Gilmore Portland Cement Corporation v. Leinard

• Decision Date: 28 September 1928
• Citation: 9 S.W.2d 862,223 Mo.App. 169
• Parties: GILMORE PORTLAND CEMENT CORPORATION, APPELLANT, v. M. C. LEINARD, MARY M. LEINARD, AND J. J. PREITT, RESPONDENTS. [*]
• Court: Missouri Court of Appeals

9 S.W.2d 862

223 Mo.App. 169

GILMORE PORTLAND CEMENT CORPORATION, APPELLANT, v. M. C. LEINARD, MARY M. LEINARD, AND J. J. PREITT, RESPONDENTS. ^[*]

Court of Appeals of Missouri, Springfield

September 28, 1928

Appeal from the Circuit Court of Douglas County.--Hon. Fred Stewart Judge.

REVERSED AND REMANDED.

Judgment reversed and remanded.

J. P Swaim for appellant.

Lz. BANTA for respondents.

COX, P J. Bradley and Bailey, JJ., concur.

OPINION

COX, P. J.

This is an action to reform and foreclose a mortgage. The trial court found for defendants and plaintiff appealed.

At the trial no evidence appears to have been offered on the question of reformation of the mortgage and we shall not discuss that question.

The facts are substantially as follows: The defendants, M. C. Leinard and Mary M. Leinard are husband and wife and defendant Pruitt is their son-in-law. The Leinards executed a promissory note for $ 4000 payable to J. J. Pruitt but not to his order so the note was not a negotiable instrument. This note was secured by a mortgage on certain land in Douglas county, Missouri. This note and mortgage were delivered to Pruitt by the Leinards with instructions to use it to raise money for them. Pruitt had bought shares of stock in plaintiff corporation of the value of $ 5000 and had given his note for that sum and pledged back to plaintiff the $ 5000 of stock to secure the note. When Pruitt received this note and mortgage of $ 4000 from the Leinard's he assigned them to plaintiff to secure his debt to plaintiff and then plaintiff returned to Pruitt the stock it then held as security for the debt from Pruitt to plaintiff. Plaintiff, therefore, paid a valuable consideration for the note and mortgage.

The defense is want of consideration; that the Leinards received no consideration for the execution of the note and mortgage. The question in this case is whether that defense is available to the Leinards, the makers of the note and mortgage. It is conceded that the note is not negotiable and that with that fact admitted, it follows that the Negotiable Instruments Law does not apply and there is no question of a holder in due course involved. The rights of the parties must be determined under the law of agency. As between the Leinards and Pruitt, he was their agent and instructed by them to procure money by the use of this note and mortgage and return the money to them. Pruitt was the payee in the note and the mortgagee in the mortgage and the Leinards knew that he could only secure money by the use of this note and mortgage in one of two ways. He could sell them or he could use them as security for money borrowed. As between them, Pruitt had the authority to sell this note and mortgage. He sold them but did not sell them for money nor deliver to the Leinards money representing the value of the consideration he received in the sale. As between the Leinards and Pruitt, their right of action against him is complete, but can they defend against the note and mortgage in the hands of plaintiff who purchased them believing at the time that Pruitt was the owner of them? There can be no doubt that an agent can bind his principle by any act that is within his apparent authority. [Underwood Typewriter Co. v. Realty Co., 165 Mo.App. 131, 139, 146 S.W. 448; Reynolds v. Chicago, B. & Q. R. Co., 114 Mo.App. 670, 90 S.W. 100; Higbee v. Bank, 244 Mo. 411, 425, 148 S.W. 879.]

Apparent authority is defined in Kissell v. Railroad, 194 Mo.App. 347, 357, 188 S.W. 1118 as follows: "The apparent authority of an agent sufficient to bind the principal is such authority as the agent appears to have by reason of the actual authority which he does have. [Northwestern Thresher Co. v. Eddyville State Bank, 114 N.W. 291.] Apparent authority is 'such authority as a reasonably prudent man using...