Madison v. Dodson

• Decision Date: 17 January 1967
• Docket Number: No. 8599,8599
• Citation: 412 S.W.2d 552
• Parties: Arnold MADISON, Plaintiff-Appellant, v. Dixie DODSON, Defendant-Respondent.
• Court: Missouri Court of Appeals

Page 552

412 S.W.2d 552

Arnold MADISON, Plaintiff-Appellant, v. Dixie DODSON, Defendant-Respondent.

No. 8599.

Springfield Court of Appeals, Missouri.

Jan. 17, 1967.

Motion for Rehearing or to Transfer Denied Feb. 13, 1967.

Application to Transfer Denied April 10, 1967.

John Alpers, Jr., Cabool, for plaintiff-appellant.

Hiett & Becker, Houston, for defendant-respondent.

TITUS, Judge.

This action, filed June 25, 1965, in the Circuit Court of Texas County, Missouri, is the second suit brought by plaintiff, Arnold Madison, on a $9,500 promissory note admittedly executed at Salinas, California, on June 20, 1961, by Doyle and Dixie Dodson (husband and wife). The note, due December 1, 1961, obligated the makers jointly and severally and represented money loaned by plaintiff so Mr. Dodson (who died in August 1964) could buy a half-interest in the Hogan Department Store at Salinas which he and plaintiff thereafter, for a time at least, operated as a partnership. Plaintiff asserts only $500 principal had been paid on the note before either suit was instituted and here appeals from a judgment entered May 13, 1966, on a verdict returned in favor of defendant.

Labeled 'Retirement of Partner,' an agreement signed by plaintiff and Doyle Dodson January 3, 1962, provided plaintiff was retiring from the partnership effective January 13, 1962, and was to be paid.$19,000 for his interest in the business. Handwritten at the end of the contract and above the signature appears: 'This agreement becomes effective the day of transfer of the nineteen thousand and no/100 to me.' Plaintiff testified that after execution of the agreement he had nothing to do with the store management, but worked 'for a period under a salary.' The store was closed in February or March 1962 and its assets sold for the benefit of creditors.

Plaintiff first filed suit on the note February 21, 1962, in the Superior Court of Monterey County, California, against 'Doyle Dodson, Dixie Dodson, Doe One, Doe Two and Doe Three, Defendants.' Mr. and Mrs. Dodson were personally served and the sheriff's return recites Mr. Dodson was being sued both 'individually and doing business as Hogans Department Store, a sole proprietorship.' On September 13, 1962, a 'Default Judgment (By Court)' was entered by the California Court against 'defendant Doyle Dodson (in) the sum of $9,000, plus interest thereon at the rate of 6 1/2% per annum from and after June 20, 1961; for attorneys' fees in the sum of $2,500; together with costs in the sum of $791.08.' The record is totally void of evidence as to what disposition, if any, was made of the claim against Dixie Dodson in the California law suit.

To avoid liability defendant pleaded the note had been fully paid by Doyle Dodson and that the California judgment against him 'is a bar to this action against this Defendant; that said Judgment is res adjudicata to this cause of action against this Defendant and that this Defendant was discharged and released from all liability on said Note.' Attached to and incorporated in defendant's answer was a copy of the 'Retirement of Partner' agreement and an authenticated copy of the California court records. Plaintiff's reply denied the affirmative defenses of the answer.

The equivocalness in defendant's testimony is best illustrated per ipsissima verba: 'Q. Now, the consideration in this (Retirement of Partner) agreement is nineteen thousand dollars, is that correct? A. Yes * * * Q. Did you and your husband acquire the money to pay this nineteen thousand dollars? A. Yes, we did. * * * We borrowed it from the Bank of America (and) it was turned over to my husband to pay Mr. Madison. * * * Q. Mrs. Dodson, I will ask you: Was this note paid? A. Yes. * * * Q. * * * (H)ow was it paid? A. It was paid with this agreement and the twenty thousand we borrowed from the Bank of America. * * * Q. You didn't pay him. And if he was paid he would have been paid by someone else, right? A. Yes. * * * Q. How much money did Mr. Madison (say he) receive(d) from your husband, according to the conversation that you overheard? A. He said he received ten thousand dollars. Q. Now, did you ever hear Mr. Madison state that he received the other nine thousand dollars, the payment of this note? A. No, I understood this ten thousand dollars paid the note.'

Four checks, totaling $9,000 drawn on the account of Hogan's Department Store at the Salinas Branch of the Bank of America, and each payable to plaintiff, were received in evidence. Plaintiff testified the checks were given him the latter part of January 1962 'postdated' in an attempt to pay the note balance. None of the checks were paid because of 'Not Sufficient Funds.' Two of the checks are dated February 7, 1962, signed by Dixie Dodson, and are in the amount of $2,000 each. Written on the face of both these checks is: 'Note Amer Trust Bank.' Defendant says these checks were given plaintiff because of a note he and her husband had at the American Trust Bank for borrowing 'some money to buy some property, I believe it was * * * it has nothing to do with this other note.' Mrs. Dodson did not testify regarding the third check dated February 20, 1962, in the amount of $2,500, nor as to the fourth check drawn to a like amount dated February 27, 1962.

Instruction number 5 (not in MAI) offered by the defendant was given by the trial court, as follows:

'Your verdict must be for defendant if you believe:

'First, that the promissory note sued on has been paid in full by Doyle Dodson or Dixie Dodson, or both, or

'Second, that plaintiff sued Dixie Dodson as a defendant, along with Doyle Dodson, in the Superior Court of the State of California, Monterey County, for payment of the note in question in this case, and

'Third, that no court judgment was rendered against Dixie Dodson in said California Court, nor was said case dismissed against Dixie Dodson, who was and is the same person as the defendant in this case.'

The trial court of its own initiative gave instruction number 6 (MAI No. 3.01) as follows.

'In these instructions you are told that your verdict depends on whether or not you believe certain propositions submitted to you. In determining whether or not you believe any proposition, you must consider only the evidence and the reasonable inferences derived from the evidence. The burden is upon plaintiff to cause you to believe the propositions necessary to support his claim against defendant. If the evidence in the case does not cause you to believe a particular proposition submitted or if you are unable to form a belief as to any such proposition, then you cannot return a verdict requiring belief of that proposition.'

On this appeal plaintiff claims the trial court erred by giving instruction number 6 without including in the charge that defendant had the burden of proving her affirmative defenses. Plaintiff objects to instruction number 5 because the affirmative defense of payment and 'the second affirmative defense contained in said instruction (were) not supported by the evidence and because the instruction does not properly define the affirmative defense of res adjudicata.'

Payment is an affirmative defense ¹ and the burden of proof was on defendant to establish payment of the note. ². Proof of payment may come from inferences drawn from facts and circumstances, yet 'to authorize such an inference the facts and circumstances should 'all point one way (to payment) and be inconsistent with any other reasonable hypothesis than that payment was made. '' Dorroh v. Wall, Mo.App., 297 S.W. 705(2); Wolfberg v. State Mut. Life Assur. Co. (8CCA), 36 F.2d 171, 174(2).

The recitation by defendant the note was paid 'with this (Retirement of Partner) agreement and the twenty thousand (dollars) we borrowed from the Bank of America,' suggests an amalgamation of the note with the contract into a resulting.$19,000 alloy. Plaintiff conceded during oral argument before us the.$19,000 figure stated in the agreement did, in fact, include the $9,000 balance due on the note, even though the contract itself does not so provide. Regardless of this most unusual blending, the parties consider the note and agreement as separable entities, which results in placing a $10,000 valuation on plaintiff's interest in the partnership. Defendant's was the only testimony offered to prove payment, and her alludement to the borrowed $20,000 implied, at least, the entire.$19,000 obligation (which included the note) had been satisfied. Pressed further, however, defendant revealed she had no personal knowledge of payment and was basing her testimony entirely on what plaintiff had told her. Plaintiff, according to defendant, did not tell her 'the other nine thousand dollars, the payment of the note' had been made, and the $10,000 plaintiff allegedly admitted being paid was merely 'understood' by defendant to have paid the note.

Except for what defendant said she 'understood,' there was no evidence concerning application of the $10,000 payment. Generally, if a debtor, owing the same creditor two or more obligations, fails to specify the account to which a payment is to be applied, the creditor may make the application. Herrman v. Daffin, Mo.App., 302 S.W.2d 313, 315(1); St. Paul Fire & Marine Ins. Co. v. United States (8CCA), 309 F.2d 22, 24, and authorities there cited. A reasonable hypothesis possible from the evidence is that plaintiff applied to $10,000 to pay his $10,000 interest in the partnership. This assumption is augmented by plaintiff's relinquishment of all management in the partnership, the fact that after the contract was signed and he...