Live Stock State Bank v. Locke

• Decision Date: 21 October 1925
• Docket Number: (No. 2422.)<SMALL><SUP>*</SUP></SMALL&gt
• Parties: LIVE STOCK STATE BANK et al. v. LOCKE.
• Court: Texas Court of Appeals

Page 405

277 S.W. 405

LIVE STOCK STATE BANK et al. v. LOCKE.

(No. 2422.)^*

Court of Civil Appeals of Texas. Amarillo.

October 21, 1925.

Rehearing Denied November 25, 1925.

Appeal from District Court, Roberts County; W. R. Ewing, Judge.

Action by the Live Stock State Bank and others against N. S. Locke. Judgment for the defendant, and plaintiffs appeal. Affirmed.

Hoover, Hoover & Willis, of Canadian, for appellants.

Coffee, Holmes & Coffee, of Miami, for appellee.

HALL, C. J.

On the 27th day of July, 1923, the appellee, Locke, executed and delivered to the Bank of Miami, a private banking concern, his promissory note in the sum of $1,771.34, payable on demand. On September 3, 1923, the Bank of Miami was indebted to the appellant Live Stock State Bank of Kansas City, Mo., in an amount exceeding $30,000, and on that date pledged the note sued upon, together with about 30 other notes made by other debtors, to the appellant bank as collateral to its indebtedness. On November 2, 1923, the plaintiff bank became insolvent, and F. C. Millspaugh, commissioner of finance of the state of Missouri, took charge thereof, and in the course of liquidating its affairs filed this suit.

The Bank of Miami failed February 21, 1924, and at that time was indebted to the plaintiff bank in about $32,000. On February 7, 1923, the appellee, Locke, entered into a written contract with the Bank of Miami, by the terms of which it was agreed that the Bank of Miami should, at the option of Locke, sell all of its assets and business to him, including the town lot in Miami upon which the bank was then doing business. It was further stipulated that Locke would finance the Bank of Miami thereafter with such funds as it might require until he assumed ownership and control thereof in an amount not to exceed $20,000; that the owners of the Miami Bank would loan said bank, as a basis of credit, either their well-secured notes or money during the time the written contract should be in force in the several sums stated therein. Locke obligated himself to try to get all of the bank's paper renewed and secured in the best possible way before he took over the bank and its business. Amongst other stipulations, Locke was authorized to demand a transfer of the bank's property on August 1, 1923, at his option, or at some later date at his option. It was further stipulated that Locke should erect a two-story brick building upon the lot where the old bank building stood, and that the lower story of the new building should be used by the bank as its place of business without rent until August 1, 1923, or until Locke should exercise his option, and after August 1st the bank should pay Locke rent equal to 10 per cent. of the cost and equipment of the room in the building to be used by the bank. It was further stipulated that in the event the bank was unable to perform or carry out its obligation, the amount advanced by Locke should be returned to him, and until said amount was paid he should be regarded as the creditor of the bank. It appears that Locke deposited $15,000 with the bank under the terms of the contract; that the building was constructed by him, and part of the ground floor occupied by the bank until August 1, 1923, without payment of rent. Prior to August 1, 1923, Locke notified the bank that he had decided not to purchase it, and to find another purchaser. It further appears that the bank negotiated with two other parties, and finally sold to one of them on September 25, 1923, and that it commenced paying rent from and after August 1, 1923. The $15,000 which Locke deposited in the bank during the life of the written contract was kept in a special account, and that amount was due him when the note was executed. He was not allowed to check on it until after the bank's business had been sold to another purchaser. While the new building was in the course of construction, Locke gave some checks upon the bank for the payment of sums due for the construction of his building. The checks were turned...