Presley v. American Guarantee & Liability Ins. Co., 41301

• Decision Date: 14 December 1959
• Docket Number: No. 41301,41301
• Court: Mississippi Supreme Court
• Parties: Sam L. PRESLEY, Jr., et al. v. AMERICAN GUARANTEE & LIABILITY INSURANCE COMPANY et al.

Page 410

116 So.2d 410

237 Miss. 807

Sam L. PRESLEY, Jr., et al. v. AMERICAN GUARANTEE & LIABILITY INSURANCE COMPANY et al.

No. 41301.

Supreme Court of Mississippi.

Dec. 14, 1959.

Pyles & Tucker, Jackson, for appellants.

Henley, Jones & Henley, Jackson, for appellees.

LEE, Justice.

American Guarantee and Liability Insurance Company and United States Fidelity and Guaranty Company, assignees of all rights, as indemnitors of Deposit Guaranty Bank and Trust Company in their bill of complaint against J. Douglas Dedeaux, Hugh H. Moore, Sam L. Presley, Jr., and P. D. M. Enterprises, Inc., sought to recover $2,941.69, being the amount of the bank's loss in connection with the payment of a check, drawn by the corporation, and guaranteed by Presley and Moore.

Presley filed both general and special demurrers, which challenged the sufficiency of the alleged cause of action, and, by his answer, denied the material allegations of the bill of complaint. Both P. D. M. Enterprises, Inc., and Moore filed general and special demurrers, and adopted by reference the answer of Sam. L. Presley, Jr. Dedeaux filed no pleading. The demurrers were overruled. At the conclusion of the evidence, the chancellor made a finding of law and fact and adjudged that the defendants were jointly and severally liable. From the decree, which was entered in accordance with the finding, Presley and the corporation appealed.

The controversy arose in this way: Sam Presley, Jr., J. D. Dedeaux and Hugh Moore organized P. D. M. Enterprises, Inc., a corporation, with a capital stock of 30 shares of the part value of $100 each, and issued to each incorporator, upon payment of $1,000, 10 shares of the stock. Their purpose was to purchase an assignment of the lease, together with the personal property, and operate the business known as Cicero's Restaurant, in the City of Jackson. The consideration therefor was $30,000, payable $15,000 in cash and $15,000 secured by a promissory note, payable $400 per month, and bearing interest at the rate of 5 percent per annum.

Each of the incorporators, on September 8, 1956, loaned the corporation $4,000, and took, as security, the corporate note in that amount with interest at the rate of 5 percent per annum. They also made another loan of $700 each and took the corporate note therefor with the same interest rate.

The transaction was consummated, and Dedeaux, at a salary of $500 per month, operated the business from September 8, 1956, until January 8, 1957. In the meantime, dissension arose between Dedeaux and Presley. Finally, on a give or take proposition, Presley with the consent of Moore, acquired Dedeaux' stock and interest, in the name of the corporation, for a consideration of $7,500. In order to raise the money for this purpose, Presley and Moore were each to lend the corporation $3,750, which loans were approved by the minutes of the corporation.

Three checks, with the corporation as maker, drawn on Deposit Guaranty Bank & Trust Company of Jackson, were delivered to Dedeaux, as follows: One in the sum of $2,723.11, in payment of Dedeaux' 10 shares of stock; another, in the sum of $710.20, being the amount of the principal and interest on the corporation note of $700 to Dedeaux; and the third, in the amount of $4,066.69, being the principal and interest on the corporate note of $4,000 to Dedeaux of date of September 8, 1956. This third check was postdated as of January 22, 1957, and on the back was this notation: 'Payment fully guaranteed by us as individuals', and signed by Sam L. Presley, Jr., and Hugh H. Moore.

Presley promptly paid the amount of his loan to the corporation, and from the proceeds thereof, the checks for $2,723.11 and $710.20 were paid. Moore did not put up the money, which he agreed to lend. Consequently when Dedeaux, about January 22, 1957, or soon thereafter, presented the $4,066.69 check to the bank, payment was refused because of insufficient funds. Such refusal was stamped on both the face and the back of the check. At least on one other occasion, and perhaps on others, payment was again refused. Two such refusals were stamped on the back of the check.

Mrs. Marian Dedeaux, 32 years of age, had been married to Dedeaux for 18 months, and they had one child. She had worked in several banks, and had been employed by the Deposit Guaranty Bank & Trust Company for about 10 years. She was having marital trouble, and admitted that in April 1957, she had a conversation with Hugh Moore, in Cicero's Restaurant, in which he told her that no more money was to be paid on the $4,066.69 check. But her husband told her that there was, and she took his word for it. She admitted that her husband had also told her that Sam Presley, Jr., had paid everything that was due and did not owe anything else. She also knew that Sam Presley, Sr., in July 1957, had loaned her husband some money.

Mrs. Dedeaux testified that she and her husband had been separated, but that they had gone back together, and her husband had told her that he wanted to straighten out and 'make a go' of the marriage, and that she also wished to do so; that her husband went to New Orleans, and, on his return, on Wednesday, September 25, he told her that he had gone through Mobile to see Sam Presley, Sr., who had agreed to deposit money to pay the check in order to prevent a suit against Sam Presley, Jr.; that on Thursday night her husband told her that he had been to a lawyer's office to straighten out the legal ends of the check, and that Mr. Presley 'was going to make the deposit Friday morning'; and that he also told her that he had to have the money out of the check. (Actually, Dedeaux had become involved with some New Orleans gamblers who had assaulted him on account of a gambling debt of $2,500, and had threatened to kill him if he did not pay it; and he had told several people about this incident, but he denied that he told his wife. She said that he told her 'that he ran into a post in Wiggins, Mississippi, playing baseball'.) She further testified, that when her husband came into the bank Friday morning, September 27, 1957, to her as teller and presented the check, 'he told me that Mr. Presley had, or either was going to make, the deposit that morning. I would not swear to it because I don't remember which he said. I asked him where the deposit would be made, and he said it would be made probably at one of our branches'. She admitted that she looked at the check, saw that it had been turned down on account of insufficient funds, consulted no one, and made no effort to determine whether there were sufficient funds at that time in the P. D. M. Enterprises, Inc., account to pay it. She said that she relied on her husband's representations--'I relied on the deposit being made'. Thereupon she cashed the check, in the amount of $4,066.69, and gave the money to her husband, who deposited $1,100 to his account, gave her $250 with which to pay the note of $100 on the house, $100 for her expenses, and $50 to be given to his mother on a debt that he owed her. The balance he put in his pocket, and, as he departed, he said that he would be back by Sunday and they would go to Church. He left, and she did not see him again until sometime the following February.

Dedeaux testified that he told his wife, on the night of September 26, 1957, that he had talked to Sam Presley, Sr.; that this man was going to make a deposit on the check; and that, when he went into the bank the next morning, with his face 'in a kind of beat up condition', he told his wife 'that the money would be deposited'. He admitted that he told his wife that Sam Presley, Sr., was going to make the deposit, but, 'I didn't know whether the money was in the bank or not'; and that it was a lie that he told her about the deposit. He admitted that he paid $2,500 of the money to the gamblers. He identified a note dated July 20, 1957, which he had given to Sam Presley, Sr., as evidence of a loan to him in the amount of $2,000, and which was apparently assigned to Sam Presley, Jr. He admitted that he had not claimed that Sam Presley, Jr., owed him anything. (This does not mean that he was exonerating Presley from his guaranty. He knew that Presley had loaned the corporation one-half of the purchase price to be paid, and that, morally speaking, Presley had paid his one-half of the amount of the consideration.)

On the following Monday, the bank discovered that the check had been cashed. The cashier told Mrs. Dedeaux that she did wrong in cashing it, and that she should have referred the matter to an officer. She was discharged on the following Thursday.

The cashier, on October 3, 1957, advised the appellee insurance companies of the loss by reason of the cashing of the check, and that Dedeaux' account of $1,125 was charged with the item, thus reducing the loss to $2,941.69. The insurance companies paid the loss and took an assignment of all the rights of the bank.

Thomas I. Kent, the representative of American Guarantee & Liability Insurance Company, testified that the loss was paid under section (B) of the policy, the 'false pretense' section, for the false pretenses, if there were such, on the part of Dedeaux; and that he gave no consideration to the endorsement on the back of the check. Lee G. Kirk, the representative of United States Fidelity & Guaranty Company, testified that the loss was paid under clause (B) because of the false pretenses of Dedeaux, saying that it was made because the bank lost money.

The appellants argue strenuously that the appellees paid the bank's loss on account of the false pretenses of Dedeaux; that, in fact, there was no false pretense under the law, and certainly none on the part of Presley and Moore; that the bank and its teller knew that P. D. M. Enterprises, Inc., did not have sufficient funds in the bank to pay the check; that there was...