Sexton v. Gordon

• Decision Date: 14 February 1927
• Docket Number: No. 15862.,15862.
• Citation: 291 S.W. 512
• Parties: SEXTON v. GORDON et al.
• Court: Missouri Court of Appeals

291 S.W. 512

SEXTON v. GORDON et al.

No. 15862.

Kansas City Court of Appeals. Missouri.

February 14, 1927.

Appeal from Circuit Court, Jackson County; O. A. Lucas, Judge.

Suit by James P. Sexton against Frank Gordon and others. Judgment for plaintiff, and defendant Merchants' Bank of Kansas City appeals. Affirmed.

Ringolsky, Friedman & Boatright, of Kansas City, for appellant.

Burns & White, of Kansas City, for respondent.

BLAND, J.

This is a suit in equity brought by plaintiff, the owner of a house and lot in Kansas City, Mo., against the appellant, Merchants' Bank, and the defendants, Frank Gordon and Fred Richardson, sheriff of Jackson county, Mo. The petition asked that the title to said property be determined for the cancellation of a certain note and release of the deed of trust on the property securing the same, and an injunction to restrain the foreclosure of the deed of trust. The court rendered a decree in favor of plaintiff adjudging that upon the payment of $45.85 end interest to defendant the note in question be adjudged fully paid and satisfied and the real estate released from the lien of the deed of trust given to secure the same. The defendant Merchants' Bank, hereinafter referred to as the bank, has appealed.

The evidence shows that on October 28, 1921, one Madeline Muschietty, then the owner of the property in question, executed a promissory note in favor of one A. L. Moore in the sum of $750, payable in monthly installments of $30 each, beginning on the date of the note. The note bore interest at the rate of 7 per cent. per annum, the interest to be paid monthly when the installments were paid. This note was secured by a second deed of trust upon the property. In March, 1922, the defendant Frank Gordon became the holder and owner of this note. In July, 1922, the property was foreclosed under a third or junior deed of trust, and the plaintiff herein purchased the property at the foreclosure. Gordon was present at the sale with the note, and plaintiff at that time paid him the sum of $120 of the principal, together with interest to August 28, 1922. Before this time there had been paid $180 on the principal, so that in all the sum of $300 had been paid on the principal after the payment to Gordon. In September, 1922, Gordon borrowed $1,000 from the bank on his promissory note, and as security therefor placed the Muschietty note and mortgage as collateral with the bank, or at least went through the form of giving the security. The balance to be paid on the Muschietty note at this time was $450. No notice of the pledging of the note to the bank was given to plaintiff, and thereafter plaintiff continued to make payments on the note to Gordon. The last payment was made on October 15, 1923, when plaintiff had paid, after the pledging of the note to the bank by Gordon, the sum of $360 in all on the principal, together with the interest. This made the total payments upon the principal of the note the sum of $660, leaving a balance of $90 due on the note. Thereafter, in April, 1924, a credit of $50 was given plaintiff by Gordon on account of the purchase of a tombstone from the former by the latter. This left a balance of $40 due upon the principal of the note if plaintiff was entitled to credit for the payments he made to Gordon after the latter placed the note with the bank, and whether plaintiff was so entitled is the question presented in this Case for determination.

The facts further show that Gordon was not in any way connected with the bank except that he had been for a great many years one of its customers. The money collected by Gordon from plaintiff on the note was deposited by the former to his account in the bank and was used and handled by him as though it were his money absolutely and as though the bank had no interest in the same. Plaintiff had never at any time demanded to see the note when making the payments to Gordon or at any other time, nor did he see to it that the payments made to Gordon were duly credited on the note. Gordon's note to the bank was a 60 or 90 day note, and was renewed for a like period from time to time. He testified that when he borrowed the $1,000 of the bank in September, 1922, the president of the bank asked him to make a financial statement, which he did. The president then told him that the statement "was ample for the, amount of the loan, but the state bank department asked them to get collateral security." After the president of the bank had made inquiries as to what collateral Gordon had, the latter finally told him that he owned the note in question "to about $375." The president said that this would be satisfactory, and Gordon gave it to the bank as collateral for his loan.

Gordon further testified that when his note to the bank was renewed from time to time he would go to the bank in person and there see the president in reference to the renewing of the same, but at times the president would be busy and would refer him to some other officer, but at each time that the president himself renewed the note, which was four or five times, he would ask the witness if the payments were being made, and the witness would reply in the affirmative; that the first time he had a conversation with the president about the payments being kept up was when his note to the bank was first renewed; that the president never asked him to turn over to the bank the money that he had received from plaintiff, but that he meant for the witness to keep it; that at one time the witness and the president "went over the note together, * * * and I figured at that time—I figured up what was paid according to the tenor of the note, and the note was practically paid up"; that at this time there was no discussion as to the witness turning the money over to the bank. The witness was asked what the president said in reference to authorizing the witness to make collections on the Muschietty note, and the witness answered that the president "never said anything about it at all."

The witness further testified that he paid an all the sum of $300 upon his indebtedness to the bank; that he never told plaintiff or Mrs. Muschietty anything about having the Muschietty note up with the bank; that he had been doing his banking business with the bank for several years; that no request was ever made of him by the bank for the payment of any money upon his note to it until May 9, 1924, when a payment of $200 upon said note was made.

The president of the bank testified that Gordon had been doing business with it for six or seven years, and that it had confidence in him; that the loan originally made to Gordon was made "on the basis of half an open loan and half of it was secured on this note"; that he and Gordon "figured at the time that the note had a value of somewhere around $500 or $600"; that the witness did not know that plaintiff was interested in the property "until after this trouble came up"; that the bank had never received any payment upon the Muschietty note, although it had been in its possession ever since September, 1922; that "we had one conversation with Gordon in reference to the collection of the installment payments due under the note"; that this conversation was in reference to whether the owners of the property were paying on the Muschietty note, and at this time Gordon stated that they were paying out a third mortgage, and that he was simply holding...