Monett State Bank v. Eubanks

• Decision Date: 16 April 1907
• Citation: 101 S.W. 687,124 Mo. App. 499
• Parties: MONETT STATE BANK v. EUBANKS.
• Court: Missouri Court of Appeals

101 S.W. 687

124 Mo. A. 499

MONETT STATE BANK v. EUBANKS.

St. Louis Court of Appeals. Missouri.

April 16, 1907.

BILLS AND NOTES — BONA FIDE PURCHASER — COLLATERAL.

One taking as collateral for a loan a note given by another, without notice of any infirmity therein, and before the maturity thereof, is a holder for value, unaffected by any equities between the maker and payee.

Appeal from Circuit Court, Lawrence County; F. C. Johnston, Judge.

Action by the Monett State Bank against J. C. Eubanks. From a judgment for plaintiff, defendant appeals. Affirmed.

The action is on the following promissory note, indorsed in blank by the payee, William McCormack: "$500. Monett, Mo., July 27, 1905. October 1, 1905, after date I promise to pay to the order of Wm. McCormack five hundred dollars, for value received, negotiable and payable without defalcation or discount, at the office of the Monett State Bank, Monett, Mo., and with interest from date at the rate of seven per cent. per annum, and if the interest be not paid annually to become as principal and bear interest at the same rate. J. C. Eubanks." The petition is in the usual form. The answer admitted the execution of the note, but as a special defense stated, in substance, that in 1904, defendant bought a threshing machine of McCormack, which McCormack represented to him to be free of all incumbrances; that for the purchase price defendant gave McCormack his three promissory notes, aggregating about $1,800, which he secured by a chattel mortgage on the threshing machine; that afterward McCormack borrowed $550 of the Citizens' Bank of Monett, and delivered said notes and chattel mortgage as collateral to secure said loan; that on the maturity of McCormack's note to the bank he was unable to pay it, and at his request defendant executed to him three new notes and a new chattel mortgage, whereupon McCormack renewed his note to the bank and deposited the three new notes and chattel mortgage as collateral security, and the note sued on is the first to mature of said new notes; that at the time defendant purchased the threshing machine it was incumbered by a mortgage given by McCormack to Nichols, Shepherd & Co., who took possession of the machine and sold it under their mortgage a short time after defendant's purchase, and by reason of these facts the notes, including the one sued on, are wholly without consideration. It is also stated in the answer that the new notes and chattel mortgage were executed for the purpose of renewing the first or original notes and chattel mortgage, which were to be canceled and delivered to defendant, but plaintiff bank refused to cancel...