Pool v. Gates

• Citation: 225 P. 1069,116 Kan. 195
• Decision Date: 10 May 1924
• Docket Number: 25,551
• Parties: ED POOL, Appellant, v. R. C. GATES et al, Appellees
• Court: United States State Supreme Court of Kansas

225 P. 1069

116 Kan. 195

ED POOL, Appellant, v. R. C. GATES et al, Appellees

No. 25,551

Supreme Court of Kansas

May 10, 1924

Decided January, 1924.

Appeal from Reno district court; WILLIAM G. FAIRCHILD, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. PROMISSORY NOTES--Valid Notes Exchanged for New Notes and Mortgages--New Notes Given for Valid Consideration. Where, at the inducement of the maker of promissory notes which were valid in the hands of the bona fide endorsee and holder thereof, the latter accepts new notes with real-estate mortgage security therefor in lieu of the older notes, the new notes and mortgage are valid obligations and have sufficient consideration for their support by the mere fact of their being substituted for the prior indebtedness.

2. SAME--Fraud--Findings--No Constructive Fraud. No theory of constructive fraud can be considered to disturb a judgment on appeal, when the trial court, upon the evidence adduced found that that defendant was not involved in any fraud complained of by appellant.

3. SAME--Comment by Trial Court--Low Mentality of Plaintiff--Not a Judicial Finding of Fact. Certain comment of the trial court touching the low mentality of the plaintiff considered, and held that such comment was not a judicial finding of fact, nor based upon record evidence, and that no issue thereon had been presented for trial and adjudication.

4. SAME--Cross Appellants Purchase of Notes--Judgment on Equitable Principles. The circumstances attending the cross appellant's purchase of an outstanding $ 15,000 mortgage, and the limitation of his recovery thereon to its actual cost to him considered on broad principles of equity, and no error discerned therein of which either appellant or cross appellant can complain.

5. SAME--No Reversible Error. Other minor matters urged to justify a reversal considered, and not sustained.

Dennis Madden, and C. B. Randall, both of Topeka, for the appellant.

C. M. Williams, and D. C. Martindell, both of Hutchinson, for the appellee.

OPINION

DAWSON, J.:

This appeal presents the result of two cases, consolidated below, in which the plaintiff unsuccessfully sought relief from certain obligations he had incurred in giving notes and mortgages for certain oil stock, trust company stock, and investment stock, and for related purposes which will require to be stated with some detail.

The plaintiff, Ed Pool, is 69 years of age, a farmer, and has been a resident of Stafford county for 45 years. He has acquired title to some 1,470 acres of land valued at $ 112,000, encumbered to the extent of some $ 49,500, exclusive of certain mortgages involved in this litigation. As a farmer plaintiff had been successful, and had long kept a bank account, and was quite familiar with the responsibilities involved in giving real-estate mortgages, having given 65 of these obligations in the course of his business career. Some two or three years ago, however, he made certain improvident investments in corporate stocks with which he had no familiarity and which have led him into serious financial consequences.

In 1921 plaintiff bought some Collins Investment Company stock from one DeMasters, giving the latter two notes for $ 2,500 each in payment therefor, and depositing the stock with DeMasters to secure payment of the notes. DeMasters sold these notes to R. C. Gates, a neighbor of plaintiff.

Early in 1922 plaintiff bought some Derby Oil Stock from one Bushnell, giving the latter two notes for $ 5,000 each in payment therefor. Shortly afterwards plaintiff bought some more of this stock from Bushnell, giving him a third note for $ 5,000 in payment. Bushnell sold one of these notes to Frank Sutton and R. C. Gates, and afterwards Gates acquired Sutton's interest in it. Still later Gates purchased a second of these $ 5,000 notes from Bushnell. It appears that before purchasing some of these notes Gates had talked with plaintiff concerning them, and plaintiff encouraged Gates to buy them. Gates testified:

"Q. Tell us the conversation you had with Mr. Pool at that time just as it occurred. A. I said to Mr. Pool, I said 'You have given this fellow another $ 5,000.00 note.' 'Yes, sir,' he said, 'he sold me,'--he said 'I bought $ 5,000.00 worth of more stock.' I said 'You are giving these notes,' and I said 'you know you can't pay them when they are due.' I said 'what will you do in regard to this?' Mr. Pool says 'If you will take up this note I will give you a mortgage for the notes you hold, [totalling $ 15,000], a new note and mortgage, and you can give me more time, if you will give me more time.' I told him 'All right,' I would do that."

It was apparently arranged that plaintiff should go to St. John to execute a mortgage on his land pursuant to this arrangement; but instead of doing so, plaintiff bought some Ranchman's Trust Company stock from one Beals, giving notes to the extent of $ 15,000 in payment, which notes were secured by a mortgage on plaintiff's land. This mortgage was recorded. When Gates heard of this, he reproached plaintiff for his duplicity, but accepted another mortgage from plaintiff pursuant to their prior arrangement modified necessarily by the superior mortgage which plaintiff had given to Beals. To strengthen the attenuated third mortgage security for his $ 15,000 investment, Gates purchased the Beals note and mortgage of $ 15,000 for $ 6,000 in cash.

In 1922 plaintiff brought an action, charging Gates, Bushnell, and others with conspiracy whereby he was defrauded into giving certain of these notes and mortgages, and praying for their cancellation. He also brought a second action against Gates, Beals and others, charging them with similar acts of conspiracy for similar fraudulent purposes, and praying for the same sort of relief. This action pertained chiefly to the transaction relating to the purchase of the Ranchman's Trust Company stock. These two actions were begun in Stafford county.

Yet another action of the same general character was begun in the district court of Sedgwick county, charging the defendants with divers and sundry acts of fraud and conspiracy, and which apparently related to the same transactions, and prayed for the same relief.

After all these actions were begun, plaintiff sold the Ranchman's Trust Company stock for $ 2,500. The Sedgwick county case was dismissed, and the Stafford county cases were transferred to Reno county and consolidated for trial. Meantime Gates' second and third mortgages matured through plaintiff's default, and Gates filed a cross-petition to foreclose them.

The trial court made findings of fact too voluminous for reproduction here, the principal features of which, so far as concerns this appeal, were against ...