Home Building & Loan Ass'n v. Barrett

• Court: Missouri Court of Appeals
• Writing for the Court: Nixon
• Citation: Home Building & Loan Ass'n v. Barrett, 141 S.W. 723, 160 Mo. App. 164 (Mo. App. 1911)
• Decision Date: 04 December 1911
• Parties: HOME BUILDING & LOAN ASS'N OF JOPLIN v. BARRETT et ux.

141 S.W. 723

160 Mo. App. 164

HOME BUILDING & LOAN ASS'N OF JOPLIN v. BARRETT et ux.

Springfield Court of Appeals. Missouri.

December 4, 1911.

1. BILLS AND NOTES (§§ 493, 499)—DEFENSES — PAYMENT — WANT OF CONSIDERATION — BURDEN OF PROOF.

In an action on a note, the defenses of payment and want of consideration are affirmative, and the burden of proof thereof is on defendant, since, under Rev. St. 1909, § 2744, a note imports a consideration.

2. BUILDING AND LOAN ASSOCIATIONS (§ 23) —OFFICERS—POWERS.

Officers and directors of a building and loan association possess only those powers which are granted by statute and the charter and by-laws of the association, and which are incident thereto.

3. BUILDING AND LOAN ASSOCIATIONS (§ 41) —ACTIONS—EVIDENCE.

In an action by a building and loan association, evidence held to show that the secretary, who was one of the directors, entered into a combination to defraud the association.

4. BUILDING AND LOAN ASSOCIATIONS (§ 23) —KNOWLEDGE OF DIRECTORS — NOTICE TO CORPORATION.

The secretary of a building and loan association, who was also a director, in pursuance of a fraudulent scheme, induced defendants to take the title to certain property in their own name, the purchase price being paid by a loan from the association, which the secretary represented to defendants was a purchase by the corporation, while in reality the arrangement was to permit the secretary to convert money to his own use. The secretary, as a director, was present at the meeting which authorized the loan. Held, that the secretary's knowledge of such facts could not be imputed to the association; for, while ordinarily a director's knowledge is that of the corporation, knowledge acquired by him while acting adversely to the corporation is not notice.

5. BUILDING AND LOAN ASSOCIATIONS (§ 24) —POWERS OF—STATUTES.

Rev. St. 1909, § 3388, in defining the scope of a building and loan association, declares that the object of such corporation shall be the accumulation of capital, derived from payments by its members in installments, to enable the members to secure loans of such funds by competitive bidding. Section 3394 provides that any association may purchase at any sheriff's sale or judicial sale any real estate upon which the corporation holds any mortgage, deed of trust, lien, or incumbrance. This is the only provision permitting building and loan associations to purchase real estate. Held that, as the power granted was necessary to allow the association to protect its loans, any general power to purchase real estate must be understood as denied, under the maxim, "Expressio unius est exclusio alterius"; and hence the purchase was illegal, and not merely an act in excess of the corporate powers, liability on which could not be avoided after performance.

Appeal from Circuit Court, Jasper County; David E. Blair, Judge.

Action by the Home Building & Loan Association of Joplin against John H. Barrett and wife. From a judgment for defendants, plaintiff appeals. Reversed and remanded with directions.

Haywood Scott, for appellant. Edgar B. Chestnut, for respondents.

NIXON, P. J.

This was an action for a balance due on a promissory note. The defense was "that said note was made without any consideration whatever, and that there is nothing due on said note." The case was tried by jury, resulted in a verdict and judgment for defendants, and plaintiff has appealed.

Plaintiff is incorporated under the laws of Missouri (article 8, c. 33, R. S. 1909), relating to building and loan associations, which article is its constitution. Its business is under the control and management of a board of directors. Its officers are a president, vice president, secretary, and treasurer. The president and vice president are required to be members of the board of directors, but any member of the association may be elected secretary or treasurer. The duties of the officers are those which usually appertain to their respective offices. The secretary is required aside from his usual duties as secretary, to follow the instructions of the board of directors. Its by-laws are in conformity with the article under which it is incorporated, except in one section, viz., section 14 of article 3, the by-laws provide that "if at any time the funds accumulate in the treasury in excess of the demands of the borrowing shareholders, the directors may invest the same in real estate for the benefit of the association or they may loan to persons not members of the association in the manner hereinbefore provided." That portion of the section giving the directors power to invest funds in real estate is in conflict with section 3394, R. S. 1909, which provides: "Any corporation created by or under this article is hereby authorized and empowered to purchase at any sheriff's sale or other judicial sale, or at any other sale, public or private, any real estate upon which such corporation may have or hold any mortgage, deed of trust, judgment, lien or other encumbrance, or in which such corporation may have an interest." The last paragraph of section 7 of article 2 of the by-laws contains the same provisions as section 3394, R. S. 1909.

Section 1 of article 3 of the by-laws conforms to section 3394, R. S. 1909, and provides how loans or advances are made. It provides that the loanable funds of the association shall, at each regular meeting of the shareholders, be offered to such shareholder who shall bid the highest premium for the preference or priority of right to have a loan or advance of a sum equal to the ultimate value of one or more of his shares; such funds to be loaned, first, to members on real estate security and pledged shares of the association; second, in case there is a balance of money remaining undisposed of at any regular monthly meeting, the directors may, at their discretion, loan the same to other than shareholders, on real estate security.

Section 4 of the same article conforms to section 3392, R. S. 1909, and provides that for every loan or advance made a nonnegotiable note or a bond, secured by first mortgage or deed of trust on real estate, shall be given, accompanied by a transfer and pledge of the shares of stock of the member so obtaining the loan or advance. It also provides what shall be recited in the note or bond and mortgage or deed of trust.

The next section provides that attorney's fees for examining abstracts of title, drawing papers, fees for recording, and all other expenses attending a loan shall be paid by the borrower or deducted from the amount of the loan.

The evidence of John H. Barrett, one of the respondents, shows what took place between him and Mr. Webster, the secretary of the loan association, before the application for the loan in question was presented: "Q. Mr. Barrett, state the facts to the jury, relating to that transaction. A. Before this loan was made, Mr. Webster, as secretary of the building and loan association at the time, asked me to use my name for a short time; said he wanted to make a loan on a piece of property; and I says, `Well'—asked him something about what it was for, and he says, `Well, I will see you in a day or two.' And in a day or two he says, `I would like for you to go over and look at a farm over here Mr. Farwell has.' I says: `I am not busy; I might go over and look at it.' He didn't say why he wanted me to go and look at the place; I supposed he wanted an opinion from me as to the value of the land, or something of that kind, so I went along with him. Mr. Farwell was over there with Mr. Webster, and in a day or two after we had been over there he said they were going to take up a loan, or pay off a loan, or something of the kind, on that property, and he wanted to make the deed to me, and then have me make a deed of trust to the Home Building & Loan Association, and get the money to pay off the mortgage that was against it, or something of that kind. Mr. Webster and Mr. Farwell and myself went to Webb City, and there they had a deed made to me, a quitclaim deed; it had been made up and left at the bank there. The quitclaim deed was already signed, and it was handed over to one of the party and compared with the deed of trust, to see that it was describing the same piece of property, both the deed of trust and the deed, and Mr. Webster had the checks or these vouchers from the building and loan association. He asked me to indorse them, so they could pay the bank, which I did, and turned them back to him. I don't know but what he laid them down on the desk, and I indorsed them. He took both of them, and he took the deed of trust and the quitclaim deed, both; took all of it. I got nothing. I didn't get any of the money from the bank nor from Mr. Webster, none whatever; didn't ask for anything; done it as a favor, I considered it, to the building and loan association, and did not request Mr. Webster or Mr. Paul to make their warrants, or any of them, payable to me. The $2,500 warrant was handed into the bank with another personal check for $200, making the $2,700, the consideration for the deed. The $200 check was drawn by Mr. Webster on some Joplin bank, and was made payable to me. I supposed he did that to make his records show just the transaction and keep it all together; he made the check for $200, which I indorsed to him again."

On March 3, 1909, at a regular meeting of the shareholders of the plaintiff association, application was made for a loan of $3,000 to defendant John H. Barrett, on 20 acres of land in Jasper county. The minutes show that the priority or right to have the loan was sold, as provided in the by-laws, and that Barrett's was the highest and best bid offered. Subsequently, and on March 10, 1909, at a regular meeting of the board of directors of plaintiff association, the application of John H. Barrett for the loan was approved and ordered made. On March 27, 1909, the following note was executed by defendants, upon which this suit was brought:...