other defendants herein named, each as principal." The individual defendants, by verified answers, denied that they signed the note as principals and plead that they were trustees of the lodge and that they signed the note for and on behalf of the lodge in their capacity as trustees and by authority and direction of the lodge.
The plaintiff undoubtedly made a prima facie case when she offered the note in evidence which was, admittedly, signed by the defendants; especially since the note itself recited that "we as principal," promise to pay. In rebuttal Mrs. Belk related the history of the note and stated that the names on the note were all the security given. She loaned the lodge the original $1,000. She stated that she thought that if the lodge wasn't good the men were. Mr. Wylie told her it would be all right, evidently meaning it would be paid. She did not testify that any of the individual defendants promised to personally pay the note, or that they considered themselves personally liable on the note.
The defendants introduced in evidence the pro forma decree incorporating Chaffee Lodge No. 735, I. O. O. F. The evidence showed that the lodge building had burned and all its records were destroyed or lost. H. L. Cordrey testified that he approached Mrs. Belk about the $1,000 loan for and on behalf of the lodge and that she made the loan and the lodge got the money. The administrator of Tom Belk's estate testified that he was unable to collect the $1,000 note and that "we" asked the lodge to divide the note into smaller notes in order that it might be divided among the Belk heirs. He testified that the...
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