United States Bank v. Pritchard

• Decision Date: 23 September 1929
• Docket Number: No. 4624.,4624.
• Citation: 20 S.W.2d 939
• Parties: UNITED STATES BANK OF ST. LOUIS v. PRITCHARD et al.
• Court: Missouri Court of Appeals

20 S.W.2d 939

UNITED STATES BANK OF ST. LOUIS v. PRITCHARD et al.

No. 4624.

Springfield Court of Appeals. Missouri.

September 23, 1929.

Rehearing Denied October 30, 1929.

Appeal from Circuit Court, Butler County; Chas. L. Ferguson, Judge.

Action by the United States Bank of St. Louis against C. E. Pritchard and others. Judgment for plaintiff, and defendants appeal. Affirmed.

John T. McKay and James A. Bradley, both of Kennett, for appellants.

Orville Zimmerman, of Kennett, for respondent.

COX, P. J.

Action upon a promissory note. Jury waived, and trial by the court, who found for plaintiff, and rendered judgment accordingly. Defendants appealed.

The only substantial defense was that the plaintiff was not the legal holder of the note, and for that reason could not maintain a suit upon it. The material facts may be summarized as follows:

The defendants Pritchard and Preslar executed and delivered this note to defendant James A. Bradley, who was the payee in said note. Mr. Bradley indorsed this note and sold and delivered it to the Citizens' Savings Bank of Kennett, Mo. The note was for $700, dated April 7, 1926, and due October 15, 1926. The Citizens' Savings Bank failed July 16, 1926, and went into the hands of the state finance commissioner for liquidation, and was placed in charge of R. J. Smith as deputy finance commissioner. Mr. Smith found this note among the assets of the bank when he took charge. Since 1920, the United States Bank of St. Louis, the plaintiff in this case, had been the correspondent of the Citizens' Savings Bank and had loaned it large sums of money at various times. To secure these loans the Citizens' Savings Bank would place with the plaintiff notes owned by it, as collateral to secure these loans. As these collateral notes would come due, they would be collected by the Citizens' Savings Bank and the money so collected would be remitted to plaintiff, or other notes would be substituted as collateral in lieu of the ones that had been paid. This had been the manner of dealing between the two banks for several years. When the Citizens' Savings Bank failed, it had on hand $8,888.15 in cash that it had collected on collateral notes held by plaintiff, and had not remitted to plaintiff either cash or substituted collateral in lieu of the notes on which this sum had been collected.

The plaintiff held a large amount of other notes as collateral for what the Citizens' Savings Bank owed it, and on the failure of the Citzens' Savings Bank demanded that this debt be paid, and threatened to sell the collateral held by it to secure payment of the debt of the Citizens' Savings Bank to it. The deputy commissioner, Mr. R. J. Smith, fearing that loss would occur to the assets of the Citizens' Savings Bank, should the collateral held by plaintiff be sold, applied to the circuit judge, W. H. C. Walker, and obtained from him in vacation an order authorizing and directing the deputy finance commissioner in charge to pay plaintiff $5,000 in cash, and to place with plaintiff other notes as collateral to secure the balance of the amount the Citizens' Savings Bank had collected for plaintiff and had not remitted. This was done, and this note, with others, was at that time placed with plaintiff as collateral. The threatened sale of collateral held by plaintiff was by this means prevented. The entire debt of the Citizens' Savings Bank to plaintiff was not paid, and at a later date the collateral held by it, which included the note in suit, was sold at public sale and was purchased by Wayne Ely and Conway Elder. Afterward Ely and Elder executed their note to plaintiff, and this note was delivered back to plaintiff as collateral to secure their note. These are the facts on which plaintiff's title to this note and its right to maintain this suit upon it rests.

The attack on plaintiff's title to the note goes back to the placement of this note with plaintiff by the deputy finance commissioner in the first instance. The contention is that he had no authority as such deputy commissioner to deliver it to plaintiff, either as a payment on the debt of the Citizens' Savings Bank to plaintiff or as collateral to secure said debt, and that the judge of the circuit court had no authority in vacation of court to order it to be done; that the order was void, and conferred no...