Market & Fulton National Bank v. Estate of Ettenson

• Decision Date: 16 June 1913
• Parties: MARKET & FULTON NATIONAL BANK, Appellant, v. ESTATE OF HENRY ETTENSON, Deceased, BENJAMIN PHILLIP, Administrator, Respondent
• Court: Kansas Court of Appeals

158 S.W. 448

172 Mo.App. 404

MARKET & FULTON NATIONAL BANK, Appellant, v. ESTATE OF HENRY ETTENSON, Deceased, BENJAMIN PHILLIP, Administrator, Respondent

Court of Appeals of Missouri, Kansas City

June 16, 1913

Appeal from Buchanan Circuit Court.--Hon. William D. Rusk, Judge.

Judgment affirmed.

Spencer & Landis for appellant.

(1) The original debt being unpaid and there being no defense to the claim, the plaintiff should have judgment. Winsted Bank v. Webb, 39 N.Y. 325; Gerwig v. Sitterly, 56 N.Y. 215; Russell v. Nelson, 99 N.Y. 119. (2) Even if a recovery could not be had on the note in this proceeding, the court will give judgment according to the facts, and to avoid circuity. Moore v. Cross, 19 N.Y. 227.

Culver & Phillip for respondent.

(1) By the law merchant a note made payable to the maker's order was a nullity, until negotiated by the indorsement of the maker. Lowrie v. Zunkle, 49 Mo.App. 153; Pickering v. Cording, 92 Ind. 306; Bank v. De Shon, 41 Ark. 337; Smalley v. Wright, 44 Me 442; Daniels on Neg. Inst. (5 Ed.), sec. 130; Rabasses Succession, 22 So. 767; Scull v. Edwards, 13 Ark 24; Kayser v. Hall, 85 Ill. 511. (2) For many years this rule of the law merchant was abrogated in Missouri (and New York) by statute, and while that statute was in force notes payable to the maker's order could be negotiated by delivery without indorsement by the maker. O'Dell v Clyde, 53 N.Y.S. 61; Secs. 10, 154, R. S. 1909; Laws 1905, p. 243; Laws 1905, p. 265, secs. 196 and 197. (3) The note is payable to the order of the makers, and both were required to indorse. Ettenson did not indorse and therefore is not liable. Allen v. Bank, 84 N.Y.S. 1001; Daniels on Negotiable Inst. (5 Ed.), sec. 684; Ryhner v. Feickert, 92 Ill. 305; Brown's Exec. v. Dickinson, 27 Gratt. 693. (4) Parol evidence cannot vary the terms of a written instrument (which includes a note) nor to make a person liable on a note whose name does not appear thereon. Bank v. Reichart, 101 Mo.App. 242; Kessler v. Clayes, 147 Mo.App. 88; Duncan v. Kirtley, 54 Mo.App. 658; Sparks v. Dispatch Co., 104 Mo. 531; Keck v. Sedalia Brew. Co., 22 Mo.App. 187; 1 Daniels Neg. Inst. (5 Ed.), sec. 303; R. S. 1909, sec. 9989.

OPINION

JOHNSON, J.

This action originated in the probate court of Clay county on three promissory notes of $ 1000, $ 1500, and $ 2000 respectively, presented by plaintiff for allowance against the estate of Henry Ettenson who died at this home in Clay county on the morning of October 19, 1909. An appeal was allowed to the circuit court from the judgment rendered in the probate court and the action afterward was sent to Buchanan county on change of venue. Defendant paid the first mentioned note before trial. A jury was waived and the cause was submitted on an agreed statement of facts, with the right reserved by plaintiff to introduce in evidence "so much of the deposition of Joseph S. Lesser as may be properly admissible in evidence." The court excluded the deposition and rendered judgment for plaintiff on the note of $ 1500 and for defendant on the note of $ 2000. Plaintiff alone appealed from this judgment and, therefore, the only issues before us for determination are those pertaining to the latter note.

The material facts of the case thus may be stated. J. S. Lesser, president of J. S. Lesser Sons & Company, a business concern having its principal office at No. 20 East Twentieth street, New York, and Henry Ettenson, a merchant of Excelsior Springs in this State, were lifelong friends, and Ettenson who was a man of wealth and prominence in the business world had repeatedly indorsed commercial paper for Lesser Sons & Company to enable that concern to borrow money from plaintiff, a New York bank. Two or three times each year Ettenson visited New York on business and while there transacted his business in the office of Lesser Sons & Company where he had the use of a desk and office privileges through the courtesy of his friend. Ettenson had indorsed a negotiable promissory note for $ 2000, executed by Lesser Sons & Company to plaintiff. This note fell due on or about October 19, 1909, and on October 5th, J. S. Lesser wrote a letter to Ettenson, who was in Excelsior Springs, enclosing a new note to plaintiff to take the place of the one about to mature and requesting Ettenson to indorse and return it. Lesser said in the letter: "You asked me about the amount of your indorsement that we have. Altogether it is about $ 4900. You have also asked me to return the paid notes which I would gladly do, but you know that we are the makers of the notes, and generally when a note is paid, it belongs to the makers; but if you want it, I will return it in the future. But in the past, when a note was paid, that ended the matter and we destroyed it. You know that a note is always returnable to the maker and not to the indorser."

In response to this letter Ettenson signed the note, not as indorser, as was his usual course, but as a maker and returned it to Lesser. The note was as follows:

New York, October 19, 1909.

"$ 2000.

"Six months after date we promise to pay to the order of ourselves $ 2000 at our office 20 E. 20th St. City. Value received.

"HENRY ETTENSON,

"J. S. LESSER SONS & CO."

On the return of the note Lesser Sons & Co. indorsed on the back: "Pay to the order of the Market & Fulton National Bank of New York.

"J. S. LESSER SONS & CO.,

"DONALD LESSER, Treasurer."

And on the afternoon of October 19th, a few hours after the demise of Ettenson in Excelsior Springs, the note was delivered to plaintiff and the old note was surrendered by plaintiff to Lesser Sons & Company. At the time of the delivery of the renewel note neither plaintiff nor Lesser knew of the death of Ettenson. It is agreed by the parties "that the plaintiff bank would not have delivered up to J. S. Lesser Sons & Company the two thousand dollar note previously held by it on which Henry Ettenson was an indorser had Henry Ettenson's name not appeared on the two thousand dollar note in suit . . . that J. S. Lesser Sons & Company and Henry Ettenson were never partners . . . and that the law of the State of New York at the time the transactions hereinabove referred to were had, relating to and governing notes and the rights and liability of parties thereto and the holders thereof, was the same as the law of the State of Missouri contained in the statutes of the State of Missouri now in force and relating to and governing notes and the rights and liability of parties thereto and holders thereof, including the article of the Missouri statute known as the "Negotiable Instrument Law."

The principal thing in the deposition of J. S. Lesser which the court excluded is his letter to Ettenson from which we have quoted. We shall not go into the subject of the propriety of the exclusion of this evidence for the reason that in the view we take of the case it may be given consideration without affecting the conclusion we have reached that the judgment of the trial court was for the right party. Indeed that evidence is more friendly to such conclusion than to the position of plaintiff, since it shows two things quite clearly, viz., first, that Ettenson, doubtless somewhat piqued over what Lesser said about the relative rights of makers and indorsers respecting the custody of cancelled notes, intentionally deviated from his usual course and signed as maker, putting his name first, so that there might be no question about his right to have the note returned to him when paid and, second, that he gave neither express nor implied authority to Lesser to sign his name as indorser, nor to indorse the note in his behalf, unless it may be said that such authority appears on the face of the note itself. Since we find nothing in the deposition to aid the position of plaintiff, we shall leave that evidence without intimating an opinion upon the question of its admissibility, and shall turn to the note and the circumstances of its negotiation to ascertain whether or not the indorsement by Lesser Sons & Company alone and the delivery of the note to plaintiff in renewal of the old note upon which Ettenson was bound, as indorser had the effect of imposing the liability of a comaker upon him. It is not contended by counsel for defendant that the death of Ettenson a few hours prior to the indorsement and delivery of the note constituted a revocation in law of any authority he may be said to have conferred on Lesser to indorse and deliver the note for him. The rule is that "the death of a party is a general revocation of all authorities granted by him whether express or implied." [Smith's Executors v. Wyckoff, 3 Sanf. Ch. 77.] But if Ettenson signed the note and returned it to Lesser with implied instructions to indorse and deliver it to plaintiff in renewal of the old note and without knowing of his death, plaintiff and Lesser completed the transaction as intended by him, we would hold the defendant estate estopped from invoking the rule just stated. Certainly the estate would not be allowed to receive the benefit of a...