Gate City National Bank v. Bunton

• Decision Date: 11 April 1927
• Docket Number: 25804
• Citation: 296 S.W. 375,316 Mo. 1338
• Parties: Gate City National Bank, Appellant, v. E. A. Bunton et al
• Court: Missouri Supreme Court

296 S.W. 375

316 Mo. 1338

Gate City National Bank, Appellant, v. E. A. Bunton et al

No. 25804

Supreme Court of Missouri

April 11, 1927

Motion for Rehearing Overruled June 25, 1927.

Appeal from Worth Circuit Court; Hon. John M. Dawson Judge.

Affirmed.

Harding Murphy & Tucker and Du Bois & Miller for appellant.

(1) Appellant's Instruction "A" should have been given. Appellant is the payee of the note and took it for full face value without notice of any alleged infirmity. Respondents endorsed the note understanding that it was for the purpose of procuring money from appellant. They delivered it to Bunton for the purpose of doing what they intended to get money on the note from appellant. They cannot set up the defense that they were defrauded by Bunton, the person in whom they confided to consummate the deal. This is true as to original payee. It is true as to non-negotiable notes. It is the principle, not the form of the instrument, that controls. Havilin v. Bank, 253 Mo. 300; Evans v Company, 65 Ark. 209; Potts v. First State Bank, 151 P. 860; Anderson v. Warne, 71 Ill. 20; Kulenkamp v. Groff, 71 Mich. 675; Bedell v. Herring, 11 Am. St. 309, 315. (2) Instruction "A" should have been given for the additional reason that the acts of respondents in endorsing the note for Bunton, the principal maker, for the purpose of procuring money from appellant and placing the note in his hands to carry out the plan, constituted a request to appellant to advance the money on the note, and they are estopped from complaining of the acts of the agent in whom they confided. Watkins Med. Co. v. Warren, 150 Ark. 542; Jordan v. Jordan, 10 Lea (Tenn.) 124; Bedell v. Herring, 11 Am. St. 314. (3) Instruction "A" should have been given for the further reason that even if fraud had been perpetrated by Bunton as claimed by respondents, it was their conduct that rendered it possible. Even if they had been without negligence in endorsing the note at his request, they delivered it to him to be carried to and cashed by appellant, and where one of two innocent parties must suffer by the act of a third, he whose act has enabled such third person to cause the lost must sustain it. Whittemore v. Obear, 58 Mo. 280; State to use v. Potter, 63 Mo. 212; Tiedeman on Commercial Paper, sec. 286, p. 481; Scotland County National Bank v. O'Connel, 23 Mo.App. 165. (4) The court erred in refusing appellant's Instruction "A" and in giving respondents' Instructions 1, 2 and 3, for all of the reasons set forth above, and for the further reason that respondents admit that they had the note in their hands when they signed it and that they could have read it, but neglected to do so. They were in possession of their faculties, experienced business men, used to borrowing money and signing notes and making financial statements. Their conduct amounted to such negligence as prohibited a recovery and the question of their negligence should not have been submitted to the jury. It was their duty to examine and read the document they signed. It was their duty to protect themselves against mistakes and frauds when starting a negotiable paper out into the commercial world. They cannot ignore that duty and rely upon a court to constitute itself a guardian for them and let the burden of their negligence fall upon innocent persons who relied upon the verity of the instrument. Shirts v. Overjohn, 60 Mo. 305; Bank v. Hall, 129 Mo.App. 286; New Madrid Banking Co. v. Poplin, 129 Mo.App. 121; Cannon v. Moore, 17 Mo. 92; 1 Daniel on Negotiable Instruments (6 Ed.) sec. 850, p. 1026; Bank v. Jones, 22 W.Va. 520; First Nat. Bank v. Stanley, 46 Mo.App. 440; Fayette Co. Savings Bank v. Steffes, 54 Iowa 214; Exparte Goldberg v. Lewis, 191 Ala. 356; 1 Brandt on Suretyship & Guaranty, sec. 456, p. 857; Jones v. Primm, 6 Tex. 170; Bank v. Baker, 193 S.W. 632. (5) The court erred in permitting respondents, over the objections of appellant, to examine witnesses touching the foreclosure of the collateral notes. They had no interest in the collateral until they discharged their duty in paying the note. It constituted no defense and was prejudicial to appellant. Maffat v. Greene, 149 Mo. 48; Stroud v. Am. Nat. Bank, 158 Ark. 509. (6) The court erred by overruling appellant's motion for new trial: (a) Because of improper and prejudicial remarks made in the argument of counsel for respondents; (b) Because a copy of a newspaper containing large head lines touching the criminal cases of Bunton was left in the jury room, on the table in plain sight, and accessible to the jury, while the case was being tried.

Charles H. Mayer, Ed. Kelso and Edward G. Robison for respondents.

(1) The defense of fraud, deception, trickery and substitution of the $ 25,000 note in the place of the $ 5000 note that the defendants read, by E. A. Bunton, is a valid defense in this action as against this plaintiff. 8 C. J. p. 790, sec. 1049; 13 C. J. 373, sec. 252; 1 Joyce on Defenses to Commercial Paper (2 Ed.) secs. 96, 98, 220; Brannan's Negotiable Instrument Law (3 Ed.) p. 186, sec. 55; Wright v. McPike, 70 Mo. 179; Broyles v. Absher, 107 Mo.App. 177; Kingmann & Co. v. Shawley, 61 Mo.App. 60; Bank v. Hall, 129 Mo.App. 291; Loveland v. Arnold, 261 S.W. 742; Woehner v. Casket Co., 196 S.W. 385; Banking Co. v. Poplin, 129 Mo.App. 123; Frederick v. Clemens, 60 Mo. 315; Atkinson v. Kelly, 214 S.W. 279; First Nat. Bank v. Wade, 111 P. 205; German-Amer. Nat. Bank v. Kelly, 166 N.W. 1053; Stevens v. Largerquist, 210 Ill.App. 496; Lundean v. Hamilton, 169 N.W. 208; Vogel v. Pyne, 189 N.Y.S. 285; Auten v. Gruner, 90 Ill. 300. (2) The plaintiff is not a holder in due course or a bona-fide holder of the note in suit, but is one of the original parties to the note, that is payee, and all or any of defenses of the makers and endorsers on note in suit can be set up against the plaintiff in this suit. Sec. 838, R. S. 1919; St. Charles Saving Bank v. Edwards, 147 S.W. 980; Long v. Shafer, 171 S.W. 692; Long v. Mason, 200 S.W. 1065; also authorities cited above. Whether or not the defendants were negligent in signing their names on the back of the note is a question of fact to be determined by the jury under proper instructions. 8 C. J. 793; 8 C. J. 1065, sec. 1382; 2 Abbotts Trial Evidence (3 Ed.) p. 1555; Abbotts Civil Jury Trials (4 Ed.) p. 549; Frederick v. Clemens, 60 Mo. 315; Biggs v. Ewart, 51 Mo. 249; Woehner v. Casket Co., 196 S.W. 385; Stewart v. Andes, 110 Mo.App. 246; Bank v. Redfern, 141 Mo.App. 390; 26 R. C. L. 1067, sec. 75. The court properly refused appellant's Instruction A and correctly declared the law in respondent's Instructions 1, 2 and 3. (3) Appellant complains of the admission of evidence concerning the sale of the collateral notes. This was proper under the answer, but the evidence failing to show an improper sale the court by Instruction 8 withdrew this from the jury. There could be no error in this, and even if the evidence had been improper it would be no error. Wright v. Gillespie & Co., 43 Mo.App. 247; Stauffer v. Mt. St. Ry. Co., 147 S.W. 1036.

Ragland, J. All concur, except Gantt, J., not sitting.

OPINION

RAGLAND

This case comes to the writer for opinion on reassignment. It is a suit by the payee of a promissory note against the maker and accommodation endorsers. The maker and three of the five endorsers suffered judgment by default. This controversy is between the payee and the remaining endorsers, O. W. Moorman and I. M. Taylor.

The evidence and the instructions to the jury were well within the issues made by the pleadings. As no question is raised with respect to the pleadings they will not be further noticed.

As stated by appellant's counsel, the following facts were disclosed by the evidence at the trial:

"W B. Planck is and was president of the Gate City National Bank, appellant. E. A. Bunton was president of the Exchange Bank of DeKalb County. On the 23d day of September, 1922, Mr. Bunton applied to Mr. Planck for a $ 25,000 loan, stating that the reserves of his bank were running low and he needed that amount. He offered his own note, which he stated would be endorsed by respondents, Moorman and Taylor and also by his wife, A. D. Bunton, Thomas G. Riffie and Alfred Kelley. He also offered collateral security in the way of customers' notes from the Exchange Bank in the sum of $ 25,000. He presented to Mr. Planck his financial statements of respondent Taylor and of all the other endorsers, with the exception of respondent Moorman, which he promised to furnish. This was Saturday. The discount board met at the noon hour, approved the loan to the Exchange Bank on the conditions named. Mr. Planck called his stenographer, Mrs. Smith, filled out on the regular blank a $ 25,000 note and delivered it to Mr. Bunton to be executed and returned, together with the financial statement of Moorman as promised. Mr. Bunton left the bank with the note at two o'clock.

"On Monday, September 25, 1922, Mr. Bunton wrote a letter to Mr. Planck enclosing the note endorsed agreeably to arrangements, by Moorman, Taylor, A. D. Bunton, Riffie and Kelley; also the financial statement of Moorman. He had left with Mr. Planck on Saturday before the $ 25,000 of collateral notes. In his letter he requested that credit be given to the Exchange Bank for the face of the note, less proper discount, which was done, and which amount was subsequently checked out in due course by the Exchange Bank.

"Moorman's financial statement bore the same date as the $ 25,000 note -- September 23, 1922. It showed that he had a total worth of $ 157,280 and a net worth of $ 105,480.

"Taylor's financial statement was dated February 27, 1922. It showed that he had total assets amounting to $ 203,000, and a net worth of $ 170,737.

"The $ 25,000 note sued on...