Natural Bridge Trust Co. v. Hannibal

• Citation: 109 S.W.2d 901
• Decision Date: 02 November 1937
• Docket Number: No. 24388.,24388.
• Court: Court of Appeal of Missouri (US)
• Parties: NATURAL BRIDGE TRUST CO. v. HANNIBAL.

109 S.W.2d 901

NATURAL BRIDGE TRUST CO. v. HANNIBAL.

No. 24388.

St. Louis Court of Appeals. Missouri.

November 2, 1937.

Appeal from St. Louis Circuit Court; M. Hartmann, Judge.

"Not to be published in State Reports."

Action upon a promissory note by the Natural Bridge Trust Company, continued by O. H. Moberly, Commissioner of Finance of the State of Missouri, against Edward Hannibal. From a judgment on a verdict for defendant, plaintiff appeals.

Reversed and remanded.

John C. Tobin, Royal L. Coburn, and Norman C. Parker, all of St. Louis, for appellant.

Dubinsky & Duggan, of St. Louis, for respondent.

BENNICK, Commissioner.

This is an action upon a promissory note for the face amount of $3,000. Judgment was rendered upon a verdict for defendant, and plaintiff's appeal to this court has followed in the usual course.

The action was defended upon the ground that defendant's signature to the note was procured by the false and fraudulent representations of the payee and its agents; that the note had been executed without consideration and solely for the accommodation of the payee named therein; and that the plaintiff herein is not a holder in due course, but became the holder of the note after maturity and with notice of its infirmities.

In 1929 there was in existence in the city of St. Louis a certain banking institution having the actual corporate name of Natural Bridge Bank, though it seems to have been known and to have done business under the name of Natural Bridge Bank of St. Louis.

Meanwhile proceedings had been taken by the stockholders of the bank with a view to converting the same into a trust company under the name of Natural Bridge Bank & Trust Company, which action on the part of the stockholders was approved by the commissioner of finance of the state of Missouri on July 29, 1929.

One Koenig was the president of the bank, and one Lubeley, who figures prominently in this case, was its cashier, or at least occupied that status in December, 1929, when the note in suit was executed.

The defendant in the case is Edward Hannibal, who did business as an individual under the style of Hannibal Ice & Fuel Company and carried his account with the Natural Bridge Bank & Trust Company. How long he had had dealings with the bank does not appear, although it was shown that he was quite well acquainted with the officers of the bank and bore a reputation with them for financial responsibility.

Hannibal's own testimony was that on December 24, 1929, Lubeley, the cashier of the bank, called upon him at his office, and that after the two of them had taken a few drinks together in the spirit of the holiday season, Lubeley had requested Hannibal to sign his note, giving as the reason for his request that he desired to buy an additional amount of the bank's stock so that he might "be a little higher than Koenig," the president of the bank. He assured Hannibal that if he did sign the note he would "never hear any more about it," whereupon Hannibal, believing that he would never be obligated thereon, executed the note upon which it is that he is now being sued in this action.

Though Hannibal had been led to believe that it was Lubeley personally whom he was accommodating, the note was nevertheless executed in favor of Natural Bridge Bank of St. Louis as payee, and this notwithstanding the fact that Natural Bridge Bank of St. Louis had theretofore changed its name to Natural Bridge Bank & Trust Company on July 29, 1929, approximately five months before the execution of the note. However the explanation probably is that the note was executed upon a printed form in Lubeley's possession which had been prepared before the change in name had taken place. The note was made to bear interest at the rate of 8 per cent. per annum after maturity, which was to be six months after date, or on June 24, 1930, a date of importance in the case in view of the defense advanced that the plaintiff herein did not acquire the note until after its maturity.

But though it is true that Hannibal had thought that his execution of the note was for the accommodation of Lubeley with respect to a matter involving no concern of the bank, the actual fact was that the bank itself was the party to be primarily served and benefited by the execution of the same.

It appears that the bank at the time held paper evidencing an unsecured indebtedness of some $52,000 on the part of a concern known as Detroit Mount Cabin Company. Koenig, the president of the bank, as well as the directors, was desirous that this indebtedness should be reduced on the books of the bank, and at Lubeley's suggestion a scheme or plan was worked out whereby notes of solvent depositors would be secured to be applied against the indebtedness of the Detroit Mount Cabin Company. Before any depositor was approached by Lubeley, he first consulted with Koenig as to whether that person's note would be accepted. This procedure was of course followed in the case of Hannibal, and it was not until Koenig himself, acting for his bank, had approved Hannibal's solvency that Lubeley called upon him to secure his execution of the note upon the false representation that the purpose was to enable Lubeley to acquire additional stock in the bank. Indeed the fraudulent scheme thus concocted was of such proportions that between December 7, 1929, and December 26, 1929, twelve notes were obtained from as many depositors, ranging in amounts from $2,000 to $6,000, and aggregating in their entirety the very considerable sum of $42,500.

The evidence shows that after Hannibal's note had been secured by the bank it purported to open an account on its books in the name of Edward Hannibal Ice & Fuel Company, and then, two days later, after charging a ticket or check against the account, proceeded to credit the full amount of $3,000, the face of the note, upon the indebtedness of the Detroit Mount Cabin Company. Inferentially it would appear that the same procedure was followed in the case of the notes obtained from the other victims of the scheme.

Hannibal's own testimony was that he never received any part of the proceeds of the note and never drew a check against the account, all of which indicates that the note was not only without consideration, but that Hannibal's signature had been fraudulently procured thereto for the benefit of the bank. In fact Koenig, the president, later told Hannibal that the note was "gotten up" to protect the bank and to save it from going under; and as late as September 26, 1930, the plaintiff herein, as successor to Natural Bridge Bank & Trust Company, wrote Hannibal a letter requesting him to renew the note, and stating that "we want to take this opportunity to thank you for your kind co-operation and assuring you that same is appreciated very much."

So matters stood, with the bank retaining Hannibal's note among its papers, until on or about May 15, 1930, when the bank examiners called at the bank for an examination in regard to its condition. In the course of their examination the examiners attempted to trace the various note transactions and to determine what application had been made of the amounts that had come into the bank in that manner. The result of their examination was to show various shortages and defalcations committed by Lubeley, as well as other losses and unsatisfactory conditions, whereupon, for the protection of the depositors, and with the approval of the commissioner of finance, a plan was worked out whereby the assets of the Natural Bridge Bank & Trust Company should be sold to a corporation to be known as Natural Bridge Trust Company, in consideration of the new bank's assumption of all the liabilities of the Natural Bridge Bank & Trust Company, except capital stock liability.

On May 26, 1930, a certificate of incorporation was issued to the Natural Bridge Trust Company, and as of the same date a contract was entered into between Natural Bridge Bank & Trust Company and Natural Bridge Trust Company whereby the former purported to transfer to the latter the whole of its assets, not, however, as of May 26, 1930, the date of the contract, but as of May 24, 1930, two days before the certificate of incorporation was issued to the Natural Bridge Trust Company.

It is of course plaintiff's contention that the note in suit was an asset of the Natural Bridge Bank & Trust Company on May 24, 1930, and passed into the hands of Natural Bridge Trust Company as of that date pursuant to the contract executed on May 26, 1930. However, it is impossible to determine from the record just what did actually occur with reference to the transfer of the assets.

For instance the record discloses by one of plaintiff's own exhibits that on June 26, 1930, one month after the execution of the contract which has been heretofore referred to, the Natural Bridge Bank & Trust Company, pursuant to a resolution passed by its board of directors on that day, transferred and assigned, not to the Natural Bridge Trust Company, but to the original Natural Bridge Bank of St. Louis, all its notes and other assets as fully set out and described in the contract executed by and between the parties on May 26, 1930. It will be recalled that the Natural Bridge Bank of St. Louis was the payee named in the note, and had ceased to exist under that name on July 29, 1929, when the approval of the commissioner of finance was given to the action of its stockholders in converting the bank into a trust company under the name of Natural Bridge Bank & Trust Company.

One Will, who had gone with the Natural Bridge Bank & Trust Company as vice-president on February 2, 1930, and who was plaintiff...