First National Bank of Kansas City v. Guardian Trust Company

• Decision Date: 16 March 1905
• Parties: FIRST NATIONAL BANK OF KANSAS CITY v. GUARDIAN TRUST COMPANY, Appellant
• Court: Missouri Supreme Court

86 S.W. 109

187 Mo. 494

FIRST NATIONAL BANK OF KANSAS CITY v. GUARDIAN TRUST COMPANY, Appellant

Supreme Court of Missouri

March 16, 1905

Appeal from Jackson Circuit Court. -- Hon. J. H. Slover, Judge.

Affirmed.

Trimble & Braley, Milford W. Rider and H. S. Mecartney for appellant.

(1) When one's name appears on the back of a promissory note of which he is neither payee nor indorsee the presumption, in the absence of extrinsic evidence, is that he is a maker, but this presumption may be rebutted by evidence showing just what the relation of the parties was. It is always open to him to show that he was not a maker, but that his contract was that either of accommodation indorser, surety or guarantor. Mammon v. Hartman, 51 Mo. 168; Seymour v. Farrell, 51 Mo. 95; Falkner v Falkner, 73 Mo. 327; Lewis v. Harvey, 18 Mo 74; Western Boatmen's Ben. Assn. v. Wolff, 45 Mo. 104; Kuntz v. Tempel, 48 Mo. 71; Kingman v Connell, 150 Mo. 282. (2) The evidence in this case clearly proved that the defendant was not a maker of the note sued on, but was a mere accommodation indorser, and there was no evidence to the contrary. It follows that the finding and judgment of the trial court against the defendant on the first count of the petition as maker of the note was without evidence to sustain it and should be reversed. Seymour v. Farrell, 51 Mo. 95; Mammon v. Hartman, 51 Mo. 168; Lewis v. Harvey, 18 Mo. 74; Crow v. Peters, 63 Mo. 429; Perry v. Barrett, 18 Mo. 140. (3) It is not now open to the respondent to assert that the appellant should have been held as accommodation indorser on the second count of the petition. The trial court found against the respondent on that count and rendered judgment thereon for the appellant. That finding and judgment has not been appealed from, but is final, and the issues joined on the second count stand finally adjudicated. Downing v. Railroad, 70 Mo.App. 675; Marquis v. Clark, 64 Mo. 601; Hoyle v. Forquharson, 80 Mo. 377; Perry v. Barrett, 18 Mo. 140; Mooney v. Kennett, 19 Mo. 554; Stanley v. Railroad, 100 Mo. 435; State v. Pitts, 156 Mo. 247; Sarazin v. Railroad, 153 Mo. 475; Cox v. Bright, 65 Mo.App. 417. (4) This is not a case where a party to a note is seeking to escape liability simply because it was wrongfully held liable on one count of the petition when it should have been held liable on the other. It was not liable on either. It was not liable on the first count as maker because it was not a maker. It was not liable on the second count as accommodation indorser because it had no power to become such indorser, and its attempt to do so was ultra vires and void, conferring no rights or liabilities on anyone. R.S. 1889, sec. 2839; Daniels on Negotiable Instruments (4 Ed.), sec. 386; Field on Corporations, 306; Green's Brice's Ultra Vires (2 Ed.), 252; Thompson's Commentaries on the Law of Corporations (1 Ed.), sec. 5739; 2 Cook on Corporations (4 Ed.), sec. 774; 1 Morawetz on Corporations (2 Ed.), sec. 423; Bank v. Security Co., 22 N.E. 567; Fox v. Rural Home Co., 51 N.E. 1090; Bank v. Ins. Co., 50 Conn. 168; Steiner v. Land & Lumber Co., 26 So. 494; Preston v. Cereal Co., 93 N.W. 136; Davis v. Railroad, 131 Mass. 288; Bank v. Bank (Mo. Sup. Ct.), 72 S.W. 1059; Bacon, Dawson & Co. v. Bank, 79 Mo.App. 406; Trans. Co. v. Car Co., 139 U.S. 24; McCormick v. Bank, 165 U.S. 538; Pearce v. Madison & I. Co., 62 U.S. 443; Railroad v. Bridge Co., 131 U.S. 389; Zabriskie v. Railroad, 64 U.S. (23 How.) 398; Thomas v. Railroad, 101 U.S. 78; Railroad v. Railroad, 118 U.S. 290; Hoagland v. Railroad, 39 Mo. 451; Kansas City v. O'Connor, 82 Mo.App. 665; Shoe & Clothing Co. v. Iron Works Co., 51 Mo.App. 66; Trust Co. v. Miller, 33 N.J.Eq. 162; Reese on Ultra Vires, sec. 72; Brice on Ultra Vires, 66; Rogers v. Belting Co., 56 N.E. 1017; Shoe Foundry Co. v. Iron Co., 72 F. 957; Constitution of Missouri, art. 21, sec. 7; Bank v. Hawkins, 174 U.S. 364. (5) The respondent, at the time it accepted the note, had actual knowlege that the appellant indorsed it merely as an accommodation to the railroad company, and had constructive knowledge that the endorsement was void for want of power, for one dealing with a corporation is bound to know what its powers are. McCormick v. Bank, 165 U.S. 538; Thompson's Commentaries on the Law of Corporations (1 Ed.), sec. 8309; Davis v. Railroad, 131 Mass. 258; Lucas v. Trans. Co., 70 Iowa 541; Railroad & Nav. Co. v. Railroad, 130 U.S. 25.

Peak & Strother for respondent.

(1) The petition states but one cause of action, although it contains two counts. The first count charges defendant as maker of the note sued on. The second count states all the facts as to the execution of the note, and thus shows how defendant is maker. A general finding for plaintiff would have been good, and the case stands here in the same attitude, as to the questions involved, as if there had been such a finding. Brinkman v. Hunter, 73 Mo. 178; Rinard v. Railroad, 164 Mo. 284. (2) The defendant's name was endorsed on the note sued on before its delivery to plaintiff, and it is therefore a maker of the note. Cahn v. Dutton, 60 Mo. 297; Cox v. Sloan, 158 Mo. 411. (3) The burden is upon defendant to show that it was expressly agreed by and between it and plaintiff, at the time of its endorsement that it should be an endorser only and not a maker; and no such evidence was offered. Kuntz v. Tempel, 48 Mo. 76; Cahn v. Dutton, 60 Mo. 299; Boyer v. Boogher, 11 Mo.App. 130; Malting Co. v. Miller, 38 Mo.App. 251. (4) The testimony of Mr. Martin that Mr. Swinney told him that if he "would get the Trust Company to endorse the note, he would loan the money," is not sufficient to show that it was agreed that defendant should incur only the liability of an endorser. Boyer v. Boogher, 11 Mo.App. 130; Malt. Co. v. Miller, 38 Mo.App. 251; Pohle v. Dickman, 67 Mo.App. 381. (5) There was ample evidence to support the court's finding that defendant was a maker of the note sued on, and that finding is now conclusive on this court. (6) The fact that defendant received no part of the money for which the note was given, it being discounted by plaintiff on the faith of defendant's endorsement before delivery, is of itself no defense. Miller v. Mellier, 59 Mo. 388; Cox v. Sloan, 158 Mo. 411. (7) By the Act of April 18, 1891, the defendant was invested with the power to execute the note sued on as it was executed. Laws 1891, pp. 99-103; State ex inf. v. Trust Co., 144 Mo. 584; The Ashenbroedel Club v. Finlay, 53 Mo.App. 256; Legion of Honor v. Neidelet, 81 Mo.App. 598. (8) Even if it were necessary that defendant should accept the amendments of 1891, the acts of the defendant and its officers and agents in the conduct of its business show that it continually exercised the powers granted in such amendments, as in the transaction involved here, and it can not now say that it did not have the power it exercised. Sumrall v. Ins. Co., 40 Mo. 32; Savings Inst. v. Board of Education, 75 Mo. 408; Muth v. Trust Co., 88 Mo.App. 596; Miller v. Ins. Co., 92 Tenn. 167; Zabriskie v. Railroad, 23 How. (64 U.S.) 381. (9) The execution of the note sued on was within the powers of defendant. By the terms of the Act of 1887, defendant had power "to loan money upon real estate and collateral security . . . and execute and issue its notes and debentures payable at a future date, and to pledge its mortgages on real estate and other securities as security therefor," and also "to buy and sell . . . all kinds of negotiable and non-negotiable paper." The Belt Railroad was a sub-company of defendant, and was indebted to defendant in a large amount, and defendant was interested in upholding its financial standing. The money advanced by plaintiff was borrowed by these two companies for that purpose, and was used to pay the employees of the Belt Company, and thereby kept it a going concern, which defendant then deemed to be for its own financial benefit. Having received this benefit, it can not now repudiate the accompanying burden and thereby deprive plaintiff of the money which it parted with on the strength of defendant's undertaking. Laws 1887, pp. 116, 117, sec. 4, subd. 8 and 9; Lumber Co. v. Kelter, 201 Ill. 503; Mahoney v. Hardware Co., 27 Mont. 463; In re West of England Bank, L.R. 14 Ch. Div. 317. (10) The contract sued on was fully executed by the plaintiff by the payment of its money to the Belt Railroad Company. There is nothing in the law of 1887 which expressly, or by fair implication, prohibits defendant from making this contract. The Act of 1891 purports to confer upon it, in express terms, the power to make it. Plaintiff's president testified that he believed defendant had the power to make it, and defendant's vicepresident testified he had not, at the time, a doubt about it. Under these circumstances, defendant can not raise the defense of ultra vires; and no one but the State in a direct proceeding can call the act in question. Drug Co. v. Robinson, 81 Mo. 26; Welsh v. Brewing Co., 47 Mo.App. 618; Glass v. Brewing Co., 47 Mo.App. 639; City of Goodland v. Bank, 74 Mo.App. 365; Chenoweth v. Express Co., 93 Mo.App. 194; State Board of Agriculture v. Railroad, 47 Ind. 407; Lumber Co. v. Rice, 23 Ind.App. 586; 2 Morawetz, Corporations (2 Ed.), secs. 689-698. (11) Defendant's course of business for years had been to execute notes similar to the one sued on. This must have been known to the stockholders, when they passed the resolution of October 25, 1899, by which "all the acts of the directors, officers, and executive committee of the company had and done since the last annual stockholders' meeting were fully ratified." One of those "acts" was the execution of the first note to plaintiff, of which the note sued on is a renewal. Defendant is, therefore, now bound by this action of...