Third National Bank of St. Louis v. Reichert
| Decision Date | 31 March 1903 |
| Citation | 73 S.W. 893,101 Mo.App. 242 |
| Parties | THIRD NATIONAL BANK OF ST. LOUIS, Respondent, v. W. J. REICHERT, Appellant |
| Court | Missouri Court of Appeals |
Appeal from St. Louis City Circuit Court.--Hon. O'Neill Ryan Judge.
AFFIRMED.
Judgment affirmed.
Turner & Holder and Frank E. Richey for appellant.
(1) Under the uncontradicted evidence in the case the plaintiff was not a bona fide holder for value and before maturity of the note sued on, so as to preclude the defense of a want of consideration. (2) The note sued on was transferred, i. e both indorsed and delivered, to the plaintiff, after the maturity of the note, and the plaintiff therefore holds it subject to all defenses that could have been set up as against the transferrer. Kellogg v. Schnaake, 56 Mo 136; Lee v. Turner, 15 Mo.App. 205; Julian v. Calkins, 85 Mo. 202; Turner v. Hoyle, 95 Mo. 337. (3) The uncontradicted evidence establishes the defense that there was no consideration for the original note of which the note sued on was a renewal note, and the original note having been given without any consideration, the renewal note was without consideration. Comings v. Leedy, 114 Mo. 454; Twile v. Sargent, 63 Minn. 218; Bank v. Barmann, 124 Ill. 200; Tiedeman on Com. Paper, sec. 180; 1 Daniel on Neg. Inst. (3 Ed.), secs. 179, 205, 206.
Dawson & Garvin for respondent.
(1) A failure or want of consideration may be shown under the Missouri law (R. S. 1899, sec. 645). Where such defects of consideration appears, it of course destroys the obligation or promise to pay which the note contains. But testimony of a want of consideration is quite different in legal effect from proof which undertakes to defeat such an instrument by some agreement in conflict with its other terms. The latter testimony is not competent of itself, nor is evidence to show a condition (in the nature of a defeasance) not expressed in the instrument admissible to defeat its purpose. Jones v. Jeffries, 17 Mo. 577; Smith's Adm's. v. Thomas, 29 Mo. 307; Massmann v. Holscher, 49 Mo. 87; Rodney v. Wilson, 67 Mo. 123; 29 Amer. Rep. 499. (2) The plaintiff in this case is the indorsee or assignee of a negotiable promissory note, perhaps before maturity, and certainly for full value without knowledge of any condition. (3) We cite the following cases to the general proposition that the judgment in this case is for the right party and should be affirmed: Bank v. Graham, 74 Mo.App. 251; Jennings v. Todd, 118 Mo. 296; Bank v. Pikin, 66 Mo.App. 592; Hurt v. Ford, 142 Mo. 283; Barnes v. McMullens, 78 Mo. 260.
--Action on a negotiable promissory note for $ 2,750, executed by the appellant to the Chemical National Bank of St. Louis, on the thirteenth day of August, 1896, due six months after date and given in renewal of a previous note for the same amount on February 10, 1896. The petition avers that the instrument in suit was indorsed and delivered by the Chemical National Bank to the respondent, the Third National Bank of St. Louis, for value and before maturity, while the answer avers that the appellant received no consideration for the note, and that, in fact, there was no consideration for it; further, that the respondent was not a purchaser in good faith before maturity but came into possession of the note long after it was due and otherwise than by purchase.
Complaint is made of the refusal of certain declarations of law by the circuit court; but the declarations need not be recited because we think no defense to the respondent's case was shown and that the judgment was for the right party.
The Third National Bank of St. Louis purchased the assets of the Chemical National Bank of said city, the purchase being the outcome of negotiations and transactions which began anterior to January 13, 1897, and were finished by the removal of said assets to the respondent's banking house on the twenty-eighth day of February. The latter date fell about two weeks after the maturity of the note in controversy and that fact is relied on as showing that the respondent did not acquire it in the ordinary course of business before maturity but subsequently; and hence that any equity appellant may have against the note is available as a defense to the respondent's action.
The officers of the Third National Bank on January 13th, made a verbal agreement to purchase the assets of the Chemical Bank for the Third National Bank, if, on examination, they were found to be satisfactory. The examination was made January 18th and the purchase then definitely arranged so far as the principal officers of the two banks could arrange it; but the terms of the deal were not put into writing until January 30th, when an instrument was drawn up and signed by the officers of the banks providing for the purchase of the assets, furnishings, good will, fixtures and property of all kinds of the Chemical Bank by the Third National for $ 475,000, the agreement being based on a statement of the condition of the Chemical Bank's affairs rendered on January 18th. Said instrument provided that the officers of the two institutions should procure approval of its terms by their boards of directors and that it should be carried out in accordance with the provisions of the Federal National Bank Act, the transfer of the assets to be made on or before March 1st. At the time the sale was negotiated, appellant's note was among the assets of the Chemical Bank and was passed at its face value by the officers of the Third National, without any information or notice coming to them that it was other than what it purported to be; namely, an ordinary promissory note not yet due, held by the Chemical Bank as one of its bills receivable. It unquestionably constituted part of the consideration moving the Third National Bank to make the purchase, as the testimony shows it was regarded as gilt-edged paper.
The testimony of the officers of the Third National tends to show that the assets and property of the Chemical were transferred to the former institution and actually delivered on or about the thirtieth day of January, but that they were not physically removed from one banking house to the other until February 28th.
The facts out of which the supposed equitable defense of the appellant arises are connected with the organization of the milling company in the State of Illinois to operate a mill at LaGrange, Missouri. The appellant, W. J. Reichert, and his brother, George Reichert, were the controlling owners of the capital stock of the Reichert Milling Company, which was engaged in manufacturing flour in Freeburg, Illinois. Said concern kept a bank account with the Chemical National Bank of St. Louis, enjoyed a line of credit with said bank, and the officers of the two corporations seem to have been on friendly terms. Sometime in 1895, the Chemical Bank acquired the property of the LaGrange Milling Company at La Grange, Missouri, on account of having loaned this company money secured on its milling plant and being forced subsequently to take the plant. The title to said plant was put in the name of William E. Garvin to hold for the Chemical Bank. J. C. Richardson and Francis Kuhn were president and vice-president of the Chemical Bank and after this property had been taken over by the bank, said officers, in order to make it productive, opened a negotiation with the Reicherts and proposed that the Chemical Bank or its officers and the Reicherts should operate the LaGrange plant together, as the latter were practical millers. The result of that negotiation was that the Climax Milling Company was organized under the laws of the State of Illinois with a capital stock of $ 15,000, which was paid by Garvin conveying to it the mill and machinery of the defunct LaGrange Milling Company. Of the one hundred and fifty shares of capital stock of the Climax Milling Company, Richardson and Kuhn took thirty-five shares each, W. J. Reichert and George Reichert, thirty shares each, C. A. Whittaker fifteen shares, and Walter J. Serth five shares. Whittaker and Serth had been employees of the Reicherts in the Freeburg mill, but after the organization of the Climax Milling Company, the former took charge of that enterprise, as it was understood they should when the plan to operate the LaGrange property was arranged. The Climax Milling Company continued business for seven or eight months and then stopped, as it lost money all the time.
When said company was organized, W. J. and George Reichert each executed a promissory note for $ 2,750 to the Chemical National Bank to pay for the shares of stock taken by them, which included the twenty shares put in the names of Whittaker and Serth, who gave their notes to the Reicherts for their shares; that is to say, the Reicherts subscribed for eighty shares of the total of one hundred and fifty shares and sold twenty shares to Whittaker and Serth. They also took the following contract binding Richardson and Kuhn to sell them the other shares:
When the original notes given by the Reicherts to the Chemical Bank matured, renewal notes were executed and the instrument sued on is one of the renewals.
The position of the respondent is that his original note was given pursuant to an understanding and agreement between him and the officers of the Chemical Bank that he was not to be bound for its...
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