Fritchen v. Jacobs

• Decision Date: 07 March 1931
• Docket Number: 29,509
• Citation: 132 Kan. 491,297 P. 409
• Parties: F. F. FRITCHEN, Appellee, v. E. C. MUELLER and MARY JACOBS, Appellants
• Court: Kansas Supreme Court

297 P. 409

132 Kan. 491

F. F. FRITCHEN, Appellee, v. E. C. MUELLER and MARY JACOBS, Appellants

No. 29,509

Supreme Court of Kansas

March 7, 1931

Decided January, 1931.

Appeal from Mitchell district court; WILLIAM R. MITCHELL, judge.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. BILLS AND NOTES--Duress--Jury Questions. In an action to recover on a promissory note, where the defense of duress was pleaded and evidence to support that plea was adduced by defendants, it is held that an instructed verdict in favor of plaintiff was erroneous, and the cause should have been submitted for a jury's determination.

2. PRINCIPAL AND AGENT--Proof of Agency. The fact of agency does not require proof of formal appointment to establish it; it may be implied from other facts, the conduct and statements of parties, and from relevant circumstances--following Wilson v. Haun, 97 Kan. 445, 155 P. 798.

3. BILLS AND NOTES--Holder in Due Course--Burden of Proof. When prima facie evidence of infirmity in a promissory note has been adduced by its defendant makers the burden shifts to the plaintiff to prove that he acquired it in due course without notice of such infirmity, and the question whether plaintiff's evidence meets that requirement is ordinarily one for a jury's determination and cannot be disposed of by an instructed verdict.

4. PLEADING--Amendment to Conform to Proof. Rule followed that when a cause is tried in full before a jury on the assumption that the issues have been sufficiently defined by the pleadings so as to permit the introduction of the evidence which the parties or either of them have adduced at length it is error to sustain a belated objection to the sufficiency of the pleadings; they should then be construed as having been informally amended and as interpreted throughout the course of the trial.

5. BILLS AND NOTES--Pleading Duress--Sufficiency of Answer. Where a defense to an action on a promissory note is duress or similar plea, the answer requires no general denial but does require a plea of new matter which will strip the colorable cause of action of its validity.

6. SAME--Trial. Other objections to defendants' pleadings considered and not sustained.

7. SAME GENERALLY. Arguments of appellee to justify the judgment based upon an instructed verdict, noted in the opinion, considered and not sustained.

R. L. Hamilton, C. L. Kagey, Leon W. Lundblade and L. M. Kagey, all of Beloit, for the appellants.

A. E. Crane, B. F. Messick, both of Topeka, and N. C. Else, of Osborne, for the appellee.

OPINION

MARSHALL, J.:

This was an action on a promissory note. The defense was a plea of duress. After the cause was tried in full before a jury the court gave an instructed verdict for plaintiff. That ruling is the basis of this appeal.

The facts and circumstances developed by the pleadings and by the evidence favorable to defendants were to this effect:

Prior to October, 1924, the defendant, E. C. Mueller, had served for a number of years as cashier of the Home State Bank of Tipton. Thereafter he obtained employment in a bank in North Kansas City, Mo., and removed there with his wife and family. It may be inferred from the record that his conduct of the affairs of the Tipton bank had not been successful and the board of directors of that institution held the view that in some undisclosed way he was responsible for some untoward state of its affairs. On January 9, 1926, the stockholders of the Tipton bank held a meeting at which this plaintiff F. F. Fritchen and M. Lutgen and other stockholders, comprising members of the prior board of directors, were reelected for the ensuing year. The minutes recite that it was the sense of the stockholders that--

"Those directors who may be elected bring all pressure possible to have some of this money returned even though they deem it advisable to bring action against the bonding company of the former cashier."

This was followed by the meeting of the board of directors, at which it was voted that the prior officers, including this plaintiff F. F. Fritchen, vice president, and A. Diebold, cashier, should be reelected. The minutes of this meeting also recite:

"It was further moved, seconded and carried that F. F. Fritchen and M. Lutgen go into the matter pertaining to the fidelity bond of E. C. Mueller and if possible to obtain payment thereon for losses sustained which we believe came about through transactions made by the former cashier E. C. Mueller and such transactions do not come up fully to our approval, and the cashier to render all assistance possible in this matter."

Shortly thereafter Diebold, the cashier, accompanied by N. C. Else, a lawyer who had previously acted as attorney for the bank in particular matters and who has subsequently acted as attorney for the bank and for Fritchen, its vice president, plaintiff herein, met defendant Mueller in Kansas City in the latter part of January, 1927. Diebold stated that Mr. Else was there to see Mueller as representative of the board of directors of the Home State Bank of Tipton. At first the court would not permit testimony to be given as to what Mr. Else himself said to Mueller, but later testimony concerning that conversation was admitted:

"Q. . . . What did Mr. Else say to you, and what did you say to him? A. He said he was down there representing the directors of the Home State Bank of Tipton.

"[COUNSEL FOR PLAINTIFF]: We move to strike that out as hearsay.

"THE COURT: Motion is sustained as to that. . . .

"Q. All right, go ahead; what else did he say? A. He said, 'The directors claim that you have some money that belongs to the bank, and that there were several items that they didn't understand what became of them.' And I said, 'I would like to have you be a little more explicit and tell me just what the claims are,' and he pulled out a yellow sheet of paper with five or six or seven figures on it, with dates, but no names. I glanced at them and I said to Mr. Else, 'What do you mean by these figures and these dates?' and he says, 'Well, this is some of the amounts that the bank claimed that you have the money for.' I told him I wasn't conscious of having taken any money from anybody in Tipton. He said, well he didn't know so much about that, but that is what they were claiming, and he was there to see what I was going to do about it. . . . And he said: 'You better come out to Osborne the next few days, because this matter is in a hurry.' He says, 'Your bond as cashier will expire within two or three weeks, and if you don't settle before that time, the bonding company will have you arrested.' . . . And then on the 10th of February, which was on Wednesday, I arrived in Osborne. . . .

"Q. I will ask you this, Did you or did you not believe that unless you signed this note that you would be indicted and disgraced? A. I certainly did.

"Q. Gene, I will ask you if to your knowledge you had violated any law for which you might have been indicted? A. No, sir. . . ."

Shortly thereafter, on February 8, 1926, Mr. Else went to the home of the defendant, Mrs. Mary Jacobs, mother-in-law of Mueller. She is a woman of some means and resides with her husband in Tipton, some miles distant from Osborne. Mr. Else introduced himself as attorney for the Tipton bank, and presented two notes for $ 3,000 each, which he wanted her and her husband to sign. She asked him why she should do so:

"Well, he said that he wanted me to sign those two notes, or if we don't sign them, that he wouldn't say what would happen, and then I was scared to death, and I called for my husband, and he came into the room then and then he stated to him, that he was here to get me and Mr. Jacobs to sign those notes or if we didn't sign them Gene (Mueller) would be sent to the pen, or something like that, he said."

Mr. Jacobs, husband of defendant Mary Jacobs, testified:

"A. Well, he said if we wouldn't sign them he would have Gene arrested and sent to the penitentiary. . . .

"Q. Did he [Else] do any more or say any more after that? A. Threatened he would have him arrested and sent to the penitentiary.

"Mr. Else said he had been down in North Kansas City and seen the daughter of witness, that is defendant Mueller's wife, and that she was all excited."

Next day Mrs. Jacobs called at the Tipton bank and asked Cashier Diebold what Would happen if she didn't sign the notes. Diebold called Mr. Else at Osborne over the long-distance telephone and then stated to her that if she persisted in her refusal he [Mr. Else] would start for Topeka next morning.

Mr. Else got in touch with Mueller in Kansas City, and in response thereto Mueller came to Osborne on February 10, 1926. Mr. Else met Mueller at the train and took him to his law office, where he met the plaintiff Fritchen and M. Lutgen. These two men were the committee of the bank appointed to apply pressure on Mueller, as recited in the minutes of the stockholders' and directors' meetings in January. After some talk Fritchen, Lutgen and Else and another bank officer retired to another room for consultation. Else then reappeared and told Mueller "that the directors were in a very hostile mood and he didn't know how he could hold them off." Mueller testified:

"He told me that the directors had decided on $ 10,000. And that I had better sign, make arrangements to sign the notes and turn over property if I knew what was good for me."

Fritchen and his confreres then reappeared and in their presence Mueller signed the note involved in this action for $ 3,000 and another note for a similar sum; also one for $ 1,000, and he also agreed to convey to the bank certain lands and assign his stock in the Tipton bank. Mr. Else took charge of the notes and he and Mueller...