Pace v. The Gilbert School
| Decision Date | 02 April 1906 |
| Citation | 93 S.W. 1124,118 Mo.App. 369 |
| Parties | RICHARD R. PACE, Defendant in Error, v. THE GILBERT SCHOOL et al., Plaintiffs in Error |
| Court | Kansas Court of Appeals |
Error to Macon Circuit Court.--Hon. Nat. M. Shelton, Judge.
AFFIRMED.
Cause affirmed.
S. P Bond for plaintiff in error.
(1) The promissory note, or coupon bond in question, is a negotiable instrument. Fogg v. School District, 75 Mo.App. 190; Bank v. Skeen, 101 Mo. 688; Bank v. Com Co., 93 Mo.App. 136; Clark v. Skeen, 61 Kans 526; Padley v. Neill, 134 Mo. 376. (2) Where a negotiable note is endorsed before it is due, a payment made to the endorser before his endorsement will not be an extinguishment of the debt so far as the endorsee is concerned, unless he has notice of the payment at the time he gets the title to the note (Story on Bills, 417; Chitty on Bills, ch. 6; Prior v. Jacocks; 1 John Cas. 169). Of course this principle will apply a fortiori to payments made after the endorsement. Grant v. Kidwell, 30 Mo. 457; Johnson v. McMurray, 72 Mo. 278. (3) The coupon bond in question is and the coupons attached are negotiable instruments. Padley v. Neill, 134 Mo. 364, 376. (4) The Omaha Loan & Trust Company was not at the time of the payments to it by Pace the agent of the Gilbert School, nor was it the agent of the Gilbert School at any time. Padley v. Neill, 134 Mo. 379; Lay v. Honey, 89 N.W 1002.
Dysart & Mitchell for defendant in error.
(1) On negotiability bond: where a note otherwise negotiable provides for the payment of an attorney's fee its negotiability is destroyed. The notice of sale was published because of default in the payment of coupons, which provided for the payment of an attorney's fee on their face. Bank v. Gay, 63 Mo. 33; Clark v. Barnes, 58 Mo.App. 667, 672; McCoy v. Green, 83 Mo. 626, 633; Bank v. Jacobs, 73 Mo. 35; Bank v. Marlow, 71 Mo. 618; Storr v. Wakefield, 71 Mo. 622; Hope v. Barker, 112 Mo. 338, 341. (2) "A mortgage executed simultaneously with a note which it secures is a part of the contract and they are to be construed together, and the negotiable character of the note is destroyed by provisions in the mortgage which affect the certainties requisite for negotiable paper." 4 Am. and Eng. Enc. of Law (2 Ed.), p. 144; Brooke v. Struthers, 68 N.W. 272, 110 Mich. 562. (4) Notes otherwise negotiable coupled with collateral agreements are rendered non-negotiable. Killam v. Schoeps, 26 Kans. 310, 40 Am. Rep. 313; 4 Am. & Eng. Enc. of Law (2 Ed.), pp. 124, 125 and notes; Daniel on Neg. Instruments (5 Ed. ), p. 178, sec. 156; Ry. v. Atkinson, 17 Mo.App. 494 and cases cited; Fitzharris v. Leggatt, 10 Mo.App. 527. (5) Necessity of notice to the payor when note not negotiable. Such notice must be a notice of the assignment, and must disclose the name of the assignee. R. S. 1899, sec. 4488; Bartlett v. Eddy, 49 Mo.App. 32; Bank v. Stewart, 73 Mo.App. 279; Bishop v. Chase, 156 Mo. 158. (6) An assignment of a note with a guarantee is not an endorsement of the note to the assignee in the commercial sense of the law merchant. While such an assignment passes the title to the assignee, the latter takes the note subject to equities, including a payment before notice of the assignment. Norton on Bills and Notes (2 Ed.), (Hornbook Series), pp. 129, 130; Trust Co. v. Bank, 101 U.S. 68; Wetter v. Kiley, 40 Am. Rep. 670, 95 Pa. St. 461; Bank v. Walker, 5 F. 399; VanKeuren v. Corkins, 66 N. Y. App. 77; Miller v. Gaston, 2 Hill (N. Y.) 188, 194. (7) The evidence in this case shows that the Omaha Loan and Trust Company was the agent to collect the bond, No. 8036, and a payment to the Omaha Loan and Trust Company was a payment to the holder of the bond. The methods of transacting the business was competent evidence to prove agency. Bank v. Ins. Co., 145 Mo. 127; Johnson v. Hurley, 115 Mo. 520; May v. Trust Co., 138 Mo. 275; Security Co. v. Richardson, 33 F. 22; Bronson v. Chappell, 12 Wall. (U.S.) 681; Stockton v. Watson, 101 F. 490; Gilden v. Bank, 69 F. 912; Garrison v. O'Donald, 73 Mo.App. 621.
On the 21st day of November, 1898, Anna L. Frazee and Lloyd Frazee, her husband, gave their bond to the Omaha Loan & Trust Company of Omaha, Nebraska, for the sum of twelve hundred dollars, bearing interest thereon at the rate of five and one-half per cent per year, from the date thereof until maturity on the 1st day of November, 1905, payable semiannually according to the tenor of fourteen interest notes, one being for $ 29.35, and thirteen each for $ 33, bearing even date therewith, both principal and interest notes payable at the Chemical National Bank, New York City. And if default be made in the payment of any of said notes or any part thereof, as the same matured, for the space of thirty days, the whole amount thereof became due and payable, and the mortgagee, its legal representatives or assigns were empowered to proceed at once to collect the note and foreclose the mortgage given to secure said note and sell the mortgaged real estate, situated in Macon county, Missouri. Said mortgage was duly recorded. All of the coupons attached to the principal bond provided for attorney's fees if collected by suit.
Anna L. Frazee and her husband on November 25, 1898, deeded to R. R. Pace by warranty deed the real estate mentioned in the deed of trust to secure the notes, subject to the incumbrance of $ 1,200, etc., due to the Omaha Loan & Trust Company.
The note and deed of trust were assigned or endorsed in blank December 5, 1898, and sent east by the Omaha Loan & Trust Company and sold by it at Winstead, Connecticut, on January 10, 1899, before maturity for a valuable consideration and in good faith to the Gilbert School.
The Gilbert School deposited the coupons in the First National Bank of Winstead, Conn., with instructions to collect at the Chemical National Bank, New York City, where the same were paid as they became due, and six were promptly paid, and when it presented the seventh it was refused payment. It thereupon demanded payment of the coupon of the makers of the note and the one who had now taken the place of the makers, and being refused, the Gilbert School through the sheriff of Macon county, the trustee in the deed of trust having refused to act, proceeded to duly advertise to sell the real estate in the deed of trust to satisfy the coupon notes then due and the principal note, which it elected to declare due and payable under the note and deed of trust upon the default of the interest. Thereupon the defendant in error brought this action for an injunction against the plaintiff in error and certain other parties for the purpose of restraining the sale of said real estate under the deed of trust and the cancellation of the promissory note, or coupon bond, which said trust deed on said land was given to secure.
The answer and cross-bill is a general denial and sets up, among other things, the special defense that the promissory note, or coupon bond, and coupons were purchased from the Omaha Loan & Trust Co., in good faith, for value received, before maturity; and they were secured by a certain deed of trust mentioned in said answer; that default had been made in the payment of the seventh and eighth coupon notes; that upon the seventh interest coupon note not being paid when due, demand for payment thereof being made and refused, the Gilbert School elected to declare the whole principal sum to become immediately due and payable. The plaintiff in error prayed for a decree of foreclosure; for an attorney's fee as provided in the deed of trust in the sum of ten per cent of the amount due on the deed of trust and notes; and for all proper relief.
At the time the said mortgage was executed the Frazees also entered into an option agreement with said Omaha Loan & Trust Company, by which the latter agreed "to accept deposit sums of $ 50, or any multiple thereof, at any time on account of said loan, in accordance with the terms of its certificate of deposit"--the certificate to provide that the company would allow interest at the rate of five and one-half per cent per annum, to be applied to the interest coupons annexed to the note; and the principal money so deposited, at the maturity of the loan, to be applied to the principal note.
The said Omaha Loan & Trust Company assigned the note and mailed it to their agent in the east to be negotiated. The assignment was as follows: "For value received, the Omaha Loan & Trust Company assigns this note to .... or order, and guarantees: first, the collection of the principal of the within note; second, the prompt payment of the coupons attached thereto." A printed slip was attached to the note or bond containing the following:
(Signed) "OMAHA LOAN & TRUST COMPANY."
Six of the coupon notes were paid by the said company out of the money in its hands, paid to them by Pace, the defendant in error, as will more particularly appear hereafter. The other coupon notes were not paid by Pace for the reason also hereafter shown. It was disclosed that neither said company Hicks, Yatz & Co., the agent of defendant in error, nor the...
To continue reading
Request your trial