People's Exchange Bank of Elmdale v. Miller

• Decision Date: 10 March 1934
• Docket Number: 30956.
• Citation: 29 P.2d 1079,139 Kan. 3
• Parties: PEOPLE'S EXCHANGE BANK OF ELMDALE v. MILLER et al.
• Court: Kansas Supreme Court

29 P.2d 1079

139 Kan. 3

PEOPLE'S EXCHANGE BANK OF ELMDALE v. MILLER et al.

No. 30956.

Supreme Court of Kansas

March 10, 1934

Syllabus by the Court.

Composition with creditors is exception to general rule that part payment is not consideration for discharge of entire liquidated debt.

Exception to general rule that part payment is not consideration for discharge of entire liquidated debt exists where part payment is made by or with aid of third person.

Where bank directors were liable on indemnity contract to depositor for interest on bank's insolvency, directors' performed oral agreement to enable receiver to pay all depositors 100 percent. providing depositors would waive claims for interest was supported by consideration and constituted accord and satisfaction of directors' liability on indemnity contract.

1. That there are exceptions to the general rule that a payment of a lesser sum with the understanding that it shall be in full discharge of the entire debt is without a distinct consideration, as stated in Sigler v. Sigler, 98 Kan. 524, 158 P. 864, L.R.A. 1918E, 725, adhered to and followed, and particularly the exception therein stated of a debtor in composition with his creditors generally, by which they agree to accept less than is due them is upheld and held to apply to the facts in this case.

2. Another exception to the general rule as to the want of consideration for the modification of a written contract, in addition to that stated in paragraph 1 of this syllabus, is where such part payment is made by or with the aid of a third person.

3. The pleadings, facts, and circumstances of the case fully considered, and held, the answers pleaded an oral contract modifying the original written contract and an accord and satisfaction; that the evidence and answers of the jury show that there was a good and valid consideration for such oral contract and also show the necessary elements to sustain an accord and satisfaction.

Appeal from District Court, Chase County; Lon C. McCarty, Judge.

Action by the People's Exchange Bank of Elmdale, a corporation against John Miller and others. Judgment for defendants, and plaintiff appeals.

W. C Harris and W. L. Harris, both of Emporia, for appellant.

Owen S Samuel, of Emporia, and Chas. E. Davis and S. R. Blackburn both of Cottonwood Falls, for appellees.

HUTCHISON Justice.

This is an action by the People's Exchange Bank of Elmdale, Kan., against ten directors of the Chase County National Bank to recover upon a contract $930.15 interest on the deposit of the former bank in the latter bank, the interest accruing after the closing of the latter bank and the serving of notice upon the directors of demand for payment. Judgment was rendered in favor of the defendants, and plaintiff appeals.

The record shows that before the plaintiff bank deposited any of its funds in the Chase County National Bank it took an indemnity contract signed by the ten directors obligating themselves to pay the deposit to the plaintiff upon demand. This contract made no mention of interest upon the deposit or any part thereof. About three years later the Chase County National Bank closed its doors and at that time it had among its deposits $18,336.74 belonging to the plaintiff bank. The plaintiff bank immediately served notice upon each of the ten directors, signers of the indemnity contract, demanding prompt payment of the deposit, and at or near the same time filed a claim with the receiver of the closed bank for the same. About five months after the bank closed a dividend was paid plaintiff on the deposit and still three months later another dividend was paid, making a total of 55 percent. thus paid by the receiver. Then it ran about eight months later before anything further was paid, during which time some oral communications were had, out of which the differences here presented mainly arise. They are based upon the following allegations of the answer of each of the ten defendants:

"Further answering, said defendant alleges that prior to the payment of the last dividend by the receiver of said Chase County National Bank the defendant, E. C. ImMasche, speaking for himself and the other defendants, stated to Edward Thurston as President of said plaintiff that the Receiver did not have sufficient assets to pay the depositors 100%; that said defendants and others contemplated taking over certain assets of said bank and putting up enough cash therefor to enable the said Receiver to pay 100% providing the depositors would waive all claim for interest.

"That said Edward Thurston on behalf of the plaintiff stated that it would be willing under the circumstances to accept the payment of the face of the deposit in full settlement of the claim. That relying on this statement said defendants and others did put up sufficient cash to pay 100% to this plaintiff and said plaintiff by reason of said agreement is now stopped from claiming any interest and there is no interest due it."

Appellant insists that these answers do not plead an oral contract nor an accord and satisfaction. The trial court instructed that they did, but that question will be considered later in connection with the evidence on those questions and the answers by the jury to special questions.

Appellees urge that, since the indemnity contract omitted any reference to interest, there can be no liability therefor, but the court rightly instructed the jury that a liability for interest at 6 percent. existed under R. S. 41--101 from the time default in payment upon demand under the contract. A statement appended to the receipt given by the plaintiff to the receiver of the closed bank for the last payment of the deposit in the sum of 45 percent. thereof, that is, of the principal only, has caused confusion as to the existence of an oral contract for the settlement without interest. It is as follows: "In accepting dividends we do not waive any claim for interest under bond contract dated Feb. 9th, A. D. 1925."

The following are the special questions and answers thereto given by the jury:

"1. At the time Edward Thurston engaged E. C. ImMasche in conversation in Cottonwood Falls, Kansas, regarding the indebtedness claimed to be due and owing the plaintiff Bank from the defendants herein, was he acting for and on behalf of the plaintiff Bank by authority given him through the directors of said Bank? A. Yes.

"2. If you answer question No. 1 'Yes,' did said plaintiff Bank, acting through said Edward Thurston, agree to accept one hundred percent of the deposit made by said Bank with The Chase County National Bank in full payment of all indebtedness claimed by said plaintiff Bank against said defendants? A. Yes.

"3. Was there a bona fide dispute between plaintiff and defendants or a bona fide doubt in the minds of either of the parties to this action as to the liability of defendants to said Bank for interest on any amount claimed to be due plaintiff Bank? A. No.

"4. Was there a settlement had between plaintiff Bank and the said E. C. ImMasche for and on behalf of the defendants? A. Yes.

"5. If you answer question No. 4 'Yes,' state whether or not the payment of said moneys to said plaintiff Bank was made by said defendants and others? A. It was.

"6. If you find that a settlement was made between plaintiff and said defendants in full of all claims on the part of said plaintiff against said defendants, state

"(a) Was there any consideration for said settlement? A. Yes.

"(b) Was the same paid by the defendants and others? A. Yes.

"(c) Did the plaintiff agree to accept the same in full of all claims against defendants? A. Yes.

"(d) In making payment of the settlement with plaintiff Bank did the defendants and others borrow $20,000.00 on May 14, 1929, with which to purchase the assets of the defunct bank and out of this sum did said plaintiff Bank receive the balance of the indebtedness due said plaintiff Bank in full of all claims? A. Yes."

The answer to special question No. 3 shows the jury understood the attitude of the trial court as to the liability of the defendants for interest, and although for that purpose the answer and the evidence supporting it may not be of any weight, but upon the element of settlement of a dispute under accord and satisfaction it may be of some consequence.

The evidence as to the existence or the making of an oral agreement about the payment of the principal and waiving the interest is as conflicting as it is possible for evidence to be. The jury chose to credit the evidence of the defendants concerning the same. There was no possible middle position regarding it. There was either an agreement of that kind made or not made. All parties agree there was a conversation about the payment of the balance of the deposit. The answers to all the special questions except No. 3 relate to this identical question, and are in harmony with the evidence and theory of the defendants as to the making of such a contract. Appellant argues that, if such a proposition was made by the plaintiff to accept the principal and waive the interest, there is no proof whatever that the defendants thereafter agreed to do any such thing, that there never was but one conversation on the subject and the defendants never contacted Thurston representing the plaintiff, thereafter to conclude or make good on their part the agreement. This reasoning as to the evidence and facts is not in harmony with the answer of the jury to the special question where it says the plaintiff bank, through Mr. Thurston agreed to accept the amount and proposition apparently made to him by the defendants. This is also in line with the allegations of the answers above quoted that the proposition came from the defendants and was accepted by the...