Heaton v. The Norton County State Bank

• Decision Date: 09 April 1898
• Docket Number: 10577
• Citation: 52 P. 876,59 Kan. 281
• Parties: MATTIE J. HEATON v. THE NORTON COUNTY STATE BANK, THOMAS BURTON AND W. T. SHOEMAKER
• Court: Kansas Supreme Court

52 P. 876

59 Kan. 281

MATTIE J. HEATON v. THE NORTON COUNTY STATE BANK, THOMAS BURTON AND W. T. SHOEMAKER

No. 10577

Supreme Court of Kansas

April 9, 1898

Decided January, 1898.

Error from Norton District Court. A. C. T. Geiger, Judge.

Mattie J. Heaton brought an action against the Norton County State Bank, Thomas Burton and W. T. Shoemaker to recover $ 9600 the alleged value of ninety-six shares of the capital stock of The Norton County State Bank, which, it is alleged, were unlawfully obtained and converted by the defendants.

The defendant Bank answered that the plaintiff was formerly a stockholder and director in the Bank, and that her husband Morgan Heaton, was also a stockholder and the cashier and chief managing officer thereof; that on or about November 21 1893, an action was commenced by certain stockholders, in the United States Circuit Court, in which it was claimed that the Bank was being wrecked by the fraud and mismanagement of Morgan Heaton and that it had become insolvent; that a receiver was appointed, who took charge of the Bank and its assets, and that subsequently an arrangement was entered into by the stockholders for the settlement of that suit, the reorganization of the Bank, and the discharge of the receiver; that the general plan was that certain notes and obligations of the Heatons and others, owned by the Bank, and amounting to nearly twelve thousand dollars, should be delivered up to Morgan Heaton in consideration that he should transfer to Thomas Burton, the president of the Bank, the shares of stock held by him and by the plaintiff, his wife and certain other persons who had been associated with them, and that this transfer included the ninety-six shares of stock to recover the value of which the present action was brought; that as evidence of said agreement the plaintiff and her husband, as well as the defendant Bank and its stockholders, executed a writing, dated January 10, 1894, and in pursuance of the agreement the promissory notes above mentioned, amounting to nearly twelve thousand dollars, were canceled and delivered to Morgan Heaton; that the plaintiff assigned in writing the shares of stock standing in her name, and that all the terms of the agreement were fully performed and carried out; and that as a part of the agreement the Heatons transferred a number of tracts of real estate, including their homestead.

Burton and Shoemaker filed separate answers, which were, in effect, general denials.

The plaintiff's reply alleged that the contract mentioned in the answer of the Bank, which purported to convey the property and transfer to the Bank the shares of stock in question, was wholly without consideration, and that no benefit or right whatever accrued to her by reason of its execution and delivery or of the assignment and surrender of the certificates of stock; that her signature to the contract and transfer was obtained by coercion, intimidation, duress and undue influence, practiced and brought about by the Bank and its officers and agents as well as by the defendants Burton and Shoemaker; that the Bank, its officers and agents, as well as Burton and Shoemaker, prepared the written contract and the assignment of stock, and came to her home, after midnight, and fraudulently represented to her that M. Heaton, her husband, had stolen and embezzled the funds of the Bank while he was in charge of the same, and that if she did not execute the papers mentioned, the defendants would immediately cause her husband to be arrested and imprisoned on the charge of embezzlement and larceny; that the defendants had previously threatened her husband with arrest and imprisonment, of which threat she had been notified, and that she then and there believed that the defendants would immediately cause the arrest and imprisonment of her husband unless she executed the paper and assigned and surrendered the stock; that, being put in fear by these threats of arrest and imprisonment, she executed the contract and other papers and surrendered the shares of stock above mentioned; that the execution of the papers and the delivery of the shares of stock were induced wholly by the threats which were made by the defendants for the purpose of intimidating her and cheating her out of her stock; that she never authorized M. Heaton to sell, assign or surrender her certificates of stock to the defendants or to any of them, never consented to the reorganization of the Bank nor to any of the transactions embraced in the agreement which she was fraudulently induced to sign; that a note of $ 3,800, mentioned in the answer of the defendants and signed by herself, was an accommodation note, upon which she was not liable to the Bank, and that it had been fully paid by another person who had guaranteed its payment.

The cause was tried by the court without a jury, and in the course of the trial considerable testimony offered in behalf of the plaintiff was excluded by the court on the objection of the defendants. After the introduction of the evidence, the court found generally in favor of the defendants and rendered judgment accordingly.

Judgment reversed and cause remanded.

L. H. Wilder and Angevine & Cubbison, for plaintiff in error.

David Martin and L. H. Thompson, for defendants in error.

OPINION

JOHNSTON, J.

The important issue in the case is the duress alleged to have been exercised by the defendants, causing the plaintiff to transfer the bank stock in question. That the plaintiff executed the contract and deed and assigned and delivered the bank stock, on January 10, 1894, is conceded. Negotiations for a settlement with the Heatons and for the reorganization of the Bank had been progressing for some time. On the night of the above-mentioned date, Burton, president of the Bank, Shoemaker, secretary and assistant cashier, and John C. Brown, a stockholder, met in the office of Brown, and, having secured the attendance of the attorney for the Bank, sent for Morgan Heaton and endeavored to induce him to settle with the Bank by transferring to it certain property and bank stock held by him, his wife, and others, for which certain notes and obligations of the Heatons were to be canceled and a small sum of money was to be paid to Heaton. Burton, Shoemaker and Brown appear to have been the principal actors in behalf of the Bank, and they spent most of the previous day in preparing the papers which they desired the Heatons to execute. In response to a note, Morgan Heaton was brought to Brown's office between nine and ten o'clock at night, and the contract which had been prepared was presented to him. After reading it over, he objected to some of its terms; a controversy ensued, in which the representatives of the Bank insisted that the Heatons should sign the papers and close up the transaction; and Heaton, on the other hand, insisted on more favorable terms than were provided for in the contract. After wrangling for some time, and without effecting a settlement, Heaton left the office and started for home. Shortly afterward, Burton followed, and when he caught up with Heaton he told him that if he did not go back to the office and sign the contract and papers at once, and then go and get his wife to sign them, he would be arrested. Heaton then returned to the office, signed the contract, and the deed to the homestead, and then he and Brown, who was a notary public, started to Heaton's home to induce his wife, the plaintiff, to sign the papers.

Brown, who was called as a witness, was asked what occurred on the way to Heaton's home; but an objection was made that, having taken the acknowledgment of her signature to the deed and contract, he could not testify to what occurred on that occasion, as it would tend to impeach his official action and his notarial certificate. This objection was sustained by the court.

The plaintiff then offered to prove by the witness: "That on the night of the ninth of January, 1894, at about two or three o'clock in the morning of that night--the morning of the tenth--this witness and the defendant M. Heaton started, under the direction and at the request of the officers of the Norton County State Bank, to go to the residence of the plaintiff in this case, Mattie J. Heaton for the purpose of procuring the signature of the plaintiff, Mattie J. Heaton, to the deed and contract referred to in the answer of defendant herein, and to obtain from her an indorsement and delivery of her certificates of stock set up in the petition herein; that they met Mrs. Heaton on the street of the city of Norton, between two and three o'clock in the morning; that Mrs. Heaton then said: 'Is that you, Morgan?'--meaning her husband, and he (Heaton) answered: 'Yes'; that she then went up to the witness and Mr. Heaton and asked: 'What is the reason that you are out at this time of night? What business have you people on hand that you cannot transact in the daytime?' That Mr. Heaton then said to her: 'They have held me up for all we have except the children, and you might as well go back to the house and sign your death warrant. Mr. Burton told me that, if we do not immediately execute deeds conveying our homestead and our other real estate, and transfer all of our bank stock to him, so that he can get away on the early morning train in the morning, he will have me arrested and imprisoned for the crime of embezzlement.' That Mrs. Heaton then asked the question: 'Has any criminal prosecution been commenced?' That the witness said to Mrs. Heaton, in answer thereto: 'We are trying to fix this matter up and avoid a criminal prosecution.' That she then asked the witness whether or not they could convict her husband, M. Heaton, and the witness replied: 'I do not know. We are trying to fix it up and avoid a...