Greer v. Lafayette County Bank

• Decision Date: 21 May 1895
• Citation: 30 S.W. 319,128 Mo. 559
• Parties: Greer v. Lafayette County Bank et al., Appellants
• Court: Missouri Supreme Court

30 S.W. 319

128 Mo. 559

Greer v. Lafayette County Bank et al., Appellants

Supreme Court of Missouri, Second Division

May 21, 1895

[Copyrighted Material Omitted]

Appeal from Ray Circuit Court.-- Hon. E. J. Broaddus, Judge.

Action by plaintiff for damages because of the fraudulent conversion by defendants of twenty shares of stock in the State National Bank of El Paso, Texas, of the face value of $ 100 each.The record discloses that: In 1881plaintiff became the owner of twenty shares of the capital stock of the State National Bank of El Paso, Texas.The stock of this bank was $ 55,000 fully paid up, as required by the act of congress; there was $ 35,000 surplus fund, $ 12,906 undivided profits.In addition to the accumulation of this $ 35,000 and of $ 12,906, the stock had paid an annual interest of $ 240, or twelve per cent.

In the latter part of March, 1888, Robert Greer applied to George Wilson, as president of the defendant bank, for a loan of $ 1,500 for his wife, offering as collateral the twenty shares aforesaid, which Wilson, by correspondence with the First National Bank of El Paso, ascertained to be ample security for the loan.Greer testifies that when the loan was made that is, April 21, 1888, it was distinctly understood between Wilson and himself that, though the note was drawn payable in three months, yet so long as "we kept the interest paid it would be satisfactory;" that Wilson said: "Just run it as long as you need it, so you keep the interest up the collateral is good enough for me."

On the date last mentioned, plaintiff borrowed of the defendant bank $ 1,500, for which she and her husband executed their note payable three months after date, with interest after date at eight per cent., by which she also hypothecated, as security these twenty shares of stock in the State National Bank of El Paso, Texas, authorizing their sale in case of nonpayment, without notice, at public or private sale; providing further, that said bank on payment of the amount loaned, as specified therein, and at any time before said collateral security shall have been sold, to surrender the same.At different times plaintiff paid the interest upon the note and part of the principal, but the defendants insisted on continuing the loan, as it was well secured, and the evidence shows that plaintiff could have procured the money at any time on the collateral for that purpose, also letters of defendants acknowledging partial payment.No demand or request for payment was ever made.The only thing testified to by Wilson was that, on some of these partial payments being made, the note was laid down on the counter and which he states he regarded as a "demand," but the evidence on the contrary is clear that from time to time the loan, by the assent and agreement of the parties, was extended.

January 5, 1892, plaintiff notified the defendants by letter that she did not desire to continue the loan longer, and to send the note and stock to the Aullville Bank for payment.In answer to this request, she received from defendant Wilson a letter, dated the sixth of that month, which was the first intimation she had received of the alleged sale of her stock and its purchase by defendant Wilson.In this communication he stated: "The Lafayette County Bank some time ago found it had too much loaned out and sold off some of its outside paper (by outside we mean the notes of persons who do not keep a regular and constant deposit with us).The note of Kittie J. Greer and R. L. Greer, along with other paper, was sold in St. Louis.The purchaser afterward wanted the bank to buy back your note; but as the bank has entered on a policy of lending only to those who keep good deposits with us, it did not suit the bank to do this.I arranged the matter by buying for myself the stock, which had gone along with the note when it was sold.The stock thus became my property.* * * I call your attention to the laws of this state as to debts owed to bankers.If a banker can not pay his depositors what is owing to them, he stands in the law on the same footing as if he had stolen that much money and must go to prison, but if any one else owes the banker he can quietly tell the banker that he is not able to pay and there is an end to it.This being the case I ask you to put yourself in my place and say if you would miss a chance to get back a thousand or so out of any member of a family, if the rest were owing you nearly $ 5,000.* * * But in the purchase of this stock I have acted strictly according to law and the contract and under the best legal advice at every step and the result can not now be changed."

On May 21, 1891, Wilson, as president of the defendant bank, began a correspondence with the Franklin Bank of St. Louis.These banks had long been doing business with each other.The correspondence and its incidents, as shown by the deposition of Garrels, the cashier, taken in narrative form, are as follows:

"'Lexington, Missouri, May 20, 1891.

"'Franklin Bank, St. Louis:

"'We wish to use some money on outside discounts; I prefer to sell them outright and will make you a separate and formal bond or guarantee that we will pay them in four months if the makers do not.Our reason for this is that they need not then appear as rediscount in our statement to the secretary of state.If this suits you, place the proceeds to our credit.Number 2963 is on sixty-five acres of land two miles from town, worth only, say, fifty per cent. over the note.We expect to get par and interest for it, and the value of the number 2963 balance and interest on it.Does this suit you?

Respectfully,

"(Signed)

'G. Wilson, President.'

"Accompanying this letter was plaintiff's note for $ 1,500, which had indorsed thereon, the authority to sell the stock heretofore mentioned, without notice, at public or private sale, etc.On the back of said note the following credits appear:

"'February 5, 1889.Interest paid to date ($ 95) and $ 105 paid on principal.'

"'Paid $ 25 interest to April 26, 1889(on June 22, 1889).'

"'July 17, 1889.Paid interest to July 16, 1889($ 25) and $ 95 on principal.'

"'March 3, 1890.Paid interest to date and $ 55 on principal.(Interest $ 65).Leaving balance $ 1,245.'

"'July 18, 1890.Paid interest to date and $ 87.65 on principal.Balance $ 1,157.35 due.'

"'January 15, 1891.Interest $ 49.25 paid to date, and $ 74.25 paid on principal.(Paid by draft on St. Louis.) $ 1,083 balance due.'

"'Pay Franklin Bank or order.

"'Lafayette County Bank.

"'Pr. Geo. Wilson, President.'

"The further indorsements appear on the back of the note:

"'Paid on this note July 21, 1891, $ 1,118, by sale of twenty shares stock mentioned therein.'

"'Pay Lafayette County Bank or order without recourse.

Franklin Bank.'

"This letter offered to us for sale two pieces of negotiable paper, number 2963, being the collateral note of Kittie J. Greer and R. L. Greer to which I have referred marked 'Exhibit A'; the other item, mentioned as number 2900, was a real estate note secured by deed of trust.We received these securities at the same time we received the letter 'Exhibit B.'We bought them on the terms stated in 'Exhibit B,' and credited the account of the Lafayette County Bank therefor in certain amounts stated in my letter to Geo. Wilson, president, of date May 23, 1891, of which letter I produce a letter press copy and the same is hereto attached:

"'Geo. Wilson, Esq., Pr., Lexington, Mo.

"'Dear Sir: -- We would have preferred to discount your note with paper sent as collaterals, but as you wished it, shall comply with your request.We shall credit the note at face and accrued interest and instruct our attorney to draw up a paper to cover the case which we shall mail to you for your signature as soon as received.

Yours Truly,

"(Signed)

'G. W. Garrels.

"'To your credit.

"'$ 1,083.10.

4m, 8d, 30-80.

$ 1,112.90.

"'$ 2,084.63.

10m, 5d, 140-82.

$ 2,225.45.'

"The bank held this note until the interest on the real estate note of a Mr. Francisco became due and then we wrote to Francisco that we would foreclose on the land unless the interest was paid.Thereupon Mr. Francisco arranged with the Morrison-Wentworth bank to take up that real estate note which bank paid us principal and interest, whereupon we turned that real estate paper over to it -- that ended our connection with security number 2900, in the letter 'Exhibit B.'The collateral note of the Greers was still in the possession of the Franklin Bank, but about the same time with my letter to Francisco I wrote to the Lafayette County Bank a letter July 18, 1891, a letter press copy of which I produce and which is hereto attached:

"'July 18.

"'Geo. Wilson, Esq., Pr., Lexington, Mo.

"'Dear Sir: -- What action do you wish us to take in regard to the papers we bought from you?

"'Yours truly,

"'G. W. Garrels.'

"In which we inquired what action we were to take in regard to the securities we bought as above stated.Thereupon we received a letter from the Lafayette County Bank dated July 24, 1891, which I now produce and which is hereto attached.

"'Lexington, Mo., July 24, 1891.

"'Franklin Bank, St. Louis, Mo.

"'Gentlemen: -- I saw H. C. Francisco last night, and he says that he will arrange to get the money to pay off that note and asks me to have it sent here and indorse it over to the person who is going to furnish him the money.I told him that could not be done; that he would have to make an entirely new loan and this be put on the record satisfied.I suppose he can do this just as well if he can get the money at all.I will write again as soon as I see him again.

"'Yours respectfully,

"'R. A. Wilson, Cashier.'

"This letter is an answer to our inquiry in so far...