Powers v. Woolfolk
| Decision Date | 29 June 1908 |
| Parties | JOHN POWERS, Respondent, v. J. L. WOOLFOLK, Appellant |
| Court | Kansas Court of Appeals |
Appeal from Jackson Circuit Court.--Hon. Walter A. Powell, Judge.
AFFIRMED.
Judgment affirmed.
Fyke & Snider for appellant.
(1) The court erred in overruling appellant's objection to the introduction in evidence of the note sued on. There is no evidence in the record that Casey had authority to assign the note to respondent. Lee v. Smith, 84 Mo. 304; Tennessee v. Davis, 50 How. Pr. (N. Y.) 447; Bank v. Parmalee, 95 U.S. 557; Bank v Bank, 66 F. 691; Matt. vi, 24. (2) For the same reason the court erred in refusing appellant's instruction number 4. (3) If at the time the one thousand dollars was paid, the note was in possession of the bank, or if the bank or Casey had authority from respondent to receive payment of the note, a payment to the bank or Casey would be a good payment.
C. C Dickinson, Peyton A. Parks and Paxton & Rose for respondent.
(1) T M. Casey, as cashier, had authority to put up the bank's paper as collateral to secure loans made to the bank. Bank v. Hughes, 62 Mo.App. 581; Sloan v. Bank, 158 Mo. 431. (2) Casey was not only cashier, but general manager of the bank, in full control. (3) Powers was about to take his money out of the bank, and hence his letting it remain there was a valuable consideration for the giving to him of the note signed by G. M. Casey, G. Y. Salmon and T. M. Casey, payable on demand. Afterwards G. M. Casey failed, and again Powers was demanding his money, and his still letting the bank retain it was a good consideration for the transfer to him of the collateral notes, and the giving up of certain collateral notes was a good consideration for the substitution of others in their place. Cox v. Sloan, 158 Mo. 411; Finch v. Skilton, 79 Hun (N. Y.), 551; Thomas v. Croft, 2 Rich. L. (S. C.), 113, 44 Am. Dec. 279; Bullard v. Burton, 64 Vt. 387; Deer v. Marsden, 88 Mo. 512; Chiles v. Wallace, 83 Mo. 85. (4) The Woolfolk note, being negotiable paper and whether due or not due, was subject only to such equities and set-offs as grew out of the note itself, not to independent set-offs or counterclaims against the assignor, subsequent to the assignment. Barnes v. Mullins, 78 Mo. 260, Crawford v. Johnson, 87 Mo.App. 479; Knaus v. Givens, 110 Mo. 58; Kelly v. Stead, 136 Mo. 430. (5) Powers was a holder of the Woolfolk note for value, and entitled to protection. Bank v. Abernathy, 32 Mo.App. 211. (6) When defendant made the $ 1,000 payment without requiring the production of the note, he did so at his peril, and must bear the loss. Bates v. Martin, 3 Mo. 367. (7) It is a familiar maxim of the law that when one of two innocent parties must suffer, it must be the one who has been guilty of a want of care. Powers was not at fault in anything; Woolfolk was grossly careless in paying the $ 1,000 without the production of the note.
Plaintiff's action is based on a negotiable promissory note for fifteen hundred dollars. He obtained judgment in the trial court, less $ 132, which was allowed by that court as a credit, the circumstances of which we need not state since plaintiff is not complaining.
There was a private banking house in Clinton, Missouri, known under the name of Salmon & Salmon, which did a general banking business. The bank was practically under the exclusive management and control of T. M. Casey, who was its cashier. The plaintiff made a time deposit with the bank of $ 10,000 at five per cent interest and as evidence thereof received a certificate of deposit. He afterwards concluded he could get a higher rate of interest by loaning the money to individual borrowers and so expressed himself to Casey. The latter told him that the bank could not pay a higher rate, but that he would get him a note payable on demand for the amount and accrued interest, being $ 11,100, bearing seven per cent, signed by his father, G. M. Casey, himself and one of the Salmons, payable to Salmon & Salmon and by them endorsed to plaintiff, notice and protest waived. This was satisfactory to plaintiff.
Afterwards G. M. Casey became known to be insolvent and failed in business, and plaintiff began to demand payment of his note from T. M. Casey, who, as already stated, was manager of the bank and who had also signed the note individually. The latter stated to plaintiff that if he would not press for payment he would turn over to him notes of the bank as collateral so as to make the note as good as it was before G. M. Casey's failure. This was done and these collateral notes were endorsed by the bank, through T. M. Casey, to plaintiff, who put them in his private box along with the principal note. This box was kept locked by plaintiff and placed by him in the bank's vault. Afterwards T. M. Casey said to plaintiff that the collateral notes would be falling due from time to time and that he would like for plaintiff to let him have them when payment would be offered and that he would give him other collateral in their place. Plaintiff had no objection to this, provided the substituted collateral was satisfactory to him. In pursuance of this several substitutions were made, plaintiff putting the new ones in his box.
In January, 1905, defendant gave the note in suit to the bank, for $ 1,500. In April thereafter Casey gave to plaintiff this note (endorsed by him for the bank) as collateral to be substituted for some then received from plaintiff. Plaintiff took the note and placed it in his box. Afterwards, on June 10, 1905, after banking hours, defendant having a check on the bank for $ 1,000 and not knowing that his note had been transferred to plaintiff, went into the bank and said to the paying and receiving teller The teller replied that it was locked up. Defendant then stated to him that he was going away and that "I want to leave this check with you to pay on that note." The teller then made a memorandum to that effect. It was stated that Casey heard this conversation and we will assume that he did. A few days thereafter, on the 21st of June, 1905, the bank failed and its doors were closed.
1. The first question is did T. M. Casey as general manager and cashier of the bank have authority to transfer the note in controversy to the plaintiff as collateral security for the note of eleven thousand and one hundred dollars held by plaintiff. The law is well settled that a cashier having the general charge and management of a bank has authority to transfer the bank's paper as collateral security for the bank's debts. [Sloan v. Bank, 158 Mo. 431, 438, 439, 57 S.W. 1056; Bank v. Hughes, 62 Mo.App. 576, 582.]
Conceding this statement of the law, defendant makes two distinct claims in avoidance. The first is that the transfer of the note against defendant to the plaintiff by Casey as collateral, though in the name of the bank, was merely an attempt to transfer the bank's note as security for his private debt. The statement that the principal note was T. M. Casey's is true, yet it is not the whole truth. The note was payable to the bank and it was signed by T. M. Casey's father and one of the Salmons and by T. M. Casey himself. It was thus, on its face, a note belonging to the bank and the bank substituted it for the certificate of deposit it had given to plaintiff. In other words, the bank took up its certificate of deposit and gave in place thereof one of its notes; afterwards assigning other notes as collateral. While this was securing a note of which T. M. Casey was one of the makers, yet it was not done for him. It was done by the bank through him and for the bank. The transaction was that of the bank, and for the bank, in order to take up the certificate of deposit issued and owing by the bank.
2. The second claim is that as plaintiff did not take collateral security at the time he accepted the note in place of the certificate of deposit, though he took it afterwards, he is not a holder of such collateral for value. That is, it is said there was no consideration for the transfer of the note to plaintiff. But considering the new note as, in reality that of the bank although signed by others, the matter under discussion does not present the question of a consideration. It does not present the question of a promise to do a thing--it is a thing done and the question of consideration for a promise cuts no figure. A man may promise to make a gift and it cannot be enforced for lack of consideration; but if he actually makes the gift it is valid. So it ought to be clear that where a debtor, with or without request, voluntarily gives the creditor collateral securities after the indebtedness has been incurred, and the latter accepts them, the transaction is valid between them. It is commonly done and its legality, we think, has not been questioned. Therefore, while it is true plaintiff did not take the collateral at the time he surrendered...
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