National Bank of Lima v. Deaton
| Decision Date | 16 June 1939 |
| Citation | 279 Ky. 606,131 S.W.2d 495 |
| Parties | NATIONAL BANK OF LIMA v. DEATON et al. |
| Court | Kentucky Court of Appeals |
Appeal from Circuit Court, Perry County; H. H. Ramey, Special Judge.
Action on mortgage notes and to foreclose a mortgage by the National Bank of Lima, trustee, against John G. Deaton and others. The defendants claimed a set-off for full amount of notes and counterclaimed for an additional sum. From a judgment for defendants allowing set-off, the plaintiff appeals, and defendant cross-appeals from judgment denying counterclaim.
Reversed on original appeal with directions to enter judgment for plaintiff and on cross-appeal, judgment affirmed.
Jouett & Metcalf, of Winchester, and W. W. Reeves, of Hazard, for appellant.
Napier & Napier, of Hazard, for appellees.
On December 8, 1930, John G. Deaton and his wife, Elizabeth Deaton, executed to the Lima Trust Company of Lima, Ohio, two notes of $1,350 each, due and payable one and two years after date, respectively, and, to secure the payment thereof executed a mortgage on three tracts of land in Perry County Kentucky, the first two of which tracts were originally owned by the Buckhorn Coal and Lumber Company and purchased at decretal sale by appellant and by it conveyed to John G Deaton. The third tract covered by the mortgage was a tract conveyed to Elizabeth Deaton by John G. Deaton on March 1 1903.
In June, 1931, the Lima Trust Company merged or consolidated with the Lima First American Trust Company and, at the time of this consolidation, the notes were endorsed and transferred to the Lima First American Trust Company. This latter company went into liquidation in February, 1933, and the superintendent of banks in the State of Ohio in the year 1934 transferred the notes in question to the appellant, the National Bank of Lima, Trustee, which instituted this action on the notes and sought a foreclosure of the mortgage given to secure them.
These notes were held by the Lima Trust Company under an agreement and declaration of trust which covered a considerable amount of land in Leslie and Perry Counties in Kentucky, by virtue of which participation certificates divided into 2,024 indivisible equal shares were issued to a large number of individual holders, and among these holders was Thomas A. White, who held sixty-one two-thousand-and-twenty-fourths. Thomas A. White was also one of three members of an advisory committee designated by the agreement and declaration of trust.
The appellees, by the second paragraph of their amended answer and counterclaim, pleaded that by the transfer of the notes by the Lima Trust Company to the Lima First American Trust Company, they were thereby placed upon the footing of a bill of exchange and appellant's right of action thereon was barred by the 5-year statute of limitations. By the third paragraph of the answer set off and counterclaim, they pleaded that on March 16, 1935, John G. Deaton entered into a written contract with the Southern Stave and Timber Corporation by which he sold to it and the Buckhorn Coal and Lumber Company 600 white oak trees on the land, which were of the reasonable value of $10 per tree, aggregating $6,000, and that, by the terms of the contract aforementioned, the Buckhorn Coal and Lumber Company, by its agent, Thomas A. White, promised and agreed that out of the purchase price of said timber, the Buckhorn Coal and Lumber Company would credit the notes sued on to an amount not to exceed $3,350. It was further alleged that Thomas A. White was a member of the advisory committee of the Lima Trust Company and an agent for the Buckhorn Coal and Lumber Company and that, by connivance between White and the Lima Trust Company and the Buckhorn Coal and Lumber Company, together with the Southern Stave and Timber Corporation, the 600 trees of the reasonable value of $6,000 were obtained from the appellees and no credit given on the notes therefor.
The contract of sale above referred to was filed as an exhibit with the answer, set-off and counterclaim, and is neither more nor less than a sale of the timber by Deaton to the Southern Stave and Timber Corporation with a provision that payments for the timber sold should be made to the Buckhorn Coal and Lumber Company in the total amount not to exceed $3,350, to apply against the mortgage held by the Buckhorn Coal and Lumber Company against John G. Deaton, by which was evidently meant the mortgage notes sued on in this action with the accumulated interest, although, as above recited the notes were held by the ...
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New Bedford Inst. for Sav. v. Gildroy
...of bank consolidations on holder in due course status under the pre-UCC negotiable instruments law. See National Bank of Lima v. Deaton, 279 Ky. 606, 610-611, 131 S.W.2d 495 (1939); Vogel v. Zipp, 90 S.W.2d 668, 671 (Tex.Civ.App.1936). We finally observe that NBIS might well not have been a......
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...to add Elliott as a new obligor, but not to release Z as the original obligor. As the court stated in National Bank of Lima v. Deaton, 279 Ky. 606, 609, 131 S.W.2d 495, 497 (1939), [i]n order to constitute a novation such as will release an obligation, it is necessary that there be a new co......
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