Ripley Nat. Bank v. Connecticut Mut. Life Ins. Co.

• Decision Date: 22 June 1898
• Citation: 47 S.W. 1,145 Mo. 142
• Parties: RIPLEY NAT. BANK v. CONNECTICUT MUT. LIFE INS. CO. et al.
• Court: Missouri Supreme Court

47 S.W. 1

145 Mo. 142

RIPLEY NAT. BANK v. CONNECTICUT MUT. LIFE INS. CO. et al.

Supreme Court of Missouri, Division No. 1.

June 22, 1898.

RELEASE OF DEED OF TRUST — AGENCY — PAYMENT — SUFFICIENCY OF EVIDENCE.

1. Under Rev. St. 1889, § 7094, providing that the beneficiary under a trust deed, and not the trustee, shall release the deed on the margin of the record, the indorsee and holder of a note secured by deed of trust is proper party to release the same.

2. A note secured by deed of trust was transferred by the payee. The holder authorized the payee to collect interest, but gave no authority to collect the principal. The payee collected the principal, released the deed of trust on the record in his own name, presenting a forgery of the original note for cancellation, and appropriated the money. Held an invalid release.

3. Authority was given by a bank holding a note for another bank to receive payment thereof. The maker of the note deposited the amount due in the collecting bank to his own credit, and verbally instructed the bank to remit the amount to the holder. Held, that he made such bank his agent, and, on its failure to remit, could not maintain a plea of payment in a suit on the note.

Marshall, J., dissenting.

Appeal from circuit court, Pettis county; George F. Longan, Judge.

Action by Ripley National Bank against Connecticut Mutual Life Insurance Company and others. From a judgment for plaintiff, defendant M. H. Sibert appeals. Affirmed.

John Cashman and W. S. Shirk, for appellant. Saugree & Lamm, for respondent.

BRACE, P. J.

On the 1st day of August, 1893, M. H. Sibert, one of the defendants in the above-entitled cause, by his deed of that date, in which his wife joined, conveyed a tract of land, containing 120 acres, described in the petition, and situate in Pettis county, to John Montgomery, Jr., in trust to secure the payment of a promissory note in words and figures as follows: "$3,365.23. Sedalia, Mo., July 21, 1893. Four months after date I promise to pay to the order of C. Newkirk and J. C. Thompson, at the First National Bank of Sedalia, Mo., thirty-three hundred and sixty-five and twenty-three hundredths dollars, for value received, negotiable and payable without defalcation or discount, with interest from date at the rate of eight per cent. per annum. M. H. Sibert." This deed of trust was filed for record in the office of the recorder of said county on the 19th of August, 1893, and duly recorded in Book 100, at page 133. Afterwards the following release was entered upon the margin of said record of said deed of trust: "The note herein mentioned having been fully paid, satisfaction of the deed of trust is hereby acknowledged, Dec. 8th, 1893. C. Newkirk, J. C. Thompson. Note produced and canceled. Attest: J. H. Pilkington, Recorder." On the same day, December 8, 1893, there was filed for record in the office of the recorder of said county, and duly recorded, a deed of trust, duly acknowledged and delivered by the said M. H. Sibert and his wife, whereby they conveyed the same, with other lands, the whole containing 640 acres, to E. W. Rowse, in trust to secure the payment of a principal promissory note for $9,000, payable five years after date, and 10 interest notes, each for $270, payable half yearly, to the Connecticut Mutual Life Insurance Company. Afterwards, on the 18th of May, 1894, this suit was instituted by the respondent bank against said insurance company, Rowse, Pilkington, Montgomery, M. H. Sibert, and Louise Sibert, his wife, charging in the petition that the said promissory note before due, and for full value, was indorsed by the said J. C. Thompson and C. Newkirk, and delivered to the plaintiff bank, which is now, and ever since has been, the owner thereof; that the same remains due and unpaid; that said deed of trust was also delivered to plaintiff, and has since remained in its hands, a subsisting and valid security for said note; that the said Newkirk and Thompson, without any power so to do, or any knowledge of or authority from the plaintiff bank, assumed wrongfully to release said deed of trust on the margin of the record thereof; that said marginal release falsely certified that said note was paid, and that said release was attested by the recorder, who certified that the note was at the time produced and canceled, all of which was untrue; that, by the filing of the Rowse deed of trust on the same day, the same became apparently, but wrongfully, a prior lien of record on said 120 acres of land, when it should of right be a lien subsequent and inferior to plaintiff's deed of trust; and praying a decree that the pretended release be canceled, and that the lien of the Rowse deed of trust be postponed, and made subject to the other, and for general relief. The defense set up by the defendant Sibert in his answer to the petition is payment of the note in full to J. C. Thompson, who, it is therein alleged, was at the time the agent of the plaintiff, duly authorized to receive payment of the same, upon which issue was joined by reply. The answers of the other defendants do not appear in the record. Upon the hearing, the issues were found for the plaintiff bank, and a decree entered in accordance with the prayer of the petition, from which the defendant Sibert alone appeals.

It appears from the evidence that the plaintiff is a national bank doing business in Ripley, in the state of Ohio, of which W. T. Galbreath was cashier, and G. Bambach was the vice president and attorney; that the defendant Sibert, a large landowner of Pettis county, Mo., was, and for many years had been, a customer of the First National Bank of Sedalia, Mo., frequently needing in his business money, which he obtained from the Sedalia bank, of which C. Newkirk was president and J. C. Thompson cashier, without security, upon notes similar to that hereinbefore set out, which were indorsed by Newkirk and Thompson, and forwarded to and discounted by the plaintiff bank. These notes were sometimes paid, and sometimes renewed from time to time, and thus Sibert as maker, and Newkirk and Thompson as indorsers, became indebted to the Ripley National Bank, on one or two of these notes overdue, in the sum of $3,365.23, on the 21st of July, 1893, in consideration and discharge of which indebtedness Sibert executed the note and deed of trust in question, in pursuance of an arrangement to that effect that day made between him and Mr. Bambach, attorney for the plaintiff bank. Thereupon Mr. Bambach delivered up the old note or notes, Newkirk and Thompson indorsed the note in question, and the same was delivered to Mr. Bambach for the plaintiff bank, who took the same to Ripley, Ohio, and delivered it to the plaintiff bank, to whom the deed of trust, after it was recorded, was also delivered; and both note and deed were in the actual possession of said bank at Ripley, in Ohio, on the 8th of December, 1893, when the release was entered on the margin of the record at Sedalia by Newkirk and Thompson. There can be no question, on the evidence, but that, when the note and deed of trust were thus executed and delivered, Sibert fully understood the exact relation that Newkirk and Thompson sustained to this indebtedness as his indorsers, and to the Ripley National Bank, his creditor, to whom the note had been thus indorsed and delivered. The note fell due November 21, 1893. On the 16th of November, 1893, Galbreath, cashier, wrote Thompson, cashier, as follows: "The M. H. Sibert note, $3,365.23, and four months' three days' interest, is also due November 21-24. I hold it here to hear from you. If he does not get the money as expected to pay it, have him send the interest due for the time as above, $91.97, which will be credited on the note, and held longer for time you direct or find necessary, but, if he is ready to pay, advise me, and I will send it to you. Note and interest to maturity, $3,457.20." On the 20th of that month Thompson, cashier, answered as follows: "In regard to the Sibert note, I would suggest that you hold it for the present. He has applied for a loan on his land with which to take up this and another note, and I am confident that the loan applied for will be secured. Will probably not know in regard to this before the last of the present week." The note, not having been paid at maturity, and protest having been waived by the indorsers, was held by the bank, in pursuance of this request, until the 21st of December, 1893, when Galbreath, cashier, in a letter of that date, under the impression that Sibert had failed to secure the contemplated loan, wrote Thompson, cashier, as follows: "We will carry the H. M. Sibert note, $3,457.20, and the 4 months' interest carried with the note to maturity in amount of $92.07, if he will pay the discount or due interest at once, but can't carry overdue notes without the interest being paid. I mean mortgage notes, in this case particularly." And the notes and accrued interest still remaining unpaid, on the 1st of January, 1894, Galbreath, cashier, inclosed the note and deed of trust, in a letter of that date, addressed to Thompson, cashier, with the following directions: "Now, if he will pay the interest accrued to November 24, and for three or four months ahead from November 24, 1893, you can credit the interest on the note accrued and ahead for time named, and return the note to us, provided the interest is paid this week. If it is not, we want it collected under your laws governing the sale of real estate held under trust deeds, as we have this year too much paper overdue, and are required by the comptroller to collect, renew, or sue to collect, so we will be compelled to comply with the requirements of the law."

The receipt of this letter, with stated inclosures, was acknowledged by Thompson, cashier, in his letter of date January 4, 1894, in which he says: "I note your special instruction concerning the M. H. Sibert loan, and also that of Gentry, and have...