Republic Nat. Bank v. Interstate Producing Corporation
| Decision Date | 03 May 1926 |
| Docket Number | No. 15589.,15589. |
| Citation | 282 S.W. 1033 |
| Parties | REPUBLIC NAT. BANK OF ST. LOUIS v. INTERSTATE PRODUCING CORPORATION. |
| Court | Missouri Court of Appeals |
Appeal from Circuit Court, Jackson County; Willard P. Hall, Judge.
Action by the Republic National Bank of St. Louis against the Interstate Producing Corporation. Judgment for defendant, and plaintiff appeals. Affirmed.
John M. Atkinson, of St. Louis, and John. T. Barker, of Kansas City, for appellant.
J. Herbert Smith and William G. Holt, both of Kansas City, for respondent.
This is an action to recover on two promissory notes of $2,500 each. The petition is in two counts, of which the first alleges that on October 1, 1922, defendant made and executed its negotiable promissory note of that date by which, for value received, it promised to pay to the order of James D. McMahon, 60 days after date $2,500, with interest from date at 8 per cent., together with an additional amount of 10 per cent. on principal and interest in case said note was placed in the hands of an attorney for collection, or suit was brought on the same; that before said note was due the payee named therein indorsed same to plaintiff for value, and that thereupon plaintiff advanced said sum of money to said payee, whereby defendant became liable to plaintiff as maker of said note; that at maturity the note was duly presented and demand made for payment, which demand was refused; that no part of said note has been paid, and the whole thereof is due.
The second count is identical with the first, and is based upon the issuance on October 1, 1922, of a note of $2,500, which is the same in all its terms as that described in count 1, excepting that the note described in the second count is payable 90 days after date. The allegations as to presentment and nonpayment of the note are present as regards the second note and identical in words as in count 1. Judgment is sought on each count for the face of the note therein described, together with the stipulated interest and attorney fees.
The amended answer denies generally the allegations of each separate count, and, for further answer, alleges that during the year 1922, defendant advanced sums of money to one James D. McMahon for the purpose of drilling certain wells at' El Dorado, Ark., in which defendant retained an interest; that additional money was required for the drilling of said wells, and that said McMahon, on or about September 25, 1922, came to Kansas City and represented to defendant that he would be able to secure $20,000 from one E. N. Fisher and William Sacks, directors and agents of plaintiff bank, and stated and represented to defendant that, if defendant would execute to him ten notes of $2,500 each he would go to St. Louis and discount said notes and obtain the $20,000 with which to finish the development of the property in Arkansas, agreeing that he himself would stand whatever discount was necessary out of his interest in the properties; that, relying upon said representations; defendant did execute ten promissory notes of $2,500 each and delivered them to said James D. McMahon, and that McMahon together with C. V. Higby, president of defendant corporation, went to St. Louis, Mo., for the purpose of negotiating said notes with said Fisher and Sacks at plaintiff bank; that in St. Louis, McMahon and Higby did meet said Fisher and Sacks, who represented that all arrangements had been made by them to discount the paper as above set forth; that said Fisher and Sacks took said notes from McMahon and went to plaintiff bank with said McMahon and Higby, and after discussing the matter with the officers of plaintiff bank and said Fisher and Sacks, the officers of plaintiff refused to accept said paper and to deliver $20,000 thereon; that said Higby then requested the return of said notes from Fisher and Sacks, and that said Fisher and Sacks and the plaintiff bank refused to return the notes, stating that said McMahon was indebted to plaintiff bank and Fisher and Sacks; that demand was then and there made by McMahon and Higby upon plaintiff and Fisher and Sacks for the return of the $25,000 in notes; that the same were unlawfully and wrongfully retained, and delivery thereof to defendant was refused; that thereafter said Fisher did return to defendant eight of the said ten notes, but refused to deliver the two notes sued upon herein.
The amended answer further pleads lack of consideration for said notes, and that plaintiff well knew there was no consideration therefor, and, although demand was made upon the plaintiff and said Fisher and Sacks, plaintiff refused to surrender and still retains said notes, claiming and alleging the fact to be that plaintiff is an innocent purchaser thereof for value, when they well knew said notes were obtained by fraud and misrepresentation. The answer prays an order of the court canceling said notes and an order requiring plaintiff bank to return same to defendant and for judgment in damages for $2,500, for costs incurred by defendant by reason of plaintiff's unlawful and fraudulent acts in obtaining and retaining said notes, and for attorney fees and expenses in defending this suit.
The reply is a general denial, and for further reply avers that at and prior to the time the plaintiff purchased the two notes in question defendant represented and stated in writing to said James D. McMahon and to plaintiff that said McMahon was the legal owner and holder of both of said notes, and that defendant had purchased the entire interest of said McMahon in certain oil properties located at El Dorado, Ark., and had duly executed and delivered said notes, together with certain other notes, to said McMahon in payment for the purchase price of said oil properties; that plaintiff believed and relied upon said representations so made, and that, so believing, plaintiff purchased said notes, paying therefor the sum of $5,000; that said McMahon is now and was insolvent when each of said two notes became due; that plaintiff purchased said notes in good faith and for value before the maturity thereof, and had no notice of any infirmity or defect in the title of said James D. McMahon to said notes.
The cause was tried to the court without a jury. No findings of fact nor declarations of law were asked and none given. The court found the issues for defendant on both counts of the petition. The following judgment was entered:
"Wherefore, it is ordered and adjudged by the court that plaintiff have and recover nothing in this cause, that defendant go hence discharged without day as to both counts of the petition, and have and recover of and from said plaintiff all costs herein and have therefor execution."
Motions for new trial and in arrest of judgment were unavailing, and defendant appeals.
The facts developed are that plaintiff is a national banking corporation located at St. Louis, Mo., and operating under the laws of the United States; that defendant is a corporation, organized and existing under and by virtue of the laws of the state of Delaware, and maintaining its principal office in Kansas City, Mo. The notes sued on were first and second of a series of ten notes, but of different maturities, executed on October 1, 1922, payable to J. D. McMahon. At the time the notes were executed, McMahon owed plaintiff the sum of $5,000, evidenced by his promissory note in that amount; such indebtedness to plaintiff was secured by two collateral notes of $2,500 each, and these were secured by a mortgage on some property in the state of Oklahoma, and a diamond ring of the value of $2,500 to $3,000.
The evidence in plaintiff's behalf tends to show that, in order to pay his indebtedness to plaintiff, McMahon, on October 26, 1922, indorsed and delivered to plaintiff the two notes sued on herein, and thereupon his account with the bank was marked "Paid" and the notes and ring were returned to him. But on this point there is some conflict in the evidence. One John A. Lewis, the president of plaintiff bank, the only witness testifying for plaintiff, first stated that the diamond ring and the collateral notes were returned to McMahon, but, on cross-examination, stated that the collateral notes were not returned to McMahon and, at the time of the trial, were in possession of plaintiff's counsel. This witness testified that at the time McMahon paid his indebtedness to the bank by the transfer and delivery of the two notes in suit, he produced and exhibited to plaintiff a letter dated October 24, 1922, which reads as follows:
And, as part of consideration of same, Interstate Producing Corporation issued to you $25,000 worth of notes of $2,500 each, first note due December 1st and one note due on the 1st of each following month until all of the notes are paid, and this transaction was authorized by the Board of Directors of the Interstate Producing Corporation and they further agreed to set aside one-half of their interest of the net oil as and when run, from said leases to meet these notes.
"Yours very truly
"[Signed] C. V. Higby
"Cvh/h/ Interstate Producing Corporation."
Defendant's testimony tends to support the allegations contained in its amended answer to the effect that the ten notes in the sum of $25,000 were executed by it in payment for the oil properties...
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