First Nat. Bank of Liberty v. Latimer

• Decision Date: 13 November 1972
• Docket Number: No. 2,No. 56083,56083,2
• Parties: FIRST NATIONAL BANK OF LIBERTY, Missouri, Appellant, v. J. E. LATIMER, Respondent
• Court: Missouri Supreme Court

Page 262

486 S.W.2d 262

FIRST NATIONAL BANK OF LIBERTY, Missouri, Appellant, v. J. E. LATIMER, Respondent.

No. 56083.

Supreme Court of Missouri, Division No. 2.

Nov. 13, 1972.

William B. Waters, Arthur R. Kincaid, Liberty, for appellant; Hale, Coleberd, Kincaid & Waters, Liberty, of counsel.

Fred A. Murdock, Kansas City, for respondent.

HOUSER, Commissioner.

First National Bank of Liberty, Missouri (hereinafter 'the bank') filed suit on a promissory note in the original amount of $22,500, dated January 10, 1964, due in 30 days, payable to the bank, signed as follows:

'National School of Aeronautics by Jean Price Latimer, Pres.

_ _, V. Pres.

Jean Price Latimer

J. E. Latimer.'

The prayer for the balance due on the note, including interest, was for $24,227.62. Jean P. Latimer went bankrupt. During pendency of the suit the bank received a sum through the bankruptcy court, which reduced the amount claimed to $22,105, plus interest. Neither National School of Aeronautics nor Jean Price Latimer was named as a party defendant. The sole named defendant was J. E. Latimer, who filed an unverified answer admitting that the note was signed as alleged; alleging that he executed the note as a surety for the school, 'the maker thereof,' without any consideration denying that he received value for executing the note; alleging that the bank at the time the note was executed knew that he signed as surety without consideration, and that the bank for a valuable consideration at or about the time of maturity of the note, without J. E. Latimer's knowledge or consent, agreed with the school to extend and did extend the time of payment of the note 'whereby this defendant became discharged from all liability on said Note.'

In answer to interrogatories filed by J. E. Latimer the bank, under the oath of its president, stated as facts the following: The consideration for the execution of the note sued on was the payment of a previous note for $25,000 executed by the same parties. The proceeds of the original note had been paid to the school by check for $25,000. On December 19, 1963 $2,500 was paid on the principal of the original note and $158.38 for interest due, by check drawn on Latimer Motors, Ltd. There were no other notes or agreements, written or oral, with any person in connection with the note in suit except extension agreements and security agreements executed by Jean Price Latimer, president of the school. By written extension agreements, eleven in number, it was mutually agreed between the bank and the school, the latter represented by Jean P. Latimer, as president, or between the bank and Jean P. Latimer, individually, that the $22,500 note dated 1--10--1964 be extended from time to time. The last date to which the note was extended was August 21, 1966. The security agreements consisted of a $10,000 note and mortgage payable to the bank, and a pledge of Jean P. Latimer's 205 shares of Latimer Motors, Ltd. stock, both dated July 13, 1964, reciting that these securities were pledged to the bank 'in order to induce (the bank) to make additional financial accommodation to (the school), hereinafter called Borrower, including forbearance of immediate collection and renewal of past due promissory note.' The only agreements altering the terms of the note sued upon were those represented by the extension agreements. (By implication the bank's answers excluded any agreement on the part of J. E. Latimer to extend the time of payment of the note in suit.)

By deposition, certified to by the notary (signature having been waived), J. E. Latimer stated as facts the following: Latimer and Jean Price were married January 1, 1961; divorced the first part of 1965. On January 1, 1964 Jean P. Latimer was president of the school and owner of all of the stock of the corporation. J. E. Latimer was vice-president, office manager and personnel manager in charge of expense accounts, at a salary of $2,000 per month. J. E. Latimer at no time owned any stock of the school corporation. Some of his salary checks were not honored, and the school 'wasn't in the best condition.' He and Latimer Motors, Ltd. were buying notes signed by students at the school in payment of tuition and endorsed by the school. The $2,658.33 check of Latimer Motors, Ltd. to the bank (credited on the original $25,000 note) was in fact payment for paper bought by Latimer Motors, Ltd. from the school. When Latimer signed the original note for $25,000 he and his motor company owned school paper, endorsed by the school with recourse, in the sum of 'quite a few thousand dollars.' J. E. Latimer had nothing to do with making the deal for the original $25,000 loan, or the renewal note in suit. All these dealings were between his wife and the officers at the bank. J. E. Latimer had not previously discussed a loan with the president of the bank, Mr. James, or any other officer of the bank, and he was not asked for a financial statement. All arrangements for the loan had been made before J. E. Latimer was called in and asked to sign the note. Latimer's wife, after indicating to him that she was borrowing $25,000 from the bank and that she had made a 'deal' with Mr. James as to how the money was to be repaid, asked him to accompany her to the bank. It was then that Mr. James asked J. E. Latimer to sign the note 'with her,' and told Latimer that he need not worry about the note; 'it's all set up. She's going to sell the building and pay this back, and I just need your signature on here because we don't have any mortgage or anything.' Latimer did not sign the note in suit 'with the knowledge that (he) was going to pay it'; the bank, through its president, 'knew that (he) wasn't signing it to pay it back.' The loan was to the school. J. E. Latimer 'didn't get any of it.' When the note sued on matured J. E. Latimer refused to sign a renewal note or grant an extension of time. At the time the note was extended in February or March of 1964 the bank could have collected on the note because the school then had 'plenty of assets over there that they could have come in and gotten' and Jean P. Latimer had at least $20,000--25,000 in personal assets that were 'clear.'

On the day Latimer's deposition was filed the bank filed (1) an unverified reply denying generally all affirmative matter contained in Latimer's answer and (2) a request for admissions. Latimer's verified responses to the bank's request for admissions contain statements of facts as follows: On and prior to January 11, 1963 and January 10, 1964 Latimer was vicepresident of the school, on its payroll at a salary of $2,000 per month. Latimer was president of and owned the controlling interest in Latimer Motors, Ltd. All of this time Latimer Motors, Ltd. and Latimer individually were buying notes from the school with recourse against the school. He signed the note in suit but the school signed as principal to evidence its obligation to the bank. He signed 'merely as a surety' on the representation of the bank president that the note was an obligation of the school and would be paid by the school. His signature was required merely as a surety for the obligation of the school. He received no consideration for the execution of the note. He denied that the note created any obligation for him to pay except in the capacity of surety, and affirmed that the Latimer Motors, Ltd. check for $2,658.33 to the bank was not given in acknowledgment of any obligation to the bank but was given on account of the purchase of notes or 'student paper' from the school.

The bank failed to file a verified denial of the statements of fact in Latimer's deposition and in his verified responses to the bank's request for admissions, and failed to file any response, by affidavits or as otherwise provided in Civil Rule 74.04, V.A.M.R. setting forth specific facts showing that there was a genuine issue for trial.

In this state of the record each party filed a motion for summary judgment, each contending that under the uncontroverted facts before the trial court contained in the pleadings, deposition, answers to interrogatories and responses to requests for admissions, there was no genuine issue as to any material fact and that each party was entitled to a judgment as a matter of law. The bank's unverified motion alleged that the bank was entitled to judgment because Latimer executed the note and therefore was primarily liable thereon; that there was lawful consideration because of (1) Latimer's employment as an officer of the corporate maker of the note; (2) the ownership by Latimer and his controlled company of notes with recourse against the school, thereby making him a creditor of the school; and (3) the marital status between him and the other individual maker, resulting in the unavailability of the defense of suretyship. Latimer's countermotion alleged that under the uncontroverted and unassailable evidence he signed the note as a surety or accommodation maker, and that he is discharged of all liability because the bank granted extensions to the maker of the note (the school), based upon a valuable consideration, without Latimer's...