Miller v. People's Sav. Bank

Citation186 S.W. 547,193 Mo. App. 498
Decision Date22 May 1916
Docket NumberNo. 11371.,11371.
PartiesMILLER v. PEOPLE'S SAV. BANK.
CourtCourt of Appeal of Missouri (US)

Appeal from Circuit Court, Livingston County; Arch B. Davis, Judge.

Suit by James Miller against the People's Savings Bank. From a judgment for plaintiff, defendant appeals. Judgment reversed, and cause remanded.

Frank Sheetz and Paul D. Kitt, both of Chillicothe, for appellant. Scott J. Miller, of Chillicothe, for respondent.

JOHNSON, J.

This is a suit in replevin, begun September 13, 1913, to recover the possession of a negotiable promissory note executed April 24, 1912, by K. A. Dunn, as maker, and payable one year after date to the order of A. M. Knight at the office of the Gunby Realty Company in Chillicothe. The principal of the note is $2,600, and interest has accrued thereon from date at the rate of 7 per cent. per annum. The note is secured by a deed of trust dated, acknowledged and filed for record April 24, 1912, executed and delivered to J. E. McWilliams, trustee, which conveyed a farm of about 140 acres in Livingston county; the record title to the farm being at the time in K. A. Dunn. The petition alleges that plaintiff is the absolute owner of said note, is entitled to the immediate possession thereof, that the note is of the value of $2,850, that it has not been seized under any process, execution, or attachment against the property of plaintiff, and that defendant "got possession of said note without the consent and without the knowledge of the owner, this plaintiff herein, and wrongful and unlawfully withholds the note and deed of trust securing the same from this plaintiff, pretending to own the same." Defendant, in its answer, alleges:

"That it has the note sued for in its possession and is the owner and legal holder thereof, and that plaintiff has no right, title, or interest therein or thereto."

A trial of the issues resulted in the return of the following verdict:

"We, the jury, find that at the time of bringing this suit plaintiff was the owner of and entitled to the possession of the note and deed of trust of $2,600 made by K. A. Dunn to A. M. Knight and that the value of said note is the sum of $2,600."

Motions for a new trial and in arrest of judgment filed by defendant were overruled, and defendant appealed.

At the time of the events in controversy plaintiff was a farmer living in Western Iowa. He had lived in Chillicothe, Mo., for many years, had invested money in farm loans in Livingston county, and had transacted the business pertaining to such investments through the agency of the Gunby Realty Company, which was the trade-name of J. E. McWilliams, a real estate and loan broker doing business in Chillicothe. Among the farm loans purchased and owned by plaintiff were two notes for $1,400 and $600, respectively, which were secured by a deed of trust on a farm in Livingston county referred to in the evidence as the Rubottom farm. In January, 1912, these notes which were past due were sent by plaintiff to the Gunby Realty Company for collection, together with some other notes. McWilliams had become the owner of the Rubottom farm, but had procured its conveyance to Katie Dunn, his bookkeeper and stenographer; the deed referring to her as K. A. Dunn. He had informed plaintiff by letter of the fact that the farm had been sold, but did not disclose that he had purchased it, and had requested that the loan be renewed, but plaintiff denied the request and, as stated, forwarded the notes and deed of trust for collection. April 24, 1912, the principal and interest on these notes plus certain sums McWilliams had collected for plaintiff on other notes amounted to $2,569.60, and plaintiff had become indebted to McWilliams in the sum of $10 for a fee paid to an attorney employed in the interest of plaintiff. On that date McWilliams had his stenographer execute the note and deed of trust is controversy to A. M. Knight, a clerk in his office, and, under date of April 25th, had Knight indorse the note in blank. He then took the note and deed of trust into his own possession, filed the deed of trust in the recorder's office, and had the Rubottom, or, as they are called in the evidence, "Kelly," notes and deed of trust canceled and released of record and had entries made in his account with plaintiff in his books which indicated the payment of those notes. He did not report to plaintiff the collection of these notes, and, despite the earnest argument to the contrary, we say the evidence as a whole abundantly supports an inference that he did not collect them, and that the entries he made in his books, to which we have just referred, merely expressed his purpose to substitute the Dunn note for the Kelly notes and to induce plaintiff to continue to carry the loan on the Rubottom farm.

On August 14, 1912, plaintiff arrived in Chillicothe and went to McWilliams' office for the purpose of having a settlement with him. According to his testimony, McWilliams reported the collections he had made on other notes and that he had made a new loan to K. A. Dunn, the purchaser of the Rubottom farm for $2,600, secured by a deed of trust of that farm and some additional land. There is no question but that the security was adequate (that fact was admitted at the trial), and plaintiff appears to have become satisfied with what McWilliams had done and expressed his willingness to accept the Dunn note and trust deed in payment of the Kelly notes and of the amount due him from other collections. He knew that McWilliams' stenographer was called Katie Dunn, but did not identify her with K. A. Dunn, the owner of the land, and had no knowledge that she was holding the title for McWilliams. Nor did he know that payment of the Kelly notes had been entered upon McWilliams' books. He states that Katie Dunn was present at the settlement and at the request of McWilliams, went to the vault in the office, procured the note and trust deed therefrom, and brought them to plaintiff, who then and there examined them, announced that he would accept them, and then returned them to McWilliams to keep for him. He did not authorize McWilliams to hypothecate or sell the note. At the same time he left other notes with McWilliams, who gave him the following receipt:

                          "Chillicothe, Mo., Aug. 14, 1912
                

"Received of James Miller, Dobson $800.00 note, Brookshier $3,000.00 and Ware $800.00 and all papers with same — notes to be renewed and collected. Also $2,600.00 Rubottom loan.

                             "The Gunby Realty Co., K. A. D."
                

In the settlement it was found that the $2,600 note overpaid plaintiff in the sum of $40.40, and plaintiff gave McWilliams a check for that amount which was paid in due course.

The testimony of Miss Dunn, who was introduced as a witness by plaintiff, corroborates him in every essential particular. She stated that when plaintiff called at the office McWilliams directed her to bring the papers relating to his matters, and that she "went in the vault and got them out of a pigeonhole on the south side." She was asked, "When you went in the vault you got this note and deed of trust?" and answered, "Yes, sir."

In August, 1913, McWilliams was adjudged insane, and was taken to a sanitarium. Plaintiff, who had removed to Nebraska, went to Chillicothe and recovered his notes and papers, which were found in McWilliams' office; but the note and trust deed in dispute were not there and were afterwards discovered by plaintiff to be in the possession of defendant. His demand that they be delivered to him was refused by defendant, and this suit followed.

The evidence of defendant relating to the disposition and possession of the note and trust deed from April 25 to August 14, 1912, flatly contradicts that of plaintiff and raises a conflict of a nature to impugn the veracity either of plaintiff and his witnesses or of defendant's witnesses. McWilliams transacted his banking business with defendant, and its president testifies that on April 25, 1912, McWilliams applied for and was granted a loan of $2,600 for three months at 8 per cent. interest, and delivered to the witness for defendant the Dunn note and trust deed as collateral to that loan which was evidenced by McWilliams' promissory note. When this note matured it was renewed, the interest being added to the principal, and afterwards it was renewed from time to time until August 6, 1913, when for the first time a collateral form note was taken from McWilliams which recited the deposit of the Dunn note with defendant as collateral. This note which was dated back to July 24, 1913, was for $2,945, the amount of the principal and accrued interest on the original loan of $2,600 to McWilliams.

The books of the bank contain entries which tend to support the testimony of the president that a loan of $2,600 was made to McWilliams on April 25, 1912, was being carried by the bank at the time McWilliams became insane, and was removed to the sanitarium, and that the Dunn note was deposited with the bank as collateral to that loan. The president testifies most positively that the Dunn note and trust deed remained without interruption in the possession of the bank and were not in the office of McWilliams in August, 1912, on the date the evidence of plaintiff shows they were exhibited to and accepted by him. And counsel for defendant in their opening statement declared:

"This $2,600 note, gentlemen, that is now in suit, was never outside of the People's Savings Bank — never."

We call attention to these emphatic utterances because of the argument of defendant's counsel that there is no proof that the note was continuously in the possession of McWilliams until after his settlement with plaintiff, and that McWilliams may have temporarily...

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