Murry v. Central Bank

• Decision Date: 15 June 1931
• Citation: 40 S.W.2d 721,226 Mo.App. 400
• Parties: M. B. MURRY ET AL., RESPONDENTS, v. CENTRAL BANK, APPELLANT
• Court: Kansas Court of Appeals

40 S.W.2d 721

226 Mo.App. 400

M. B. MURRY ET AL., RESPONDENTS, v. CENTRAL BANK, APPELLANT

Court of Appeals of Missouri, Kansas City

June 15, 1931

Appeal from the Circuit Court of Boone County.--Hon. H. A. Collier Judge.

AFFIRMED.

Judgment affirmed.

Harris Price & Alexander for respondents.

George S. Starrett and Ruby M. Hulen for appellant.

ARNOLD J. Bland, J., concurs; Trimble, P. J., absent.

OPINION

ARNOLD, J.

--This is an action seeking to recover money collected by defendant on a note which plaintiffs claim was collected for their use and benefit by reason of an assignment or transfer of the note. The cause was tried to the court and jury. At the close of the case the court instructed the jury to return a verdict for plaintiffs in in the amount prayed for in their petition, namely $ 1125, as principal and interest, and the further sum of $ 112.56 as attorney's fees, upon which a judgment was accordingly entered. After an unsuccessful motion for a new trial, defendant duly appealed.

The record discloses one Joseph D. Chorlton and wife were the owners of certain real estate in Columbia, Missouri, which they sold and conveyed subject to a first deed of trust thereon, to one Pittman. They received from him as part of the purchase price, his note in the sum of $ 5894.26, dated July 19, 1924. This note, secured by a second deed of trust on said property, was payable in monthly installments of $ 50 each, with the provision that the balance remaining thereon should be due and payable August 1, 1927.

On July 28, 1924, said Chorltons became indebted to defendant bank in the sum of $ 2950.84, for which they executed their note, and as collateral security, endorsed, assigned, and delivered to defendant said Pittman note. While said Pittman note was held by the bank as aforesaid, the Chorltons became indebted to plaintiff, M. B. Murry, and his brother, Thomas F. Murry (now deceased, his interest being represented in this action as co-party plaintiff by W. E. Davis, the administrator of his estate), for rent of a residence owned by them. Relative to such indebtedness, it appears said parties entered into a written agreement, as follows:

"This contract made and entered into this 21st day of September, 1925, by and between Thos. F. Murry of Oklahoma City, Oklahoma, and M. B. Murry of Callaway county, Missouri, parties of the first part and Joseph Chorlton and Bonnie B. Chorlton, of Columbia, Missouri, parties of the second part, witnesseth:

"That whereas the said parties of the second part are indebted to the said first parties, for certain rents on property located at Number Six (6) Ripley Street, Columbia, Missouri, and are unable to pay said rents in cash when due the said second parties have agreed to give the first party a note for said rents, said note to bear interest at the rate of eight per cent from date and they agree to secure the said note by giving as collateral a note for the sum of $ 5894.26 given by M. D. Pittman and wife to the said parties of the second part and bearing date of July, 1924. It is understood, however, that the said note of $ 5894.26 is now held by the Central Bank of Columbia, Missouri, to secure the payment of a note given by said second parties to the said Bank for the sum of $ 2950 of date July 28, 1924. It is also further understood that $ 700 has been paid on each of the two notes above described. It is understood that the rents secured are rents due on a contract which extends from August 15, 1924, to August 15, 1925."

This agreement, although dated September 21, 1925, was actually entered into on October 17, 1925, at which time the Chorltons also executed and delivered to plaintiff, for all rent then due, their note in the sum of $ 763.97 and interest at eight per cent. This note was payable one day after date, and provided that if same was not paid at maturity and placed in the hands of an attorney for collection, an attorney's fee of ten per cent on principal and interest should be paid. Nothing was ever paid by the Chorltons upon this note.

It is conceded of record that prior to the maturity of the Pittman note on August 1, 1927, the defendant had collected thereon $ 1950, of which amount $ 1709 had been credited upon the Chorlton note of $ 2950 and $ 241, upon two other notes of the Chorltons, held by the bank; that Pittman was unable to pay the balance of his said note at its maturity; that it was arranged between him, the Chorltons and the defendant bank that he should refinance his property by getting a larger first mortgage loan, appropriating the excess received to the payment of the pledged second mortgage note held by the defendant, which was done; that in the refinancing program the said Pittman note was cancelled and the deed of trust securing the same released of record; that a new note for $ 3200, payable to the Charltons, and a second deed of trust securing the same were then executed by Pittman and delivered to defendant; that later, on October 29, 1927, the Chorltons borrowed $ 1600 from defendant bank and as collateral security endorsed and assigned this new Pittman note in the sum of $ 3200; that Pittman made regular monthly payments to November 14, 1928, upon said new note, which totaled $ 750; that these payments were applied on said $ 1600 note of the Chorltons; that on said later date the bank purchased the said Pittman note, paying therefor, $ 400 in cash to the Chorltons, and by satisfying the balance due upon the $ 1600 note and other of Chorltons' obligations.

Plaintiff's evidence tended to prove that the bank was notified and advised of plaintiffs' claim prior to August, 1927. This is disputed by defendant. However, it is admitted of record by defendant's officers, who testified on its behalf, that prior to October 29, 1927, at which time it made the new loan of $ 1600 to the Chorltons and accepted the Pittman note of $ 3200 as collateral security therefor, the bank had full notice and knowledge of plaintiffs' claim. Subsequent to this notice on November 14, 1928, it made said purchase of the unpaid balance of the Pittman note. It was formally admitted of record by defendant's counsel that at the time of said purchase by defendant, it had collected on the Pittman note enough to pay the $ 2950 and interest (the original Chorlton indebtedness) and $ 1486.36 in addition thereto.

Plaintiffs' amended petition alleges the corporate existence of defendant, the execution of the original Pittman note, the pledge thereof to the bank, the making of the agreement set out above, the execution of the note to the Murrys thereunder, the fact of nonpayment, the alleged assignment by the agreement of the pledged note as collateral security therefor; the notice thereof to the defendant, the collection by defendant of sums in excess of the amounts due from the Chorltons, and that the defendant had received over its own claims, for the use and benefit of plaintiffs, a sum there set out, more than sufficient to pay plaintiffs' demands. By its answer to said petition, so far as here pertinent, defendant denied the notice of assignment to the Murrys, and the legal force and effect of the Murry agreement as an assignment. The answer further alleges as a defense, the making of certain advances on the Pittman note, and the fact of purchase on November 14, 1928, of the new $ 3200 note. The reply, in substance, reasserts the legal sufficiency of the assignment, but also alleges that if insufficient to pass the legal title, still it operated to create a lien upon the $ 3200 note which represented the balance of the original Pittman note. Such reply also charges that the bank made all of its advances and payments therefor with full knowledge of plaintiffs' rights and subject thereto.

The trial court, in directing a verdict for the plaintiffs, stated he was prompted to do so by reason of the fact the bank admitted having received notice of plaintiffs' claim, at a time when the indebtedness for which the Pittman note had originally been pledged had been discharged, and at a time when it held the $ 3200 note free of any claim of its own. Hence, the bank, in dealing further with respect thereto with full knowledge of plaintiffs' claim, became liable therefor.

Since the material facts are undisputed, as we view the cause, the propositions presented are not difficult of determination. The defendant bank held in its possession a note for $ 3200 evidencing the balance due on a previous note for $ 5894.26, which had been cancelled to allow refinancing. This $ 3200 note was given and accepted by defendant as a renewal representing the balance due on the cancelled note. After such new note was given, notice was given to the bank that plaintiffs claimed certain rights therein as security for the payment of their debt. At that time defendant bank had no rights in, or lien against the $ 3200 note,--all of its claims having been paid by the refinancing program. No question is raised as to the sufficiency of this notice, and none could be raised. The right asserted by plaintiffs was that the Pittman note had been "given" to them as collateral security for another note executed to the Murrys. With this notice, and fully cognizant of the outstanding adverse claim of plaintiffs, the bank thereafter loaned money...