U.S. Nat. Bank of Red Lodge v. Chappell
| Decision Date | 24 November 1924 |
| Docket Number | 5547. |
| Citation | 230 P. 1084,71 Mont. 553 |
| Parties | UNITED STATES NAT. BANK OF RED LODGE v. CHAPPELL. |
| Court | Montana Supreme Court |
Appeal from District Court, Carbon County; W. L. Ford, Judge.
Action by the United States National Bank of Red Lodge against Grace Chappell. Judgment for plaintiff, and defendant appeals. Reversed, and remanded for new trial.
Shea & Wiggenhorn, of Billings, for appellant.
George W. Pierson, of Billings, and John G. Skinner, of Red Lodge for respondent.
This is an appeal by defendant from a judgment given plaintiff following a directed verdict.
From the proof admitted, and evidence offered which should have been admitted, the facts are pretty clear. R. B. Chappell called Roy, was vice president of the First State Bank of Wibaux, hereafter called the Wibaux bank. As such officer he negotiated two promissory notes aggregating $13,150 to the United States National Bank of Red Lodge, hereafter called the Red Lodge bank. These notes were forged, and by Roy Chappell it seems. the indorsement upon them by the Wibaux bank was without recourse, but unrestricted as to Chappell himself. The Wibaux bank closed its doors and, shortly following that event, Roy Chappell put in appearance at Red Lodge. Immediately thereafter he returned to Wibaux accompanied by John Romersa, vice president of the Red Lodge bank. Romersa had been connected with that bank as cashier ever since its founding in 1910, until January, 1921, when he was made vice president. He was succeeded as cashier by H. P. Cassidy, who from 1911 had been assistant cashier.
Apparently, Romersa took the forged notes with him. How he learned the notes were forged does not appear, but shortly after reaching Wibaux, Romersa sought out the defendant, Mrs. Chappell, mother of Roy Chappell, and told her something would have to be done or "they" would prosecute her son. Mrs. Chappell called her brother, Henry Mullendore, and her two other sons, J. R., or Rex, and W. B. Chappell, all from distant places, to her aid. These three arrived and took charge of the negotiations for her. Romersa in turn telephoned Cassidy to send to Wibaux John G. Skinner, Esq., a gentleman who had been attorney for the Red Lodge bank for many years. Mr. Cassidy told Mr. Larkin, president of the bank, of the telephone conversation, and the result was that Mr. Skinner was dispatched to Wibaux without delay. In the meantime conferences went on between Romersa and those representing Mrs. Chappell. Romersa said to Mullendore and W. B. Chappell that the bank was loser $13,150 on the forged notes, and the loss would have to be made good by the mother of Roy Chappell, or some other, or the bank would cause Roy to be prosecuted criminally After the arrival of Mr. Skinner a number of conversations took place between Romersa and Skinner, representing their bank, and Mullendore, Rex, and W. B. Chappell, representing the defendant. Romersa and Skinner were negotiating with Roy Chappell also. In addition to the threat made by Romersa that unless the forged notes were made good the forgeries would be exposed and Roy Chappell prosecuted, it was represented to Mullendore and the Chappells that in case of a settlement "they would keep the thing quiet; keep it from the public" After conferring repeatedly, those representing the defendant told Romersa and Skinner that she would give the Red Lodge bank in settlement 60 shares of corporate stock in the Wibaux Realty Company, and nothing more. At this point Messrs. Romersa and Skinner retired from the room in which the conference was then being held, but returned shortly saying that, while the offer was acceptable, together with such other property and collateral as Roy Chappell himself had agreed to turn over-constituting all of his available property and assets-the bank would not be able to accept the transfer of the stock in the form proposed, but that, in order to meet the requirements of the banking department, the bank would have to have a note with the stock as collateral (whether such representation was correct or incorrect is not material to this inquiry); Mullendore and the two sons refused to permit the defendant to execute a note, but Romersa and Skinner said it would be a mere form, and Mrs. Chappell would not have to pay it. As an assurance of this assertion Mr. Romersa wrote on a typewriter at the dictation of Mr. Skinner; an agreement which, after some amendment, was signed by Romersa for the Red Lodge bank, and which reads as follows:
After Romersa had executed the agreement, Mr. Skinner and he prepared a note which was to become due in a year from date. To this Rex Chappell objected, being fearful that, if the note should be indorsed before maturity in good faith, and for value, his mother would not have any defense to it. He insisted that the note should be made due on demand so that the Red Lodge bank could not transfer it to an innocent party free of such defenses as his mother might interpose. To this Romersa and Skinner finally agreed. The defendant signed the note and indorsed the stock and delivered the same to Romersa, and he gave her the agreement. Contemporaneously with these acts, Roy Chappell and his wife executed a demand note to the Red Lodge bank for the sum of $13,150, to bear interest at the rate of 8 per cent. per annum from date until paid, and they also gave over to Romersa as collateral security for the payment of this note diamonds belonging to Mrs. Roy Chappell, household furniture, and promissory notes, which were made payable to Roy Chappell, and by him were indorsed to the Red Lodge bank Romersa then surrendered the forged notes, to whom it does not appear, but this is not material, for it has nothing to do with defendant's liability upon the note in suit.
When Romersa returned to his bank, instead of placing the $13,150 note signed by Roy Chappell and wife, with the "assets of the bank," he placed it in the "collateral pouch." The Wibaux Realty Company stock and defendant's note he put with the "assets." All this happened in December, 1921. In the following June, 1922, Romersa took the certificate for the Wibaux Realty stock to Wibaux, where he had a new certificate therefor made out in the name of the Red Lodge bank. In July following the Wibaux Realty Company declared a 5 per cent. dividend, and the defendant, who was then secretary of the company, sent a dividend check for $300 to the Red Lodge bank In the meantime Romersa sold the diamonds and furniture, and made some collections from the notes which Roy Chappell had turned over as collateral; the amounts received were credited, not upon the note of Roy Chappell. but upon the note of this defendant. Romersa severed his connection with the bank in November. 1922.
Thus matters stood until the Red Lodge bank made demand upon the defendant for the payment of the $7,150 note. Mr. Larkin, president of the bank, testified that he did not know anything about the agreement drawn up by Messrs. Skinner and Romersa and signed by Romersa for the bank at the time the defendant's note was obtained, until about January 23, 1923, when he received a letter from Rex Chappell, calling attention to the agreement and in behalf of his mother, refusing to give a renewal of the note, But with knowledge of the facts on the part of Larkin this suit was commenced June 9, 1923.
The complaint sets forth the $7,150 note in hæc verba, and is in the ordinary form. The defendant demurred, then answered, and later filed an amended answer. After certain admissions and denials, which are not necessary to be noted here, the defendant set up three separate defenses; the first being that the promissory note "was executed by the defendant without any consideration whatsoever and there was a total absence and failure of consideration"; the second setting forth that the defendant was induced to execute the note upon the representation and promise of the plaintiff and its agents that the note would not be enforced against her, and that she would not be required to pay the same, and that she received nothing of value for it, that prior to the execution of the note she was the owner and holder of 60 shares of the capital stock of the Wibaux Realty Company of the par value of $6,000, and that before the execution of the note and on the 13th day of December, 1921, the plaintiff solicited her to transfer and convey the said stock to the plaintiff for the debt of another, and plaintiff prevailed upon the defendant to consent thereto and that at the same time the plaintiff and its agents, acting for it and in its behalf, represented to...
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