Pattonsburg Sav. Bank v. Koch

• Decision Date: 05 November 1923
• Docket Number: No. 14797.,14797.
• Citation: 255 S.W. 580
• Parties: PATTONSBURG SAV. BANK v. KOCH.
• Court: Missouri Court of Appeals

255 S.W. 580

PATTONSBURG SAV. BANK v. KOCH.

No. 14797.

Kansas City Court of Appeals, Missouri.

November 5, 1923.

Appeal from Circuit Court, De Kalb County; A. M. Tibbels, Judge.

"Not to be officially published."

Action by the Pattonsburg Savings Bank against George B. Koch. Judgment for defendant, a new trial was granted, and defendant appeals. Affirmed.

Boyd Dudley, of Gallatin, and Scott J. Miller, of Chillicothe, for appellant.

John C. Leopard & Son, of Gallatin, and Randolph & Randolph, of St. Joseph, for respondent.

BLAND, J.

This is an action upon a promissory note in the sum of $5,000, negotiable in form, executed on April 3, 1920, by the defendant in favor of one L. W. Timms, payable four months after date, and transferred for value by blank indorsement by Timms to one Rolla Bray, who in turn, before maturity, transferred the note for value, without indorsement, to the plaintiff bank. The note was given for a one-third interest in a one-half part of a royalty reserved by one Bridges, owner of land in Arkansas, in an oil lease made by him upon it; the royalty being one-eighth of the oil produced under the lease.

There was a verdict and judgment in favor of defendant, but the court sustained plaintiff's motion for a new trial, assigning as reason therefor that he erred in giving defendant's Instruction No. 1, and defendant has appealed.

The facts show that Timms, Thompson, Hedrick, and Hewitt had been selling royalties in Arkansas leases in Daviess county, Mo. Previous to the selling of the royalties for which the note was given, they had sold interests in royalties to several persons in the vicinity of Pattonsburg in what was called the Robinson lease, among whom were Bray and one R. E. Maupin, president of plaintiff bank. Bray and Maupin assisted in the selling of the Robinson royalty. Shortly after disposing of the Robinson royalty, Timms, Thompson, Hedrick, and Hewitt came to Jamesport, where defendant was president of a bank, and there sold to him and two other men, by the names of Lent and Marlow, a one-sixteenth interest in the Bridges royalty, each paying $5,000; Lent and Marlow paying cash and defendant giving for his part his note (the one in suit) to Timms.

It appears that Timms and Thompson, the latter having lived in Jamesport some time previous to this occasion, solicited the defendant to buy an interest in the Bridges, royalty, and they told the defendant that they had just "syndicated" a royalty in Pattonsburg and vicinity and that Bray and Maupin were in that syndicate. They represented to defendant that the Standard Oil Company had leased the Bridges land and had timbers on the ground ready to drill an oil well; "that there was a great deal of production going on down in that part of the country; * * * that the `rigs' * * * were thick around there, and they (the Stand-against and Oil Company) were ready to drill and the timbers were on the ground ready to put down a well on this particular piece of land;" that "everybody knew what the Standard Oil Company was; that when they had a lease on the ground, they knew, or were pretty sure, there would be some oil there"; that the Standard. Oil Company "had investigated It—had their geologists make an examination; that they knew that there was GE on this particular piece of ground."

Defendant testified that Timms and Thompson were to give him and his copurchasers an assignment of the royalty interests sold to them; that neither he nor his copurchasers ever received any such assignment. Timms and. Thompson stated to defendant and his associates that they would "resyndicate" the royalty sold the latter if they desired it; that is, that they would sell a part of the royalty sold at such a price that defendant and his associates would get their money back.

The note was purchased by Bray, who lived at Pattonsburg, on the 4th day of Hay, 1920. Thompson, who was in Jamesport, called up Bray's son-in-law at Pattonsburg and told him that he had a note of defendant's which he wanted to sell to him and desired to trade it for a car. Bray, at his son-in-law's solicitation, drove to Jamesport and there interviewed defendant in the bank. There is conflict in the testimony as to what occurred. Defendant testified that Bray came into the bank alone and told him that he had a deal pending with Thompson for the purchase of an automobile, and that Thompson wanted Bray to take the $5,000 note, and desired to know if defendant had signed it. Defendant testified:

"I told him that I had given the note, and that it had only been about three or four days beforehand that the note was given, and as yet we hadn't received any deed to the property."

Shortly after this conversation, Bray same into the bank accompanied by Thompson and his son-in-law, whereupon Thompson said he had shown the note to Bray and that Thompson "wanted him (defendant) to say it was all right." Defendant said:

"I have explained the case to Mr. Bray, and when we get our deed to this property, the note will be paid when it comes due."

Bray and others testified that Bray was in the hank but once, and that his son-in-law and. Thompson were present at that time; that Thompson told the defendant that he was talking of selling the note to Bray's son-In-law ; that he asked defendant if the, note was all right, and defendant replied that it was, and that "he would pay it when it was due, and if he made a deal he was on he would pay it in 15 days"; that thereupon Bray and the others withdrew and, went across the street to a restaurant, and there Thompson attempted to sell the note to Bray's son-in-law. Finally, Bray himself purchased the note, giving Thompson a check for $3,200, which was cashed, and a car valued at $1,800. Bray admitted that he knew the note was given in an oil transaction, but denied knowing of any representations made in the sale of the royalty.

The deposition of Timms was read in evidence by the defendant. He testified that he sold the interest in the Bridges royalty to Thompson, Hedrick, and Hewitt for $9,000; that these resold it to defendant, Lent, and Marlow; that he (Timms) was paid $9,000 in cash with the money secured from Lent and Marlow and that he refused to take defendant's note for any part of the purchase price of the sale to Thompson, Hedrick, and Hewitt; that when Thompson, Hedrick, and Hewitt had sold the royalty, they asked Timms to come and transfer the papers; that the next day after the royalty was sold to defendant, Lent, and Marlow, he went to Jamesport and transferred the royalty to them and received the money and note sued on, and immediately indorsed the note in blank and gave it to Thompson. He testified that he did not represent that the Standard Oil Company bad a lease on the Bridges land, and that he did not know what representations Thompson made, as he was not in Jamesport.

Timms further testified that he saw Bray two or three times after defendant gave Timms the note in suit, but before Bray purchased the note; that at one time Bray said that he was figuring on "trading for this note"; that Maupin was present, and he and Bray asked Timms how the note happened to be given and he told them that Thompson, Hedrick, and Hewitt had sold an oil royalty. Bray and Maupin asked how the note happened to he made out to Timms, and the latter told them that Thompson did not want defendant to know how much profit was 'made, and that the note was made out to Timms, and "1 in turn handed it to Mr. Thompson"; that he told Bray in the presence of Maupin not to buy the note on his (Timms's) indorsement. Timms testified that he delivered the note to Thompson in defendant's bank.

The undisputed facts show that the Standard Oil Company did not have any lease upon the Bridges land and, of course, did not have any paraphernalia there ready to begin drilling a well. The note was transferred by Bray for full value and without indorsement to plaintiff bank about the latter part of May or the first of June, 1920. Prior to the transfer of the note to the bank, the bank's president, Maupin, had a conversation with defendant in Gallatin concerning the note. There is conflict in the evidence as to what this conversation was, but defendant testified:

"That Maupin asked him if he had executed the note, that Bray wanted to sell it to the bank; that he (Maupin) did not know whether the signature on the note was that of the defendant; that defendant told Maupin he "had given the note, but that I had never received any deed to the royalty, and that there had been a number of circumstances that had aroused my suspicions. * * * I told Mr. Maupin not to buy the note until he had seen further about it. And that is about all the...