Student Loan Marketing Assoc.

• Citation: 25 S.W.3d 699
• Parties: (Mo.App. W.D. 2000) Student Loan Marketing Association, Respondent, v. Jeffery W. Holloway, Appellant. WD57535 0
• Decision Date: 29 August 2000
• Court: Missouri Court of Appeals

25 S.W.3d 699 (Mo.App. W.D. 2000)

Student Loan Marketing Association, Respondent, v. Jeffery W. Holloway, Appellant.

WD57535

Missouri Court of Appeals Western District

08/29/2000

Appeal From: Circuit Court of Pettis County, Hon. Donald L. Barnes

Counsel for Appellant: Steven A. Fritz

Counsel for Respondent: Keith J. Shuttleworth

Opinion Summary: Respondent Student Loan Marketing Association (also known as Sallie Mae and hereinafter SLMA) filed suit against Jeffery Holloway on a series of promissory notes executed by Mr. Holloway while he was a student at the Washington University School of Dental Medicine. After a trial to the court, judgment was entered in favor of SLMA in the amount of $155,866.27 plus accrued interest in the amount of $6,375.11. The court also awarded SLMA $10,000 in attorney's fees. Mr. Holloway brought five claims of error on appeal, all based on alleged evidentiary insufficiencies.

Division One holds: Due to evidentiary insufficiencies, including SLMA's failure to offer and the trial court's failure to admit the promissory notes on which SLMA's suit was based, the trial court's judgment is reversed. Because the necessary proof seems to have been available, the judgment is reversed, and the case is remanded for a new trial in which the evidentiary deficiencies may be remedied.

Victor C. Howard, Presiding Judge

Jeffery W. Holloway appeals from the judgment of the trial court, sitting without a jury, in favor of Student Loan Marketing Association (also known as Sallie Mae, hereinafter "SLMA") in its suit on promissory notes executed by Mr. Holloway. He brings five claims of error on appeal, all based on alleged evidentiary insufficiencies at trial.

The judgment of the trial court is reversed and the case is remanded for further proceedings.

Background

In its first amended petition, SLMA alleged that between the years of 1985 and 1988, "pursuant to the U.S. Department of Health and Human Services Health Education Assistance Program, sections 42 U.S.C. 294 -- 294l," Mr. Holloway executed eight separate promissory notes for a total of $79,000.¹ The petition further alleged that the promissory notes had been assigned by the original payees to SLMA. SLMA then averred that Mr. Holloway defaulted on his educational loans, and the sum of $155,866.27 plus accrued interest in the amount of $6,375.11 remained due and owing on the notes. SLMA also requested attorney's fees.

The case went to a trial before the court on April 23, 1999. Mr. Holloway did not appear or put on any evidence. His counsel, however, did make numerous evidentiary objections to SLMA's evidence. The trial judge provisionally admitted the arguably admissible evidence, reserving judgment until all of the evidence was in. After all evidence was heard, the issues were taken under advisement, and the trial judge ordered counsel to brief Mr. Holloway's counsel's evidentiary objections raised throughout the trial. After considering the parties' briefing of the issues,² the court entered its written findings and judgment in favor of SLMA for the amount claimed due and owing plus $10,000 in attorney's fees.

Standard of Review

Our standard of review is governed by Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). We will sustain the judgment of the trial court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, or unless it erroneously declares or applies the law. Id. at 32.

Point I

In his first point on appeal, Mr. Holloway alleges that because the promissory notes were neither offered nor admitted into evidence, the evidence was insufficient for the court to render judgment in SLMA's favor. The issue is whether SLMA's failure to offer the notes for admission into evidence rendered its claim based thereon invalid.

To recover on a promissory note, the plaintiff must (1) produce the note (2) signed by the maker and (3) show the balance due. [Citation omitted.] "[P]resentment of the note or satisfactory proof that it has been lost or destroyed are essential elements of the case because the instrument itself is the exclusive ground for the cause of action." Absent presentment of the note or proof that it was lost or destroyed, a judgment based on the instrument fails for want of substantial evidence to support it.

Affiliated Acceptance Corp. v. Boggs, 917 S.W.2d 652, 656 (Mo. App. W.D. 1996) (quoting Union Sav. Bank v. Cassing, 691 S.W.2d 513, 514 (Mo. App. W.D. 1985)).

Although neither party cites the Cassing or Boggs cases, supra, both aid in this issue's resolution. In those cases, purported copies of the promissory notes sued on were attached to the petitions as exhibits, as the notes apparently were in this case.³ Likewise, the parties suing on the notes each presented testimonial evidence concerning the notes. The notes were marked as exhibits and handed to the witnesses as they testified concerning the notes' contents, but both plaintiffs failed to offer the notes for admission as evidence in the cases.⁴ This court found in both cases that the plaintiffs' failures to introduce the notes into evidence required the judgments to be reversed and the cases remanded due to a failure of proof of the judgments in favor of the plaintiffs suing on the notes. Cassing, 691 S.W.2d at 515; Boggs, 917 S.W.2d at 656-57.

We consider the testimonial evidence in Cassing and Boggs. In Cassing, the assistant vice-president of the plaintiff bank merely identified the exhibit as a note given to the bank by the defendant. He did not testify about any other specifics, i.e., he did not testify as to whether the exhibit was the note sued on, what that note's due date was, or whether the bank had presented the note to defendant and demanded payment. Cassing, 691 S.W.2d at 514. In Boggs, the CEO-CFO of plaintiff Affiliated testified concerning the collection and loan arrangement with Mr. Boggs. He testified to how the balances of the notes were aggregated into two accounts, to how payments on the loan were applied to the balance due and to the outstanding balance due on the notes. Boggs, 917 S.W.2d at 655. In both cases, this court found that the testimonial evidence was not sufficient to correct the plaintiffs' failures to offer the actual promissory notes for admission into evidence.

In this case, Ms. Rhea-Vance, SLMA's loan-dispute specialist on Mr. Holloway's account, identified each of the promissory notes in SLMA's exhibit number one by testifying that SLMA's assignors of the notes and Mr. Holloway were the parties to the notes, by telling the court the individual amount (a total of $79,000) and date on which each was signed, by testifying that the signature appearing on the notes was "Jeffery W. Holloway," by describing how the interest is calculated, and by describing the repayment provisions in the notes. As Ms. Rhea-Vance testified, she held the notes in her hand, and the judge personally verified which note she was testifying about by referencing the notes in his court file. However, none of the notes were offered or admitted into evidence. Nonetheless, the trial court awarded SLMA a judgment on the notes in the amount of $155,866.27 plus $6,375.11 in accrued interest, the full amount prayed for and the amount Ms. Rhea-Vance testified was due to SLMA on the notes.

Although the notes had been attached and filed with the petition, "[t]he mere filing of a document does not put it before the court as evidence." Hopkins v. Hopkins, 664 S.W.2d 273, 274 (Mo. App. E.D. 1984) (holding that the mere filing of an income and expense statement in a dissolution action did not mean that it was evidence considered by the trial court). While Ms. Rhea-Vance's testimonial evidence concerning the note appears to be more in depth than the testimony in the Cassing and Boggs cases, "the deficiency in [SLMA's] case, the failure in this record to establish production by [SLMA] of the note[s] on which the suit was based, is a technical but critical oversight." Cassing, 691 S.W.2d at 515. This exhibit consisting of the notes on which the lawsuit was based could not be considered by the court in making its judgment until it had been offered and admitted into evidence.

Point I is valid. Because this evidentiary deficiency is curable upon remand,⁵ we reverse and remand to the trial court for retrial, where the promissory notes may be properly offered and admitted into evidence.

Point II

In his second point on appeal, Mr. Holloway alleges that the trial court incorrectly relied on documents purporting to assign the original payees' interests in the promissory notes to SLMA.

At trial, SLMA introduced its exhibit number five, identified by Ms. Rhea-Vance as a series of five "blanket endorsements."⁶ Each blanket endorsement states as follows:

The undersigned ("Seller"), by execution of this instrument, hereby endorses the attached promissory note which is one of the promissory notes ("the Notes") described in the Bill of Sale executed by Seller in favor of the Student Loan Marketing Association ("Purchaser"). This endorsement is in blank, unrestricted form and without recourse except as provided in paragraph 10 of the Commitment and Loan Sale Agreement dated [(date each note purportedly sold)] between Seller and Purchaser.

This endorsement may be effected by attaching either this instrument or a facsimile hereof to each or any of the notes.

[Signed: original payee of note/s]

Mr. Holloway complains that these purported assignments make reference to "attached" promissory notes, but no promissory notes were actually attached to the documents produced at trial. Thus, he claims the documents alleging to evince the assignments do not show that any particular notes allegedly made by Mr. Holloway were assigned to SLMA, so SLMA does not have standing to sue on the notes.

As to the endorsements, Ms. Rhea-Vance testified that the endorsements in exhibit number five are part of Mr. Holloway's file at SLMA. Each...