Lynes v. Holt-Taylor Mercantile Co.

• Decision Date: 09 February 1925
• Docket Number: (No. 14904.)
• Citation: 268 S.W. 702
• Parties: LYNES, v. HOLT-TAYLOR MERCANTILE CO. et al.
• Court: Missouri Court of Appeals

268 S.W. 702

LYNES, v. HOLT-TAYLOR MERCANTILE CO. et al.

(No. 14904.)

Kansas City Court of Appeals. Missouri.

February 9, 1925.

Appeal from Circuit Court, Callaway County; H. J. Westhues, Special Judge.

"Not to be officially published."

Action by W. D. Lynes against the Holt-Taylor Mercantile Company and others. Judgment for plaintiff, and defendants the Bank of New Bloomfield and the State Bank of New Bloomfield appeal. Reversed and remanded for new trial.

Baker & Baker, of Fulton, for appellants.

N. T. Cave and D. M. Cuthbertson, both of Fulton, for respondent.

ARNOLD, J.

This is an action to recover an unpaid balance on a promissory note. The Holt-Taylor Mercantile Company and the Bank of New Bloomfield, two of the defendants herein, were corporations doing business at New Bloomfield in Callaway county, Mo.

On September 6, 1913, the mercantile company executed to said bank its demand note for $3,500, and in January following, W. D. Lynes, plaintiff herein, purchased said note from the bank for full value, and, by resolution of the board of directors, the note was indorsed to plaintiff as follows:

"For value received, we assign the within note to W. D. Lynes.

                            "E. L. Christian, Cashier."
                

The note was delivered to plaintiff and remained in his possession until May, 1914, when he took it to the bank for collection of interest. The cashier collected the interest and credited the amount to the account of plaintiff and then took a new note, dated May 13, 1914, for the same amount in renewal payable to the Bank of New Bloomfield and signed by the Holt-Taylor Mercantile Co., Bruce Taylor, secretary, Ray A. Holt, and S. P. Holt. This note, which is the basis of this action, was retained by plaintiff, who collected the interest regularly and credited it thereon.

On or about April 11, 1922, the Bank of New Bloomfield was closed by the state bank examiner and all its properties were taken in charge by him. After the failure of said bank a new bank was organized under the name of the State Bank of New Bloomfield, for the purpose of taking over the business of its defunct predecessor. The new bank was to take over certain assets and assume certain liabilities of the old, under a proposition submitted in writing and accepted by both banks which reads, in part, as follows:

"And whereas, it has been determined that the said Bank of New Bloomfield has in its note case notes and other assets of the face value of $150,000 which are bad, slow or doubtful, and not considered good paper for any bank to hold; and whereas, there is now in process of organization a new bank to be located at New Bloomfield, Mo., to be known as the State Bank of New Bloomfield, which proposes to take over the assets of the said Bank of New Bloomfield, except the $150,000 face value of paper above mentioned, and to assume all the liabilities of the old bank except such as hereinafter mentioned * * * and said new bank takes over all the assets of the Bank of New Bloomfield except the assets of the face value of $150,000, considered slow, bad and doubtful, to be selected by the state bank commissioner, and will assume and agree to pay to the Commerce Trust Company the bills payable above set out," etc.

The testimony tends to show that the note sued on " is not included in the exceptions mentioned in said proposition.

In November, 1922, the Holt-Taylor Mercantile Company made a voluntary assignment for the benefit of creditors. The note involved herein Was presented for payment to the trustee of the mercantile company, and on December 21, 1922, the sum of $570.78 was paid and credited thereon; and on February 23, 1923, a further sum of $195.00 was paid, and properly credited.

The petition formally pleads the matters above stated, and alleges that "* * * at various times since said note was sold and indorsed to him [plaintiff] he has demanded payment thereof from each and every one of said defendants, but payment has not been made except as above set out. * * *" Judgment is asked in the principal sum of $2,734.22 and interest at the rate of 8 per cent. compounded as provided in the note.

The answer of the two banks is a general denial, and as special defenses it is denied that the Bank of New Bloomfield ever owned, indorsed, signed, or transferred the note described in the petition; that the cashier of said bank was authorized by resolution of the board of directors to indorse said note, and that any purported indorsement of the same was ultra vires and null and void; and that if such purported indorsement were legally made it would no longer be binding on defendants, because (1) without the knowledge of defendants, plaintiff has repeatedly and continuously, from time to time, extended the time of payment of said note, and (2) because said note has been materially changed since it left the possession of the Bank of New Bloomfield, in that if such note was ever in existence at the time it left the possession of the Bank of New Bloomfield, it was signed only by the Holt-Taylor Mercantile Company and Bruce Taylor, secretary, and has since been signed by R. A. Holt and S. P. Holt; that the said note, in its present form, is not the note once owned by said Bank of New Bloomfield, in date, tenor, and amount; that the State Bank of New Bloomfield never assumed the obligation on said note as alleged in plaintiff's petition.

Defendants Holt-Taylor Mercantile Company, R. A. Holt, and S. P. Holt did not answer. Upon the pleadings thus made, the cause went to trial before a special judge, a jury being waived. Judgment was for plaintiff and against all the defendants and each of them, in the sum of $3,184.46, with interest at 8 per cent. per annum, compounded from the judgment date. Motion for a new trial was ineffectual, and defendants Bank of New Bloomfield and the State Bank of New Bloomfield appeal.

At the inception of the trial, counsel for defendants admitted that the Bank of New Bloomfield at one time owned a note for $3,500, signed by Holt-Taylor Mercantile Company, by Bruce Taylor, secretary, and that it was thereafter, in December, 1913, or January, 1914, sold to plaintiff and assigned to him by the cashier of said bank, pursuant to a resolution of the board of directors of record.

The first assignment of error is that the court erred in overruling the demurrer offered by appellants at the close of all the evidence, for the following reasons: (a) Because there was no evidence that the cashier was authorized to indorse the note sued on for and in the name of the Bank of New Bloomfield; (b) the note sued on never having been the property of the bank, even if the board of directors, by resolution in writing of record, had directed the cashier to indorse such note, such act, on the part of the board of directors and the act of the cashier pursuant thereto, would have been ultra vires, null and void.

This argument is based upon the assumption that the note sued on is not the identical note sold and indorsed to plaintiff, having as additional obligors Ray A. Holt and S. P. Holt. But this assumption is not supported by the evidence. The cashier (plaintiff's witness), who transacted the business, testified on cross-examination:

"Q. On the old note that the bank sold, there was nobody on that note except the Holt-Taylor Mercantile Company? A. I think it was just like this one.

"Q. You kept the register? A. Yes, sir. "Q. Well, the register doesn't show that there was anybody else there? A. No. sir; it didn't show. Very often when we had an indorser on the note we would write the first name, and would mark `renewal' or `new.'"

Further the cashier testified:

"I don't remember...