First Nat. Bank v. Equipment Co.

• Decision Date: 14 June 1926
• Docket Number: No. 15588.,15588.
• Citation: 285 S.W. 779
• Parties: FIRST NAT. BANK OF ELYRIA v. EQUIPMENT CO.
• Court: Missouri Court of Appeals

285 S.W. 779

FIRST NAT. BANK OF ELYRIA v. EQUIPMENT CO.

No. 15588.

Kansas City Court of Appeals. Missouri.

June 14, 1926.

Rehearing Denied July 6, 1926.

Appeal from Circuit Court, Jackson County; Samuel A. Dew, Judge.

Suit by the First National Bank of Elyria against the Equipment Company. Judgment for plaintiff, and defendant appeals,. Reversed and remanded.

Roy B. Thomson and Carl L. Crocker, both of Kansas City, for appellant.

Wm. E. Byers and Spencer A. Gard, both of Kansas City, for respondent.

ARNOLD, J.

This is a suit on a promissory note in the sum of $1,000, purported to have been executed by defendant and payable to plaintiff.

Plaintiff is a national bank located at Elyria, Ohio, and on May 24, 1920, was doing business under the name of the National Bank of Elyria. Defendant was a corporation doing business in the state of Missouri, with its principal offices at Kansas City in said state.

The petition alleges that defendant, by its president, H. J. Mayers, together with the Mutual Motor Stores Company, on May 24, 1920, executed a certain promissory note for value received, payable to the National Bank of Elyria (now the First National Bank in Elyria), in the sum of $1,000, payable on demand at 7 per cent. per annum at Elyria, Ohio; that the interest has been paid to September 15, 1922; that plaintiff is the owner and holder of said note; and that, prior to September 15, 1922, demand for payment was made, and that the said note and interest are due and unpaid. Judgment is asked for the amount of the note and interest. The answer denies the execution of the note by defendant.

The reply avers that the note sued on was executed by defendant, by its officer and agent, H. J. Mayers, especially authorized thereunto; that defendant represented and held cut the said H. J. Mayers as its officer and agent, and permitted said Mayers, with knowledge of the fact, to hold himself out as such officer and agent with authority to harrow money and make and execute notes and other obligations of defendant therefor, and otherwise generally manage and conduct its affairs, and that said Mayers did so hold himself out and so manage and conduct the affairs of defendant; that said Mayers was also president of the Mutual Motor Stores Company, a comaker of the note in suit and owner, at that time, of all of the stock of defendant; that defendant borrowed money from plaintiff and others through and by the Mutual Motor Stores Company to finance its operations, and otherwise; that the note sued on herein, executed by both the aforesaid companies, was made for the purpose of taking up and discharging, and did take up and discharge, indebtedness of defendant to plaintiff, for all of which reasons defendant is estopped to deny the execution of the note sued on herein.

Upon the pleadings thus made, the cause was tried to a jury. Verdict and judgment were for plaintiff in the sum of $1,163.33, with 8 per cent. interest until fully paid. Motions for a new trial and in arrest were overruled, and defendant appeals.

The evidence shows that on May 24, 1920, the note in question was executed and signed by the Equipment Company by H. J. Mayers, president; that prior to that date the Mutual Motor Stores Company, through its president, H J. Mayers, a resident of Cleveland, Ohio, entered into negotiations with Messrs. Hess, Greene & Reid, owners of all the stock of the Equipment Company, defendant herein, for the purchase of the Equipment Company by the Mutual Motor Stores Company, and' a contract of purchase was entered into whereby the stock of the Equipment Company should be placed in escrow in bank until the purchase price was paid; and that, in the meantime, the possession and control of defendant should remain in the sellers. The contract, in terms, provided —

"that second party (the Mutual Motor Stores Company) shall not have or in any manner claim to have any title, ownership, or right to possession in or to any of the assets or business of first party, whether mentioned in said agreement or otherwise, until such time as the whole of said balance of $86,500, together with the interest on any additional payment herein stipulated to be paid, has been paid in full."

It appears this purchase price was never paid by the Mutual Motor Stores Company, and that its interest in said contract of purchase later was sold. The testimony shows the negotiations were conducted by H. J. Mayers for the Mutual Motor Stores Company, and the signing by him of defendant's name to the note in issue is the basis of plaintiff's claim of liability thereon. One G. W. Kneisley, for plaintiff, testified by deposition that Mayers was president of the Mutual Motor Stores Company and in active charge of its affairs; that witness was a stockholder and director thereof, and that he is a son-in-law of the president of plaintiff bank; that the proceeds of the loan in question were deposited to the credit of the Mutual Motor Stores Company at the request of Mayers. The evidence further shows that the records of defendant company were examined to ascertain whether any money or property from this loan went to defendant company, but with negative results. The various installments of interest on the note were paid and properly credited.

The only evidence of record tending to show by whom the said interest installments were paid is found in the testimony of R. C. McIntosh, who was a witness for defendant, and stated that from October 15, 1920, until some time in 1924, he was president and general manager of defendant company; that the first notice he had of the existence of the note sued on was in the spring or summer of 1921, at which time he received a notice, or demand, for interest; that he immediately notified plaintiff bank that he knew nothing of the note, and refused to pay the interest; and, at the same time, he called the matter to the attention of H. J. Mayers, and that Mayers immediately issued his personal check in the amount of $17.50, and mailed it to plaintiff in payment of the said interest.

As to whether H. J. Mayers was president of the defendant company at the time the note in question was executed is somewhat in dispute. Plaintiff's testimony, while not positive, tends to show that Mayers was president at that time, while evidence on the part of defendant strongly tends to show that E. J. Hess was then president. It seems, however, that the records of the defendant company are not clear on this point. It is shown that the annual meetings of the stockholders at which directors were elected and the directors' meetings at which the officers were elected were held in the month of February. The records do not show positively who was president of defendant company from February to October, 1920, during which time Way 24th) the note was made.

Plaintiff's evidence shows that defendant company borrowed money from plaintiff through H. J. Mayers about May, 1919, and that the amount so borrowed was reduced to $4,000; that on June 4, 1019, plaintiff took a note of $4,000, signed by the Equipment Company and the Mutual Motor Stores Company, both names signed by H. J. Mayers as president of each, the proceeds thereof being credited to the Mutual Motor Stores Company; that subsequent payments were made on the $4,000 loan and renewal notes taken until the indebtedness was reduced to $1,300, and the note sued on was taken in renewal.

The first assignment of error is directed against plaintiff's instruction No. 1, which is as follows:

"You are instructed that, if you find and believe from the evidence that before the execution of the note sued on herein the defendant represented and held out the said H. J. Mayers as its officer or agent, and permitted the said Mayers, with knowledge of the fact, to hold himself out as such, with authority to borrow money, and make and execute notes in behalf of said defendant therefor, and plaintiff was thereby induced to believe that the said H. J. Mayers had authority to so execute promissory notes, then you may find that the said H. J. Mayers, on May 24, 1920, had authority to execute the note sued on in this action."

It is urged this instruction is erroneous because there was no evidence to support it, in this, there was no evidence whatever that defendant represented or held out to plaintiff or any one else that H. J. Mayers was its president or authorized representative to borrow money in its behalf and to execute notes therefor; that the only evidence offered tending to show that Mayers had such authority, or was held out by defendant as 'having such authority, was testimony purporting to be declarations of Mayers of his own authority; and that such testimony was not admissible; that there was no effort made to show defendant had notice, either actual or implied, of these representations of Mayers; that, in this connection, the facts shown arc that plaintiff is located in the state of Ohio, where the note is purported to have been executed, while defendant, during the whole time, was located in Kansas City, Mo. In this connection defendant directs attention to the further fact that the officer of plaintiff who procured the note sued on was an officer of the Mutual Motor Stores Company of Ohio, the joint maker of the note in question, the name of which company also was signed by H. J. Mayers as its president.

The rule is well established that an instruction must not be broader than the issues made by the pleadings and proof. Chat the instruction is within the pleadings there can be no question; the point being covered by plaintiff's reply to defendant's answer. But we must agree with defendant, having carefully read the record, that the instruction is broader than the evidence introduced. This point was exhaustively discussed in Bank & Trust Co. v. Dry Goods Co., 293 Mo. 194, 238 S. W. 474, a case similar to the one at bar, and such an instruction was declared erroneous. The court said:

"The evidence fails to...