Kennish v. Safford

• Decision Date: 06 March 1916
• Docket Number: No. 11881.,11881.
• Citation: 193 Mo. App. 362,184 S.W. 923
• Parties: KENNISH v. SAFFORD et al.
• Court: Missouri Court of Appeals

184 S.W. 923

193 Mo. App. 362

KENNISH v. SAFFORD et al.

No. 11881.

Kansas City Court of Appeals. Missouri.

March 6, 1916.

Rehearing Denied April 3, 1916.

Appeal from Circuit Court, Jackson County; D. E. Bird, Judge.

Action by John Kennish against Charles G. Safford and Isaac W. Ray. Judgment for plaintiff, and defendant Ray appeals. Affirmed.

McCune, Harding, Brown & Murphy, of Kansas City, for appellant. T. A. Witten and Hadley, Cooper & Neel, all of Kansas City, for respondent.

JOHNSON, J.

June 18, 1910, plaintiff (who then was practicing law in Kansas City) loaned $3,650 to A. M. Howell, a building contractor, and took Howell's promissory note for that sum, due in 90 days, with interest from date at 8 per cent. per annum. As collateral security Howell at the same time delivered, or caused to be delivered, to plaintiff three other promissory notes, which purported to be secured by deeds of trust on real estate; one for $4,000, one for $1,800, and the third for $1,500—in all $7,300, twice the amount loaned to Howell. One of these collateral notes turned out to be a forgery, and the other two were worthless. Howell, who had been operating as a building contractor on an extensive scale, was guilty of this and other criminal deeds, and his affairs came to a crisis shortly before the maturity of his note to plaintiff. A receiver of his property was appointed, but nothing was realized for creditors. The defendant Safford, a loan broker, procured the loan from plaintiff for Howell, and a part of the proceeds was paid over to defendant Ray, who was Safford's father-in-law and a creditor of Howell. Plaintiff charges a conspiracy between Safford and Ray to defraud him. The petition alleges:

"To induce plaintiff to make said loan, said defendant Safford, for the purpose of carrying out said conspiracy to defraud plaintiff, represented that all of said notes [meaning the three collateral notes] were the property of said Arthur M. Howell; that the same were all secured by deeds of trust on real estate in Kansas City, Mo., which deeds of trust constituted and were first liens on the properties respectively described therein; that he knew said notes and deeds of trust to be good, valid, bona fide, and in full force and effect, and that he knew the titles to all of said real estate were good; that said real estate was ample in value to secure said notes; and that said Howell desired to make said proposed loan in order to complete an apartment building owned by him then in course of construction; that said representations were all fraudulent and false, and were at the time known by both of said defendants to be fraudulent and false, and were made by said Safford with the full knowledge of said Ray in carrying out said conspiracy and fraudulent scheme and design of said Safford and said Ray to defraud plaintiff; that in truth and in fact said $1,800 note and the deed of trust purporting to secure same were forgeries, and were not executed by said Benjamin S. Fauber and Melvina F. Fauber, and the deeds of trust purporting to secure said $4,000 note and said $1,500 note were subject to prior deeds of trust on the real estate in said deeds described, and said real estate had been sold under said prior deeds of trust, and said securities were wholly worthless, all of which both said Safford and said Ray fully knew at the time; that said loan was, in fact, applied for by said defendants for the said Howell for the fraudulent purpose of obtaining the proposed loan from plaintiff for said defendants' own use; that relying upon the friendly intentions of said Safford and upon his well-known financial ability, and believing the representations so made by him, and that defendants were not personally interested in said loan, plaintiff agreed to make said loan of $3,650 to said A. M. Howell, and did pay and deliver said sum to said Safford as agent for said A. M. Howell, and accept from said Safford the aforesaid notes, alleged to be secured as aforesaid, as collateral security therefor; that said A. M. Howell was, at the time, wholly insolvent and financially worthless, all of which both said Safford and said Ray at the time knew, but which plaintiff did not know, and that said Howell soon thereafter became a fugitive from justice, and is now insolvent and a fugitive."

The answer is a general denial. The verdict of the jury was for plaintiff for $3,650, the full amount of his demand, and defendant Ray appealed. His principal contention is that the judgment against him lacks the support of any substantial evidence, and that his demurrer to the evidence should have been sustained. The business of defendant Safford was conducted under the name of Farmers' Mortgage & Loan Company. His father-in-law, Ray, a wealthy man, lived near Kansas City, and made the office of that company his headquarters, but had no interest in the business. Some time before the events in controversy he had allowed Safford to lend some money for him, and Safford loaned about $2,900 to Howell, who was one of his regular customers. This loan was secured by two, and perhaps all three, of the collateral notes afterward turned over to plaintiff. Defendants deny having had possession of the forged note, but the evidence as a whole supports an inference that Ray received and held that note as a part of the security for his loan to Howell.

The major part of that loan was not due at the time plaintiff made his loan to Howell, but there is evidence tending to show that Safford, on behalf of Ray, was vigorously pressing Howell for instant payment, and was moved to take that course by knowledge of the fact that the collateral notes were worthless, and that Howell had been borrowing money on spurious collateral. A bank recently had forced Howell to make good some paper of that character, and a woman stenographer employed in Safford's office testified to hearing Safford demand of Howell that he repay the Ray loan within an hour. Defendant's evidence contradicts her testimony and attacks her credibility, but we regard the issues it raises as issues of fact for the jury to determine. Safford and Ray both admit they were trying to collect the loan, but say the effort was prompted by the desire of Ray to use the money in the purchase of lands in Colorado as gifts to his grandchildren. Defendants deny any knowledge of the insolvency or criminal practices of Howell, and their evidence tends to show that they manifested confidence in him by lending him money after plaintiff made his loan.

Plaintiff had become acquainted with Safford at Jefferson City while plaintiff was Assistant Attorney General. Safford was introduced by Fred Burkhart, who had lived in Mound City, where plaintiff practiced law, many years. Burkhart was associated in business with Safford at Kansas City, and when plaintiff retired from public office and opened a law office in Kansas City, Burkhart and Safford were among the first to visit him, and Safford employed him in an important suit in Callaway county, and informed plaintiff that he expected to employ him in all of his legal business, which was large. An intimate personal relationship was established between plaintiff and Safford, the details of which need not be recounted. About the time Safford began pressing Howell for payment of the Ray loan, plaintiff sold a farm he owned in Arkansas and consulted Safford about the investment of the proceeds in a home in Kansas City. Afterward Burkhart called at plaintiff's office, and in the ensuing conversation inquired if plaintiff knew Howell, and, receiving a negative answer, remarked:

"He is a good man to get acquainted with. He has a great deal of business here, and he can throw you a lot of business, and I would like you to get acquainted with him."

Several days later Safford visited plaintiff, and asked if he would like to make a loan. plain...