Mitchell v. Fayette Bank & Trust Co.
| Decision Date | 19 May 1931 |
| Docket Number | Case Number: 20009 |
| Citation | 149 Okla. 64,299 P. 498,1931 OK 267 |
| Parties | MITCHELL et al. v. FAYETTE BANK & TRUST CO. et al. |
| Court | Oklahoma Supreme Court |
¶0 Bills and Notes--Action by Bank on Note--Defenses--Failure of Bank to Transfer Collateral Securities to Defendants as Agreed.
Where the president of a corporation executes his note and mortgage in favor of a bank for the purpose of reducing an indebtedness of the corporation to the bank and as part consideration therefor the bank agrees to transfer to him shares of stock of the corporation held by it as collateral security, to indemnify him against loss, the failure of the bank to comply with the agreement may be pleaded as a defense to a suit by the bank on the note and mortgage.
Appeal from District Court, Cotton County; E. L. Richardson, Judge.
Action by the Fayette Bank & Trust Company of Connersville, Ind., against Oscar Mitchell, Maud Mitchell, and the First National Bank of Connersville, Ind. Judgment for plaintiff and defendant bank, and defendants Mitchell appeal. Affirmed in part and reversed in part.
Langille & McDonnell, Dudley B. Madden, and Walter Hubbell, for plaintiffs in error.
J. C. Norman and Marion J. Northcutt, for defendants in error.
¶1 This is an action brought by the Fayette Bank & Trust Company of Connersville, Ind., against Oscar T. Mitchell, Maud Mitchell, and the First National Bank of Connersville, to foreclose a mortgage on certain real estate located in Cotton county. Plaintiff acquired its mortgage by purchase, and there is no contest as to the mortgage. The defendant First National Bank held a second mortgage against the premises executed by defendants, Oscar and Maud Mitchell, which mortgage it seeks to foreclose by cross-petition. This mortgage was given to secure a note in the sum of $ 4,563. It is claimed by defendants, Oscar and Maud Mitchell, that the consideration for this note partially failed, and by way of counterclaim they seek to recover damages against defendant First National Bank.
¶2 The counterclaim is a voluminous document, and among other things alleges: That defendant Oscar Mitchell, at the time of the execution of the note and mortgage, was the president of Lexington Sales Corporation; that the defendant bank was carrying for the corporation an excessive loan; that the bank examiner insisted upon a reduction thereof; that the bank held as additional security for its loan to the corporation numerous shares of stock owned by stockholders of the corporation; that the note and mortgage, together with another note executed by A. M. Cline, was executed to reduce the indebtedness of the corporation to the bank; that as part consideration therefor the bank agreed to transfer and to deliver them a certain portion of the shares of stock held by it as collateral security to indemnify them for the execution of the notes and mortgage; and that the bank agreed that these notes should never be...
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