Tross v. Bills' Executrix
| Decision Date | 28 September 1920 |
| Citation | 189 Ky. 115 |
| Parties | Tross v. Bills' Executrix. |
| Court | Kentucky Court of Appeals |
Appeal from Jefferson Circuit Court (Common Pleas Branch, Fourth Division).
HENRY J. TILFORD and O'NEAL & O'NEAL for appellant.
BRUCE & BULLITT for appellee.
This was an action by Henry E. Bills, now deceased, against the appellant, Fred Tross, upon a negotiable promissory note, for the sum of $6,000.00, and which was executed by the Globe Furniture Company, on April 5, 1911, to Bills, and by which it promised to pay the sum named four months, thereafter, and was endorsed by Tross and one John Rohrman. The principal obligor in the note and Rohrman, one of the endorsers, have since the execution and delivery of the note, both, received discharges in bankruptcy, and hence the action for recovery upon the note was instituted against Tross, alone. Tross filed an answer and counterclaim on June 17, 1916, and an amended answer and counterclaim on November 27, 1917, and after the conclusion of the evidence at a trial had on January 15, 1918, he offered a second amended answer, which the court refused to permit to be filed. At the conclusion of the evidence, the court directed a verdict for the plaintiff, and from the judgment rendered upon the verdict, Tross has appealed. Since the trial, Bills has died, and the action has been revived in the name of his executrix. The complaints made of the trial court, by the appellant, are, that it erred to the prejudice of appellant:
First, by refusing to permit the amended answer offered on January 15, 1918, to be filed.
Second, by peremptorily directing a verdict for the plaintiff.
To an understanding of the questions involved, a statement of the facts, alleged as a defense and counterclaim, as well as the evidence offered in support will necessarily be considered. The original answer and counterclaim was set out in four paragraphs, but the matters alleged in the first and third paragraphs were either withdrawn or eliminated, and hence the cause went to trial upon the second and fourth paragraphs of the original answer and counterclaim and the amendments to same of November 27, 1917, and the denials of same made by Bills in his replies, thereto. The same state of facts were pleaded in the second paragraph of the original answer and counterclaim, and its amendment, as a defense in bar of recovery upon the note, as were pleaded in the fourth paragraph of the original answer and counterclaim and its amendment, as a counterclaim against Bills. The facts averred in the original answer and counterclaim as a bar to recovery upon the note, and, also, as a counterclaim were, that the original note for the money sued for was executed either in 1909 or 1910, and that it underwent a great many renewals, the last one of which was the note sued on, and that when the original note was executed, and, thereafter, until after the note sued on was executed, and until the principal obligor in the note, the Globe Furniture Company, which was a corporation passed into bankruptcy, the plaintiff Bills, the defendant Tross, John Rohrman and Albert S. Phillips were directors and principal stockholders of the corporation, and that Bills owned stock of the par value of $10,000.00, and Tross, Rohrman and Phillips each, owned stock of the par value of $3,000.00. The corporation was financially distressed, when Bills agreed to loan it, the sum of $6,000.00 upon the note of the corporation, if Tross, Rohrman and Phillips would severally guarantee the payment of such portion of the note, as was in the proportion, which the stock owned by them, bore to the entire stock of the corporation; while Bills agreed, that he would guarantee the payment of such part of the note as was in the proportion of the stock owned by him in the corporation. Tross, Rohrman and Phillips would, thus, each be responsible for 3/19 of the note, if not paid by the Globe Furniture Company, and Bills would pay to himself 10/19 of the note. This proposition was agreed to, the money was loaned by Bills to the corporation, the note was executed and endorsed by Bills, Tross, Rohrman and Phillips, and not being paid at maturity was thereafter regularly renewed under the same terms and conditions and that Bills procured Tross to endorse the note sued on by expressly representing that he himself would endorse the note and would, also, procure Rohrman and Phillips each to endorse it, and that in the event the principal obligor did not pay it, that each of the endorsers, would be responsible for only such a part of it as the stock owned by him was in proportion to the entire stock of the corporation, and that the note should not become obligatory and would not be used by him (Bills) until it had been endorsed by himself, and by Rohrman and Phillips, and that such representations of Bills which were relied upon by Tross, and Bills' endorsement of the note constituted the entire consideration for the endorsement by Tross, but, that Bills fraudulently failed to endorse the note sued on, or to obtain the endorsement of Phillips, and that these facts wrought a release of Tross' obligation as an endorser of the note. In the counterclaim Tross, further, averred, that at the time of the execution of the note, and its endorsement by him and at the time of its maturity, Bills, Tross, Rohrman and Phillips were each solvent, but since, the Furniture Company and Rohrman have each been adjudged bankrupts, and that the wrongful failure of Bills to endorse the note and to secure the endorsement of Phillips rendered defendant liable for the payment of the entire note, to his great damage. Tross, by the amendments of November 27, 1917, averred, that he was mistaken in the allegations made in the original answer and counterclaim touching Phillips, and that the agreement which Bills made with him at the execution of the original note was that he would endorse the note and obtain its endorsement by Rohrman, and that in the event it was not paid by the principal obligor, Bills, Tross, and Rohrman should be responsible each, for such part of it, as the stock owned by him in the corporation was to the entire stock of the corporation, that is, Tross and Rohrman would be liable for 3/16 of the note, each, and Bills for 10/16 of it, and the renewals of the note thereafter, including the note sued on was made under the same terms and conditions, except that at several of the last renewals, Bills promised to obtain the endorsement of Crawford, who was also a stockholder, and that he secured the defendant to endorse the note sued on by representing to him that his liability would be only as above stated, which with the endorsement of Crawford would be for 3/17 of the note, and that he, Bills, would endorse the note, and obtain the endorsements of Rohrman and Crawford, and that defendant's endorsement would not become binding upon him, until Bills, Rohrman and Crawford endorsed the note, but Bills fraudulently failed to endorse it himself or to obtain the endorsement of Crawford, who was solvent at all the times mentioned and at the time the note was sued on. The amended answer of January 15, 1918, which was rejected by the court, withdrew the amended answer and counterclaim of November 27, 1917, and alleged that Crawford was when the original note was executed and at all times thereafter a stockholder of the Globe Furniture...
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