Montgomery v. Schwald

• Citation: 166 S.W. 831,177 Mo. App. 75
• Decision Date: 19 January 1914
• Docket Number: No. 10,889.,10,889.
• Parties: MONTGOMERY v. SCHWALD et al.
• Court: Missouri Court of Appeals

166 S.W. 831

177 Mo. App. 75

MONTGOMERY v. SCHWALD et al.

No. 10,889.

Kansas City Court of Appeals. Missouri.

January 19, 1914.

Rehearing Denied February 16, 1914.

1. APPEAL AND ERROR (§ 1010)—FINDINGS— CONCLUSIVENESS.

The appellate court is bound to accept findings of fact of the trial court, where there is substantial evidence to support them.

2. BILLS AND NOTES (§ 92)—CONSIDERATION —SUFFICIENCY.

Defendants, being sureties on the note of a corporation, the payment of which was being demanded, executed to plaintiff, a judgment creditor of the corporation, their individual notes for the amount of his judgment, so that the note upon which they were sureties could be paid out of certain money which had come into the hands of the corporation, and plaintiff thereupon assigned to defendants the notes upon which his judgment was based. Held, that there was a good consideration for the notes.

3. EVIDENCE (§ 444) — PAROL EVIDENCE — BILLS AND NOTES.

Where notes promised unconditionally to pay certain sums of money, the maker, in an

action thereon, could not show by parol evidence that they were conditioned upon the payee taking a trust deed, etc., as this would contradict the written instrument; and, there being evidence of a consideration, it could not be done under the guise of showing a failure of consideration.

Appeal from Circuit Court, Cooper County; G. A. Wurdeman, Special Judge.

Action by James T. Montgomery against Leon K. Schwald and another. From a judgment for plaintiff, defendants appeal. Affirmed.

George F. Longan, of Sedalia, for appellants. James T. Montgomery and Charles E. Yeater, both of Sedalia, for respondent.

TRIMBLE, J.

In this case suit is brought on two promissory notes admitted to have been executed by the defendants. Their defense is failure of consideration. A jury was waived, and the cause tried before the court. Judgment was rendered for plaintiff on both counts. Defendants appealed.

Some time in 1908 all the parties to this suit were interested in a corporation called the "Mexican Gulf Land & Development Company, Limited," which was organized to buy 75,000 acres of land in the Republic of Mexico, and which bought said land largely on credit. The company sold treasury stock as far as it could, and used the money to make payments on the land. Needing more money for this purpose, and not being able to raise it otherwise, the remaining amount necessary to be raised was divided into various sums, and different groups of men in the corporation gave their notes and raised the respective amounts agreed to be raised by each group. The defendant Schwald obtained four notes of $1,440 each, payable to the company, and indorsed in blank by it, and endeavored to sell them in order to put the money into the company's coffers. Failing in this, he and plaintiff executed a note to a Sedalia bank for $5,760, and put up the four notes as collateral, and the money was used by the company. This was in August, 1908. The following February plaintiff severed his connection with the company.

The note to the Sedalia bank was renewed from time to time, and at one of these renewals it was signed by plaintiff and both defendants. At last the bank demanded its money, and, as plaintiff was the only one on the note who could pay at that time, he raised the money and paid it off, taking into his possession the four collateral notes. The defendant Schwald paid plaintiff some of the interest, and then Schwald, who was plaintiff's only coprincipal on the note to the Sedalia bank (Moore having signed as security for both), gave plaintiff his note for $2,847, being one-half of the amount he had paid the Sedalia bank, and put up with plaintiff, as collateral security, $9,400 of notes secured on land in Ripley county, Mo. Plaintiff then brought suit against the Mexican Land Company, hereinabove mentioned, on the four collateral notes he had obtained when he paid the Sedalia bank, and in this suit plaintiff recovered judgment against said Mexican Land Company in the sum of $6,415.40 March 20, 1911. Plaintiff endeavored to obtain payment of this judgment but could not do so. On October 18, 1911, the defendant Schwald wrote plaintiff, sending him $47.50 interest on his $2,847 note, and telling him to be in Kansas City on a certain date as the representatives of a New Mexico company, the Soto La Marina Land & Water Company would be there with money to pay for 14,000 acres of land it was going to buy of the Mexican Land Company, and plaintiff could then get all or at least part of his money. The price agreed upon between the two companies for this land was $31,000. But, when plaintiff met the buying company's representatives at their conference with the selling company, the former could pay only $18,600 down, leaving $12,400 yet due. The selling company needed the entire $31,000 to pay off its debts, among which was plaintiff's judgment. As there was only $18,600 cash in sight, the men interested in the selling company (the Mexican Gulf Land & Development Company) wanted it used to pay such of its debts as they were security for, and plaintiff also wanted his judgment paid.

The two defendants in this case were sureties on a note of the selling company to a trust company in Kansas City for about $12,000, counting interest due. Suit had been commenced on this note, and they proposed to plaintiff that he allow this $12,000 indebtedness to be paid out of the $18,600 cash fund and let them give their notes to him (plaintiff), with a year's time, in payment of the Mexican Land Company's debt or judgment to him.

Plaintiff finally agreed that if they would pay him $1,000 out of the cash to be received from the buying company, and give him their notes for the balance due him, to wit, $6,029, he would allow this to be done. (As he had a judgment against the selling company, it could not convey the 14,000 acres to the buying company so as to obtain the $18,600 to pay its other debts, unless he consented thereto.) This was agreed to, and thereupon the defendants in this suit executed to plaintiff the two notes sued on herein. The $12,000 note, on which suit was then pending against defendants herein as sureties, was then taken up with the money received from the buying company, and defendants herein were released therefrom.

During the negotiations a question arose about how defendants, and others who were taking up other indebtedness of the company, could be secured. And both the selling and buying company agreed that the 14,000 acres bought by the latter should be deeded to a trustee to hold for the benefit of such parties, and, as the buying company made payments on the balance due from it, the trustee would apply it on the debts of the selling company, and thus those who were its sureties would be protected. Plaintiff was asked to become such trustee, and he finally consented and drew up the trust deed. This was never executed, as will be set forth later.

When defendants herein executed and delivered to plaintiff the notes sued on, the latter offered to return to Schwald his $2,847 note given for half the original indebtedness (which plaintiff had paid to the Sedalia bank), and also the collateral $9,400 Ripley county land notes and the four collateral notes for $1,440 on which he had recovered judgment against the Mexican Gulf Land & Development Company. They were not turned over at that...