First Nat. Bank v. Hubbard

• Decision Date: 08 May 1922
• Docket Number: No. 3026.,3026.
• Citation: 211 Mo. App. 9,240 S.W. 854
• Parties: FIRST NAT. BANK OF MOUNTAIN GROVE v. HUBBARD.
• Court: Missouri Court of Appeals

240 S.W. 854

211 Mo. App. 9

FIRST NAT. BANK OF MOUNTAIN GROVE v. HUBBARD.

No. 3026.

Springfield Court of Appeals. Missouri.

May 8, 1922.

Appeal from Circuit Court, Wright County; C. H. Skinker, Judge.

Action by the First National Bank of Mountain Grove against J. M. Hubbard. From judgment for plaintiff, defendant appeals. Affirmed.

Lamar & Lamar, of Houston, for appellant.

N. J. Craig, of Mansfield, and A. M. Curtis, of Hartville, for respondent.

BRADLEY, J.

This is a suit on a promissory note. The cause was tried below before the court without a jury, and judgment went for plaintiff for the face of the note with interest, and defendant appealed.

The note sued on is for $1,500, and is dated September 10, 1919, and due on demand. The defense is failure of consideration. Defendant pleads in his answer that the note is a renewal of other notes of like amount, and that all of said notes were without consideration, and were executed solely for the accommodation of plaintiff. Defendant's answer, after admitting that he signed the note, is as follows:

"For further answer to plaintiff's petition defendant says that, while it is true that he executed said note, and delivered it to the plaintiff, yet defendant says that said note was and is wholly without consideration; that defendant received nothing, and that plaintiff paid to this defendant nothing, therefor, and that said note is not, and never was, binding upon defendant in the hands of this plaintiff. Defendant further says that said note is a renewal of other and former notes for like amounts as the note sued on; that all of said notes were without consideration and were executed by this defendant solely for the accommodation of the plaintiff; that some 8 or 10 years ago, the exact date of which defendant cannot now state, the said plaintiff bank was forced to, and did, take over for certain indebtedness due and owing to said bank by one J. J. Murr certain lands; that the amount of the indebtedness of said Murr for which said lands were taken over was in the neighborhood of $7,500 or $8,000; that said Murr became and was insolvent, and that said real estate was taken over by said bank on said indebtedness, and was the only property out of which said debt could be realized, and that said real estate was carried on the books of said bank as an asset thereof at the amount for which the same had been taken; that on said date, or shortly thereafter, one E. 3. Green was the cashier of said bank, and prepared a note payable to said bank in the sum of $1,500, and informed this defendant that it was desired and was better for said bank if this defendant would sign said note for the accommodation of said bank, so that the amount thereof could be credited to the amount for which said real estate was carried on said books, and informed this defendant that later on, and in due time, when the condition of the earnings of the bank were so that the same could be done, that said amount would be charged off as loss, and said note surrendered to defendant herein; that, relying upon the statements and promises of said cashier, this defendant did execute said note, but that defendant received nothing whatever therefor, but the amount of said note was credited on the amount charged against said real estate on the books of said bank, and charged to bills receivable on said bank, so that the books of said bank might not show such a large amount carried against said real estate as assets; that said note was renewed from time to time at the request of the officers of said bank, and for the express accommodation of said bank; that at no time was defendant called on to, nor did defendant at any time, pay any interest or discount on said note, nor did this defendant ever furnish or pay the stamps placed on said note, but, as the same matured from time to time, it was renewed solely for the accommodation of said bank at its request, and for the reason above set forth, and that the note sued on is in renewal and continuation of the note signed by this defendant, under the circumstances and for the purposes above set forth, and that this defendant, when said original note was executed, received absolutely no consideration whatever therefor, and that the plaintiff paid no consideration for said note, and that said note is invalid and without consideration. Wherefore defendant prays that he be discharged, with his costs herein laid out and expended."

The evidence on the part of plaintiff tended to show that Murr in 1908 owed plaintiff hank $2,500, which was 10 per cent. of the capital stock, and the limit that could under the law be loaned to Murr. In this situation Murr applied to defendant, who was at the time president of plaintiff bank, for an additional loan of $1,500. Defendant wan an active officer in the bank at this time, drawing a salary of $100 per month, and had charge of the loans and notes. When Murr made application for the $1,500 loan the cashier, who was also a director, and Hull, another director, were opposed to making the loan because Murr had already the limit that could lawfully be loaned to him. Over their objections defendant made the loan. Two days after this loan the bank examiner came, and on discovering this excess loan to Murr ordered that Murr's indebtedness to the bank be immediately reduced so that the loans to him would be within the law. Defendant thereupon induced Murr's father to give his note to the bank for $1,500 to take up Murr's $1,500 note. Shortly thereafter it was discovered that Murr was in bad shape financially, and could neither pay the $2,500 nor the $1,500. When this situation appeared defendant gave his own note for $1,500 to take up the note given by Murr's father. Defendant's note was renewed from time to time, but never for mote than $1,500, though no interest was paid, and the bank furnished the revenue stamps, and until this suit no attempt was made to collect. In August, 1918, one Dennis purchased the stock of Green, who was cashier when defendant gave the first note in the Murr transaction, and succeeded Green as cashier. Later Dennis purchased defendant's stock, and defendant went out, and Dennis became president. About the same time that Murr got the $1,500 loan through defendant, he (Murr) gave a trust deed on his lands and a chattel...