People's Bank of Ava v. Baker

• Decision Date: 24 March 1917
• Docket Number: No. 1978.,1978.
• Citation: 193 S.W. 632
• Parties: PEOPLE'S BANK OF AVA v. BAKER.
• Court: Missouri Court of Appeals

193 S.W. 632

PEOPLE'S BANK OF AVA v. BAKER.

No. 1978.

Springfield Court of Appeals. Missouri.

March 24, 1917.

Appeal from Circuit Court, Douglas County; John T. Moore, Judge.

Action by the People's Bank of Ava against W. E. Baker. From a judgment for defendant, plaintiff appeals. Reversed and remanded.

Jos. V. Pitts and A. H. Buchanan, both of Ava, for appellant. J. S. Clarke, of Ava, for respondent.

STURGIS, J.

The plaintiff sued defendant as indorser of two promissory notes for $50 each. These notes were made by Hammons and wife to one Messengill, who indorsed same to defendant. The consideration for the transfer of the notes to defendant is that defendant was surety on a note for $60 to a local bank for Messengill, who, being unable to pay, indorsed the notes sued on to defendant, with instructions to dispose of the notes to the best advantage, and after paying this $60 note of Messengill's, to pay the balance, if any, to Messengill. One Burdett was president of the plaintiff bank, and was also interested in a local mercantile firm which Messengill owed $27. Burdett, for his bank, agreed to buy these two notes for enough to pay the $60 note of Messengill's to the local bank on which defendant was surety and the $27 store account due his firm. To this defendant agreed, and the notes were indorsed by defendant and delivered to plaintiff bank. The plaintiff thus paid $87, and perhaps a little more on account of interest, for these notes, and this money went to pay Messengill's debts. The only interest defendant had in the transaction was that he was, as stated, surety for Messengill on the $60 note so paid. The plaintiff, through its president, Burdett, not only purchased the notes sued on for less than their face value, but Burdett thereby secured the payment of a store account due the firm in which he was interested.

Defendant testified, and the facts corroborated his statement, that he let plaintiff or Burdett have these notes for Burdett's accommodation in getting the store account paid, Messengill being insolvent and having left the country. Both defendant and Hammons, the maker of the notes, testified that at that time Hammons was willing to pay enough on or for the notes to pay the $60 note on which defendant was surety, and thereby release the defendant. The transfer of the notes to plaintiff being for Burdett's benefit, defendant claimed that he indorsed the notes merely to transfer the same, and that he was not to be held liable thereon.

Another defense grows out of the fact that the notes sued on were secured by a mortgage or deed of trust executed by the maker Hammons. This mortgage or deed of trust was not put in evidence, as it should have been, and we know nothing of its terms. It was never recorded. It seems that it was filed in the recorder's office in the manner provided for chattel mortgages, but that amounted to nothing. At the time defendant indorsed the notes to plaintiff the rights of no third party had attached to the land covered by the unrecorded mortgage, and so the mortgage was then in full force. Later, and while plaintiff held these notes, the land was conveyed to third parties, and both sides seem to concede that thereby the security was lost. The defendant testified that the fact of the mortgage not having been recorded was mentioned at the time he indorsed the notes to plaintiff, and that plaintiff agreed to have the same recorded. It did not do so, however, and defendant charges that by its neglect the security was lost. It is not shown whether this security was ample to pay the notes or not.

The first instruction given for plaintiff is entirely too general, and covers matters not in issue, but it is correct in so far as it holds that defendant, by indorsing the notes without qualification, made himself liable thereon, and he cannot be allowed to show by evidence aliunde that he was not to be bound thereby. Sections 10036 and 10039, R. S. 1909; Eaves v. Keeton, 193 S. W. 629, decided at this term; First National Bank v. Korn, 179 S. W. 721; First National Bank v. Soltz, 183 S. W. 675; 3 R. C. L. 375. This instruction was wrong,...