Means v. Merchants’ State Bank

• Decision Date: 08 April 1916
• Docket Number: 20091
• Parties: MEANS v. MERCHANTS’ STATE BANK ET AL.
• Court: Kansas Supreme Court

156 P. 701

97 Kan. 748

MEANS v. MERCHANTS’ STATE BANK ET AL.

No. 20091

Supreme Court of Kansas

April 8, 1916

Syllabus

Plaintiff executed to a bank his promissory note which the bank sold and indorsed. The indorsee sued the plaintiff on the note and obtained judgment against him. In a suit by plaintiff to compel the bank to pay the judgment, the petition alleged that he was an accommodation maker, and that the president of the bank promised him that the bank would save him harmless from any liability on the note. Held that, as the note was given solely for the accommodation of the bank which received and retained the consideration, the plaintiff may maintain the suit independent of the authority of the president to bind the bank by the promise.

The evidence in this case is examined, and held sufficient to sustain the general finding in plaintiff’s favor.

It is further held, upon the facts stated in the opinion that the defendants failed to establish that plaintiff executed the note with the intent to enable the officers of the bank to deceive the bank commissioner or to conceal the condition of the bank from its stockholders and creditors.

Appeal from District Court, Sedgwick County.

Action by A. C. Means against the Merchants’ State Bank and another. From judgment for plaintiff, defendants appeal. Affirmed.

Dale, Amidon & Madalene and S. A. Buckland, all of Wichita, for appellants.

Holmes, Yankey & Holmes, of Wichita, for appellee.

OPINION

PORTER, J.

A. C. Means executed and delivered to the Merchants’ State Bank of Wichita two promissory notes, each for the sum of $5,000, dated April 19, 1913. One of the notes was payable directly to the bank; the other, which is the one involved in controversy here, was payable to Means himself, and he indorsed it to the bank. After he had renewed it once, the renewal note was sold to a bank in Kansas City which subsequently sued Means thereon and recovered judgment for the full amount and interest. In the meantime, the Merchants’ State Bank and the Merchants’ Reserve State Bank, both of Wichita, consolidated, and Means brought this action against both banks to compel them to pay the judgment. The petition alleged that the notes were executed as an accommodation to the Merchants’ State Bank without any consideration being given and under an agreement with J. W. Dice, president of the bank, by which the bank was to hold plaintiff harmless and free from any liability upon the notes. The defendants answered that the arrangement between Dice and Means was an individual transaction; that Dice acted without authority of the board of directors and without their knowledge and consent; and, further, that the transaction was for the fraudulent purpose of deceiving the state bank commissioner and the stockholders and creditors of the bank as to its condition; and that the plaintiff was estopped to say that he was not bound by the note. At the trial the defendants objected to having a jury called, and claimed that the case was an equitable one for the court to decide. The court called a jury in an advisory capacity, and the jury made certain findings of fact. Without approving or disapproving the findings of the jury, the court rendered a general judgment in plaintiff’s favor for the expenses of defending the action brought against him on the note and directing the defendants to pay the judgment.

Plaintiff claims that the notes were given without consideration and under the following circumstances: In 1912, one W. H. Kelchner, who had been operating a meat market in Wichita, was largely indebted to the bank on notes, and the bank was compelled to take over the business. For a while it employed Kelchner to manage the business. Later it employed John Chain, paying him $25 a week, and, in lieu of Kelchner’s notes, Chain gave his notes to the bank. Some time in March, 1913, Means applied to the bank for employment, and the cashier told him that Chain’s management of the meat market was not satisfactory, that the bank might give him the position under the same arrangement, and that, if he wanted it, to see Mr. Dice, president of the bank. Mr. Dice told him that they were carrying $10,000 of Kelchner’s notes in Chain’s name, and said:

"Of course, your notes will simply replace Chain’s. There is no liability whatever on it. There will be no liability in any way at all. You will never be asked to pay the notes or the interest. You are simply loaning your credit to the bank. In addition to this, I will give you my personal guaranty that you will never get into trouble or be asked to pay these."

Several days later Means executed the notes for the accommodation of the bank, and took charge of the management of the meat market, and continued there until some time in November. Before the notes fell due, Mr. Dice had severed his connection with the bank, and the president who succeeded him and one of the directors spoke to Means about the notes. Means testified that he told them he did not owe the notes, that they were accommodation paper and the bank had agreed to protect him; but that the new officers stated, in substance, that they understood the notes had been given to the bank in the regular course of business. Some time later, at the request of Dice, the plaintiff renewed both notes.

The question is whether upon the facts, the plaintiff was entitled to judgment. One contention of the defendants is that Dice acted as an individual in the transaction, without authority from the board of directors, and therefore the bank is not bound by his agreement with the plaintiff. A number of authorities are cited which hold that an agreement with the president or cashier of a...