Stroud v. American National Bank of Rogers

• Decision Date: 30 April 1923
• Docket Number: 346
• Citation: 250 S.W. 525,158 Ark. 505
• Parties: STROUD v. AMERICAN NATIONAL BANK OF ROGERS
• Court: Arkansas Supreme Court

250 S.W. 525

158 Ark. 505

STROUD v. AMERICAN NATIONAL BANK OF ROGERS

No. 346

Supreme Court of Arkansas

April 30, 1923

Appeal from Benton Circuit Court; W. A. Dickson, Judge; affirmed.

Judgment affirmed.

Sullins & Ivie, for appellant.

The court erred in denying appellant's motion for a continuance and also in sustaining the demurrer to paragraphs 5 and 6 of the answer and striking out amended paragraph 6. Should not have permitted appellee to amend complaint by interlineation to allege that appellant indorsed the note at the time of its execution and delivery, thereby, in effect changing the cause of action. 103 Ark. 473; 80 Ark. 285. The uniform negotiable instrument law changes the rule of the above cases. 8 C. J. 75, § 12. The court erred in directing a verdict. 82 Ark. 86; 86 Ark. 27; 95 Ark. 144; 97 Ark. 490; 99 Ark. 49.

Duty & Duty, for appellee.

The amendment to the complaint by interlineation was not prejudicial, since it only expressed the legal effect of the allegation before amendment made. Neither paragraph 5 or 6 of the owner stated a defense, nor did 6 after amendment, and no error in sustaining demurrer and motion to strike. 77 Ark 55; 145 U.S. 205; Jones on Pledges, § 606. No proper showing made for continuance nor error committed in denying motion therefor. Rule in this State early promulgated allowing joint action against maker and indorser where making and indorsing of note were simultaneous acts. 15 Ark. 511; 17 Ark. 454; 24 Ark. 511; 94 Ark. 333; 124 Ark. 154; 3 R. C. L 1135, § 350. Not changed by negotiable instrument law. Sec. 7830, Crawford & Moses' Digest. Appellant was in fact the maker of the note, and writing his name across the back of the note when it was executed and before delivery constituted him a joint maker. Cases supra and 180 S.W. 500; 34 Ark. 524; 80 Ark. 285; 77 Ark. 53; 14 L. R. A. (N. S.) 842, 3 R. C. L. 1127, § 342. There was no dispute about the facts, and the verdict was properly directed. 104 Ark. 267; 114 Ark. 574; 89 Ark. 24.

OPINION

HUMPHREYS, J.

Appellee instituted suit against appellant and J. M. Henderson in the circuit court of Benton County to recover a balance of $ 4,000 principal and $ 74.80 interest, upon the following note:

"$ 4,500.00 No. 2485.

"Rogers, Ark., Dec. 31, 1920.

"Feb. 1, 1921, after date--promise to pay to the order of the American National Bank at the office of the American National Bank in the city of Rogers, Arkansas, forty-five hundred dollars, for value received, negotiable and payable without defalcation or discount, with interest from maturity at the rate of 8 per cent. per annum, having deposited and pledged the American National Bank as security for the payment of this note and other indebtedness, whether as principal debtor or otherwise, due to the holder hereof

"O. K. Truck Co. stock certs. No. 4443 (41 shares).

"O. K. Truck Co. stock certs. No. 3122 (431).

"Collaterals in their possession now, or hereafter, or any substitute therefor.

"Now, in the event of the nonpayment of this note at maturity, or any other indebtedness due the holder hereof as aforesaid, the holder hereof is hereby invested with full authority to use, transfer, hypothecate, sell or convey the said collaterals, or any substituted for or added to the above, or any part thereof, or to cause the same to be done, at public or private sale, with or without notice or demand of any sort, at such place and on such terms as the holder hereof may deem best, and the holder of this notice is authorized to purchase said collaterals when sold for his or its own protection; and the proceeds of such sale, transfer or hypothecation shall be applied to the payment of this note, together with all protests, damages, interest, costs and charges due upon the note, or incurred by reason of its nonpayment when due, or in the execution of this power. The surplus, if any, after payment of this note, together with all charges above stated, shall be paid to the drawer of the note, or, at the election of the holder thereof, be paid on any other obligation of the drawer thereof, whether as principal debtor or otherwise, held by the holder thereof; and, if the proceeds of the above sale shall not be sufficient to pay this note, the drawer hereof agrees to make good any deficit. In case of depreciation in the market value of any security pledged for this obligation I agree to furnish, on demand, additional security as and when demanded by the holder of this note.

"J. M. HENDERSON.

(Note indorsed on back as follows):

"H. L. STROUD."

Indorsement on interest:

"2-1__1921

$__to April 1, 1921.

"4-1__1921

$__to April 1, 1921.

"__191

$__to __191 .

"April 1, 1921, By cash $ 500.

"July 22, 1921, Ex. 60 days.

"Aug. 22, int. pd. 30 days.

"9-15, int. pd. 30 days.

"Int. pd. to 10-1-21.

"12-30, int. pd. 90 days to 1-122."

The original complaint filed by appellee contained the following paragraph, which constituted the gist of the action:

"Plaintiff states that on December 31, 1920, the defendant, J. M. Henderson, made, executed, and delivered to the plaintiff his promissory note in the sum of $ 4,500, due February 1, 1921, and that the defendant, H. L. Stroud, indorsed said note in blank for a valuable consideration, and that the money represented by said note, which was borrowed from this plaintiff, went to the defendant, H. L. Stroud, a copy of which note is hereto attached, marked Exhibit 'A' and made a part of this complaint and pleaded with the same force and effect as if specifically set out herein."

Appellant filed an answer denying the allegations embraced in said paragraph, and as additional defenses pleaded matter contained in paragraphs numbered 5 and 6. which are as follows:

"(5) Defendant, for further answer herein, alleges that said note sued on herein is a collateral note, and that said note shows on its face that it is a collateral note, and that same is secured by considerable collateral security which plaintiff has failed and refused to dispose of, or attempt to dispose of, in any manner, for the payment of said note, although repeated demands had been made by this defendant upon plaintiff to dispose of said security in the way and manner provided for in this note."

"(6) Said defendant, for further answer, herein alleges that said plaintiff and defendant, J. M. Henderson, colluded together for the purpose of assisting said defendant, Henderson, and in evading the payment of said note, and for the fraudulent purpose of forcing this defendant to pay same."

A special demurrer was filed to each of the paragraphs upon the ground that neither stated a defense, which demurrer was sustained by the court over the objection of appellant. At the same time appellee was permitted to amend the paragraph of the complaint set out above by inserting the words "and at the time of delivery" immediately after the word "consideration." Appellant then amended said paragraphs 5 and 6 of his answer to read as follows:

"(5) Defendant, further answering herein, alleges that the note sued on herein is secured by collateral security as shown from the face thereof, and that said plaintiff still has in its hands said collateral security, and has wholly failed and refused and still refuses to foreclose or sell or dispose of said collateral security for the payment of said note, but is holding and claiming said collateral security as its own, which collateral security is worth as much or more than the face...