The First National Bank of Arkansas City v. Skinner

• Decision Date: 16 November 1900
• Docket Number: 810
• Parties: THE FIRST NATIONAL BANK OF ARKANSAS CITY, KANSAS, v. J. W. SKINNER, as Sheriff of Cowley County
• Court: Kansas Court of Appeals

62 P. 705

10 Kan.App. 517

THE FIRST NATIONAL BANK OF ARKANSAS CITY, KANSAS, v. J. W. SKINNER, as Sheriff of Cowley County

No. 810

Court of Appeals of Kansas

November 16, 1900

Decided November, 1900.

Error from Cowley district court; J. A. BURNETTE, judge.

Judgment of district court reversed.

SYLLABUS

1. CORPORATIONS -- Knowledge of Officers -- Effect on Corporation. The knowledge acquired by an officer of a corporation while acting for himself in the interest of his own separate undertaking is not imputable to the corporation and it will not be bound by the knowledge or the acts of its officer under such circumstances.

2. INSTRUCTIONS -- Pleadings and Evidence. An instruction not warranted by either the pleadings or the evidence held erroneous.

Pollock & Lafferty, for plaintiff in error.

C. T. Atkinson, and J. E. Torrance, for defendant in error.

OPINION

MILTON, J.:

This action was brought by the plaintiff in error against the defendant in error to recover the possession of certain personal property in which the plaintiff claimed a special ownership under a chattel mortgage executed by the Arkansas City Manufacturing Company and delivered to the plaintiff, to secure an indebtedness evidenced by a promissory note for $ 2500. The mortgage was duly recorded on March 31, 1893, the day following its execution and delivery, and was duly renewed in March, 1894, by affidavit. In his answer the sheriff justified under an order of attachment issued out of the district court of Cowley county on December 13, 1894, in an action then pending wherein John Leech was plaintiff and W. M. Sleeth, doing business as the Arkansas City Manufacturing Company, was defendant, and averred that the property remained continuously in his possession until the 21st day of February, 1895, when he sold the same at public sale under the order of the court and thereafter duly returned such order of sale with the report of his proceedings thereunder. The answer also averred that the indebtedness evidenced by the note and mortgage under which the plaintiff claimed was not bona fide; that the manufacturing company did not owe the debt to the First National Bank; that the mortgage was given for the purpose of covering up the property of the manufacturing company, in order to hinder and delay the creditors of Sleeth, who was the principal owner of the property of the company and also at that time president of the plaintiff bank; and that by reason of the fraud of the plaintiff it was not entitled to recover.

Before the trial the answer was amended by the addition of an averment to the effect that Leech had made a loan of $ 1000 to the manufacturing company, and that prior to the date when the loan was made Leech had on deposit in the plaintiff bank the sum of $ 2000, of which fact Sleeth, by reason of his connection with the bank as its president, had knowledge; that Sleeth requested Leech to loan the $ 1000 to the manufacturing company; that in order to induce Leech to make the loan, Sleeth represented that the bank was interested in the manufacturing company and in fact was a partner with Sleeth in that company, and that the loan was made upon such inducement. The plaintiff's reply contained a general denial only.

The evidence was conflicting, but that on behalf of the plaintiff tended to prove that on and for several years prior to May 8, 1893, W. M. Sleeth and one Pearson were partners, under the name of the Arkansas City Manufacturing Company, and engaged in the manufacture of furniture in Arkansas City; that when the mortgage under which the bank claimed was delivered Sleeth was president of the bank, and the manufacturing company was indebted to it in a large sum; that in April, 1893, John Leech came to Arkansas City and was "shown around" by his old friend and former neighbor, Sleeth, who pointed out houses and lands which he claimed to own; that on May 8 thereafter Sleeth induced Leech to lend the manufacturing company the sum of $ 1000, the company giving its note therefor, payable six months after date, signed by the manufacturing company, "per Frank Theaker, manager," and indorsed by Sleeth. Leech testified that before this loan was made Sleeth promised him a place in the factory, and stated that it had no outside debts; that, in answer to a question asked by Leech, Sleeth stated that the Arkansas City Manufacturing Company consisted of himself and the First National Bank of Arkansas City; and that the last statement was the inducement that caused the said loan to be made. Some months after this loan was made, a chattel mortgage covering the property claimed by the plaintiff was given by the manufacturing company to Leech, at his request, to secure the payment of the note. The court, over the objection of the plaintiff, gave the following instructions:

"III. The evidence is undisputed that W. M. Sleeth, the principal owner or manager of the manufacturing company, was also the president of the...