Kansas City Trust Co. v. Mayflower Sales Co., 44926

• Decision Date: 14 May 1956
• Docket Number: No. 2,No. 44926,44926,2
• Citation: 365 Mo. 959,291 S.W.2d 51
• Parties: KANSAS CITY TRUST COMPANY, a Missouri Banking Corporation, Respondent, v. MAYFLOWER SALES COMPANY, a Missouri Corporation, Appellant
• Court: Missouri Supreme Court

Page 51

291 S.W.2d 51

365 Mo. 959

KANSAS CITY TRUST COMPANY, a Missouri Banking Corporation, Respondent, v. MAYFLOWER SALES COMPANY, a Missouri Corporation, Appellant.

No. 44926.

Supreme Court of Missouri, Division No. 2.

May 14, 1956.

Motion for Rehearing or to Transfer to Court en Banc Denied

June 11, 1956.

Phineas Rosenberg, Paul Barnett, Kansas City, for appellant.

Hilary A. Bush, Fred A. Murdock, Johnson, Lucas, Bush & Gibson, Kansas City, for respondent.

BOHLING, Commissioner.

Action on a guaranty and wholesale repurchase agreement. The Kansas City Trust Company, a banking corporation, herein designated plaintiff, sued the Mayflower Sales Company, a corporation, herein designated defendant, in two counts and had a judgment for $21,693.23 on Count I and for $1,796.47 on Count II. Defendant appeals; contending the negotiable instruments involved, endorsed without recourse by defendant, were not subject to said written agreement, and that certain testimony was inadmissible. Defendant offered no witness. The case was tried to the court without a jury.

Defendant was engaged in business as a wholesaler of electrical appliances. In May, 1950, negotiations were conducted at plaintiff bank by M. B. Lasky, President, M. E. Davis, Credit Manager, of defendant's St. Louis office, and G. Claiborne, Manager of defendant's Kansas City office, on behalf of defendant, and Robert J. Campbell and C. E. James, Vice-presidents of plaintiff. Thereafter, the Mayflower Sales Company, St. Louis, Missouri, by its President, addressed the following letter to plaintiff, dated June 1, 1950:

'Kansas City Trust Company

1822 Main Street

Kansas City, Missouri

Re: Wholesale Repurchase Agreement.

'Attention: Mr. Robert Campbell

'Dear Mr. Campbell:

'Undersigned desires to have you purchase acceptable promissory notes, drafts, acceptances, conditional sales contracts, chattel mortgages, bailment leases or trust receipts, herein called, 'Wholesale Instruments,' covering the sale of Wholesale Norge, Emerson, or Dumont merchandise bearing a model and serial number of each piece of merchandise, by persons, firms or corporations herein called, 'Dealers', whose credit and financial responsibility is acceptable to you in connection with the purchase of said equipment from Undersigned at Wholesale.

'In consideration of your purchasing such Wholesale Instruments, Undersigned unconditionally guarantees that such Wholesale Instruments executed by Dealers of the Undersigned with respect to the purchase of said equipment, and/or the renewals or extensions thereof, will be paid by Dealers obligated thereon in full when due, in accordance with the terms of such Wholesale Instruments, and that in the event of the failure of any Dealer to pay at maturity such Wholesale Instruments or extensions or renewals thereof, Undersigned will, upon demand, pay the entire unpaid balance owing on any such Wholesale Instruments, together with interest thereon after maturity, and any attorneys fees, court costs and other expenses paid or incurred by you in enforcing or attempting to enforce payment of such Wholesale Instruments, or in repossessing or attempting to repossess the equipment covered thereby, or in the prosecution or defense of any action or any matter arising out of or connected with such Wholesale Instruments.

'This contract may be cancelled by either party upon written notice.'

Thereafter, on June 12, 1951, defendant, by its President, forwarded an identical letter to plaintiff, with the exception that at the close of the second paragraph a proviso, of no materiality here, was added to the effect that defendant's liability should not exceed $80,000.

On December 17, 1951, M. B. Lasky, President of defendant, sent the following telegram to plaintiff:

'Have advised our Kansas City office not to give your bank any more floor plan paper unless you sign new agreement sent to you. Use this notice not to accept any more paper until I receive new agreement.'

On December 20, 1951, plaintiff and defendant executed a new guaranty agreement. It reads (date and signatures omitted):

'It is understood and agreed that the Kansas City Trust Company (herein called Lending Agency) may finance transactions involving the sale of appliances by Mayflower Sales Company, Inc. (herein called Distributor) to various dealers selected and approved by Distributor and Lending Agency.

'In connection with any such loan or extension of credit made hereunder, the Lending Agency shall require in advance a minimum down payment equal to not less than ten (10%) percent of the Dealers purchase price of such appliances.

'The initial terms of any such loan or extension of credit shall be ninety (90) days or less. The Lending Agency may make as many as three (3) renewals, each renewal subject to not less than a ten (10%) percent reduction payment. If the dealer should default on any such loan or extension of credit, made hereunder, and the Lending Agency be forced to repossess said merchandise, the Distributor will repurchase such new merchandise on hand with said Dealer, from the Lending Agency within ten (10) days after receipt of written notice from the Lending Agency. The repurchase price shall be the amount of the unpaid balance due the Lending Agency on said merchandise, plus costs of repossession, if performed by the Lending Agency or its agent, on the unpaid balance. In no event shall the repurchase obligation of the Distributor exceed the actual billing price of said merchandise when financed.

'Either party hereto may cancel this Agreement at any time upon thirty days notice in writing of its intention to cancel. Termination of this Agreement shall in no means affect the obligations of Distributor as to equipment covered by wholesale paper purchased or acquired by Lending Agency prior to the effective date of termination of this Agreement.'

On June 25, 1952, M. E. Davis, defendant's credit manager, St. Louis, Missouri, wrote plaintiff, 'Re: Jenkins Furniture Co., Neodesha, Kansas,' as follows:

'Attached you will find our check in the sum of $556.86 which pays your Bank on the entire Wholesale outstanding balance on the above mentioned dealer.

'This check covers items sold by this dealer and not paid for by them.'

Defendant contends the court erred in failing to sustain its motion to strike plaintiff's reply on the ground said reply set forth a different claim than that alleged in the petition and constituted a fatal departure from the claim pleaded in the petition.

Plaintiff says it seeks no recovery on an oral guaranty; that defendant's answer raised the affirmative defense that by reason of the 'without recourse' endorsements defendant's offers of guaranty were revoked and not applicable; that a reply was proper, Cordner v. Roberts, 58 Mo.App. 440; that plaintiff did not abandon the claim pleaded in the petition but pleaded the facts upon which it based the plea of estoppel in its reply. We take the issue as submitted.

Defendant does not differentiate between Counts I and II. The same legal theories of recovery on the part of plaintiff and of defense on the part of defendant are presented with respect to all Wholesale Instruments sued on. A statement of the pleadings and facts covering the issues in Count I fully presents the issues and there is no occasion to detail the pleadings and facts with respect to the instrument sued on in Count II.

Plaintiff alleged in its petition:

'2. That on or about June 1, 1950, plaintiff and defendant entered into a written contract whereby defendant agreed that if plaintiff purchased from defendant certain acceptable promissory notes * * * [naming the instruments specified in the contract to be executed by 'dealers'], therein called 'Wholesale Instruments,' * * *; that, in consideration thereof, defendant agreed unconditionally to guarantee that such 'Wholesale Instruments,' executed by dealers of defendant * * *, including renewals or extensions thereof, would be paid by the dealers obligated thereon, in full when due * * *, [et cetera]. * * *

'4. That, pursuant to said contract, plaintiff from time to time purchased from defendant certain 'Wholesale Instruments' * * *; that thereafter certain renewals or extensions of said 'Wholesale Instruments' were made; that thereafter the makers of said 'Wholesale Instruments' * * * failed and refused to pay the amounts due and payable as provided in said 'Wholesale Instruments' and plaintiff made demand on defendant * * * [et cetera].

'5. That the final extension or renewal of said 'Wholesale Instruments' purchased by plaintiff from defendant, pursuant to said contract, which were not paid by makers when due are more fully described as follows: [Here plaintiff describes different 'promissory notes and conditional sales contracts payable to defendant'--plaintiff's Exhibits C through O.]'

Attached to plaintiff's petition as exhibits were the aforesaid letters of June 1, 1950, June 12, 1951, and December 20, 1951 (Exhibits A, B and P, respectively), and the Wholesale Instruments sued on in Count I (Exhibits C through O) and Count II (Exhibit Q).

Defendant admitted in its answer its execution and delivery of the written contract of guaranty; admitted that from time to time plaintiff purchased from defendant Wholesale Instruments executed by defendant's dealers identical in form with Exhibits C through O, 'including defendant's endorsement thereon 'without recourse"; admitted that renewals of said instruments were made; admitted that the makers defaulted in payment; admitted that plaintiff made demand on defendant to pay, with interest et cetera; admitted that defendant refused and still refuses to pay; and denied that the demand for payment and refusal to pay were pursuant to said contract of guaranty.

Defendant also alleged in said answer that all of the Wholesale Instruments were endorsed by defendant 'without recourse'; that by reason of said endorsement, defendant's...