Vandagrift v. Bates County Inv. Co.

• Decision Date: 23 May 1910
• Citation: 144 Mo. App. 77,128 S.W. 1007
• Parties: VANDAGRIFT v. BATES COUNTY INV. CO.
• Court: Missouri Court of Appeals

128 S.W. 1007

144 Mo. App. 77

VANDAGRIFT v. BATES COUNTY INV. CO.

Kansas City Court of Appeals. Missouri.

May 23, 1910.

1. BILLS AND NOTES (§ 350)—SALE AFTER PAYMENT AND MATURITY—FRAUD.

A sale by the holder of an overdue note secured by a deed of trust after the foreclosure of the deed and the payment of the debt is a fraud on the buyer, unless he has knowledge of the facts, for the payment of the note at or after maturity extinguished it, though, as to the maker, the buyer was not an innocent purchaser.

2. CORPORATIONS (§ 428)—KNOWLEDGE OF OFFICERS—EFFECT.

The rule that the knowledge of the officer of a corporation received in his individual capacity is not chargeable to the corporation does not apply where all the officers of a corporation have the same knowledge of a fact, and where, because of confidential relations existing between a bank and a corporation, all the officers

of the bank were acquainted with the facts pertaining to a sale by the corporation to the bank of a matured note which had been paid, the bank was chargeable with knowledge of the facts.

Appeal from Circuit Court, Vernon County; B. G. Thurman, Judge.

Action by E. C. Vandagrift, receiver of the Bates National Bank of Butler, against the Bates County Investment Company, and De Witt C. Chastain, assignee. From a judgment for defendant, plaintiff appeals. Affirmed.

John A. Easton and E. H. McVey, for appellant. John S. Francisco and D. C. Chastain, for respondent.

BROADDUS, P. J.

This is an action, the purpose of which is to follow a certain fund by tracing it into the assets held by the respondent assignee, and to secure a preference for the full payment of the plaintiff's claim. The plaintiff is the receiver of the Bates National Bank, of Butler, Mo., organized in September, 1902, and which continued in business until September 20, 1906, at which date it was declared insolvent and a receiver was appointed, who held the office until May 15, 1908, when the plaintiff was appointed as his successor. The Bates County Investment Company was organized as a Missouri corporation in June, 1897, and continued in business until February, 1907, at which time it made an assignment for the benefit of creditors and defendant Chastain was appointed assignee. During the years of 1905 and of 1906 this company was insolvent. In January, 1900, one Mary E. Holt acquired title by deed to 240 acres of land in Bates county. It appears, however, that she took the title in her own name for the benefit of the real purchaser, her son, E. A. Holt. On March 1, 1900, Mary E. Holt and her husband executed to a trustee for the investment company two deeds of trust; one for $1,500, securing three notes for $500 each, and the other or second deed of trust for $1,000, securing two notes for $500, both of which were duly recorded March 17, 1900. All these notes were signed by E. A. Holt, and recited on their faces that they were secured by the said deeds of trust. The consideration for the two deeds of trust and the notes mentioned was furnished by the Bates County Bank, of which the Bates National Bank was the successor. The transaction was according to the usual custom existing between the bank and the investment company when a real estate loan was made by the bank. In a short time thereafter, the three notes described in the first deed of trust were sold in the regular course of business to the Masonic Home of Missouri, which held them until paid in April, 1906.

The controversy arises as to the two notes secured by the second deed of trust which are designated by numbers "193" and "194." The investment company kept deposits and a checking account in the bank, and the two institutions were until January, 1906, closely related. The officers and most of the directors were the same and the places of business adjoined. The books of the bank show that on November 6, 1900, the bank sold the two notes to the investment company, and the books of the latter evidence such sale. These notes matured March 1, 1905, five years from date. On February 18, 1905, the land, which was security for the notes, was sold by the trustee, and the investment company at such sale became the purchaser and received a deed from the trustee therefor, but did not place it on record until April 14, 1906, more than a year later. It is claimed that this sale was made in...