Whiteman v. Bishop

• Decision Date: 09 December 1926
• Docket Number: (No. 3300.)
• Parties: WHITEMAN v. BISHOP et al.
• Court: Texas Court of Appeals

289 S.W. 730

WHITEMAN v. BISHOP et al.

(No. 3300.)

Court of Civil Appeals of Texas. Texarkana.

December 9, 1926.

Appeal from District Court, Red River County; R. J. Williams, Judge.

Action by H. S. Whiteman against Ira Bishop, J. H. Wooley, and others. From so much of a judgment in his favor as denied recovery against defendant Wooley, plaintiff appeals. Judgment so far as appealed from reversed and rendered.

W. F. Moore, of Paris, for appellant.

A. L. Robbins, of Clarksville, for appellee.

HODGES, J.

On January 2, 1922, Ira Bishop, Oma Puckett, J. H. Wooley, and L. B. Pool executed and delivered to the appellant, H. S. Whiteman, the following note:

"$3,000.00 Annona, Texas, January 2, 1922.

"January 1st after date I, we or either of us promise to pay to the order of H. S. Whiteman of Annona, Texas, three thousand dollars at the First State Bank, Annona, Texas, for value received, with interest from maturity until paid at the rate of 10 per cent. per annum, payable annually. And if this note is not paid at maturity and is sued on or placed in the hands of an attorney for collection, I, we or either of us promise to pay an additional sum of 10 per cent. on the amount of this note as attorney's fees, having deposited and pledged with said bank as collateral security for the payment of this note sundry notes, which property is pledged at a valuation of $____. * * *

                   "Ira Bishop.                 Oma Pucket
                   "J. H. Wooley.               L. B. Pool."
                

That portion of the note which provided for the sale of the collateral in the event the debt was not paid at maturity is omitted as immaterial. The word "bank" appearing in the body of the note is probably due to the fact that a bank note form was used. The proof shows that all of the parties to the note were stockholders of the First State Bank of Annona, which had a capital stock of $25,000. They were all directors except Wooley, who was the largest stockholder. Whiteman was president, Bishop was vice president, and Pool was the cashier and the managing officer of the bank.

Since the special answers of the defendants are important in determining the issues involved and also furnish a history of the transaction which terminated in the execution of the note sued on, they are here set out in full.

After a general demurrer and a general denial, Puckett and Pool pleaded specially as follows:

"That on said date and at the time of the execution of the note upon which plaintiff bases his cause of action, the board of directors were in session, with plaintiff present and acting as chairman of said meeting; that the other defendants were present, with L. B. Pool acting as secretary of said meeting; that said board meeting was being held in the directors' room of said bank; that there was present, also, at said meeting one ___ Kennedy, a state bank examiner, who just finished examining said bank, and who found, after requiring that several notes be `charged off,' that the capital stock of said bank had been depleted in the sum of $3,000 below the amount required by law for it to continue business; that said bank examiner called on said board of directors to make good said deficiency; that none of said directors had such an amount of money, except the plaintiff, H. S. Whiteman; that said examiner proposed that the plaintiff, H. S. Whiteman, place in said bank to its credit such sum of money and that a note be drawn in favor of said Whiteman for said sum of money and that the directors present sign said note as makers and that good notes belonging to the bank and then in the note case sufficient in number and value be turned over to the said H. S. Whiteman to be collected by him and the proceeds applied to the full payment of the note then and there executed, and such note was to be paid in such manner and not by these defendants as aforesaid; that there were among the assets of said bank and in its note case at that time about $40,000 in good notes owing to said bank by solvent makers; that such plan to raise $3,000 for the use and benefit of said bank, as suggested by said examiner, was approved by all the directors present including the plaintiff; that said examiner drew the note, or had it done, for defendants to sign, and drew a check payable to the bank for plaintiff to sign; that the notes to be turned over to plaintiff were in the note case, which was on the table around which said board of directors was meeting; that defendants Bishop, Pool, and Puckett signed the note to plaintiff, and plaintiffs signed the check payable to the bank, in accordance with the above outlined scheme; that said examiner took the check, and the defendant L. B. Pool suggested that the notes be withdrawn from the note case and turned over to plaintiff, as was agreed upon, and undertook to do so, whereupon said examiner turned over to said Pool the check with instructions to credit the bank with same, and suggested that he, the said bank examiner, would attend to the turning over to plaintiff the notes; that these defendants, except Pool, left the bank and did not know that the plaintiff, Whiteman, had not received the notes, as was agreed, for quite a while thereafter; that later the plaintiff and the defendant Pool took notes from the note case sufficient in number and value to cover the amount of plaintiff's note, and wrote `H. S. Whiteman' on each of same, whereupon they were informed by said bank examiner that he would close the bank if said notes were turned over to the plaintiff, according to the agreement; that said Whiteman and Pool did not turn over to plaintiff said notes, according to the agreement, as they had authority to do, and said notes were permitted by plaintiff to remain in the note case of said bank, and when said notes were collected the proceeds went into the general funds of said bank and were not applied to the payment of plaintiff's note, as was agreed upon by all the parties to the transaction, including plaintiff; that these defendants relied, in signing the note herein sued upon, on the full carrying out of the plan as above set out to replenish the depleted capital stock of said bank, and entered into the plan believing that the same would be fully carried out and that the said Whiteman would have the full amount of money advanced by him refunded to him through the collection of the notes that it was agreed should be turned over to him; that these defendants entered into said arrangement and signed said note without any consideration whatever moving to them or either of them; that the same was all done to keep the bank in a going condition; that previous to the above transactions the board of directors had passed a resolution and spread the same upon the minutes of said board authorizing the officers of the bank to use its assets to borrow money and to pledge the same for debt."

In addition to adopting the above answer, Wooley pleaded as follows:

"And for further special answer herein this defendant says that on the 2d day of January, 1922, he had occasion to enter the directors' room of the First State Bank of Annona, Tex., in which, at that time, the directors of said bank were having a meeting, as alleged in the special answer of the other defendants herein; that while in said room one Mr. Kennedy, a state bank examiner, requested this defendant to sign the note herein sued upon, and this defendant refused to do so, stating that he was not a director of said bank, whereupon said examiner, in the presence and hearing of plaintiff and the other directors of said bank, explained the situation and the plan to raise the $3,000, as detailed in the special answer of the other defendants herein; that this defendant, relying on the statements of said bank examiner and the sincerity and integrity of the president and board of directors of said bank, there present and hearing the explanation of the bank's condition and the plan to give relief to said bank made by said bank examiner, signed said note as one of the makers of the same; that he signed the same without any consideration moving to him, and would not have signed said note had he believed the representations of said examiner to be false; that he did not learn of the deception practiced on him until some twelve months thereafter, when he was informed by the plaintiff herein that the notes were not turned over to him, as per the agreement, and that said bank examiner had threatened to close said bank if said notes were taken out by him; that if the explanation of the plan to raise the $3,000 made by said bank examiner in the presence and hearing of plaintiff and the other members of the board of directors of said bank was false, this defendant's signature to said note was obtained by fraud, deceit, and misrepresentation and this defendant is not bound thereby."

Bishop, after testifying that the bank examiner was present at the meeting referred to in the pleadings, and had informed them that the bank was in a "shaky condition" and had to have some money, said:

"I don't know who suggested * * * that Mr. Whiteman would let the bank have the money, * * * and he made us the proposition that if we would put up good notes, as I understood, sufficient above the amount, he would let the bank have $3,000, and he and Pool would select the notes from the case, just such notes as we called good notes; and they were to be turned over to Mr. Whiteman to secure him for this loan to the bank."

In answer to the inquiry as to his understanding about who was to collect those notes and what was to be done with the money, the witness said, in substance, that Whiteman was to collect the notes and apply the proceeds to the payment of the note which they were to make to him. The bank at that time held good notes amounting to about $45,000 in value, and these were in a note case on the table around which the parties were then sitting. The notes Whiteman was to get were "to offset" the note sued on. Witness...