Winer v. Bank of Blytheville

• Citation: 117 S.W. 232,89 Ark. 435
• Parties: WINER v. BANK OF BLYTHEVILLE
• Decision Date: 01 March 1909
• Court: Arkansas Supreme Court

117 S.W. 232

89 Ark. 435

WINER v. BANK OF BLYTHEVILLE

Supreme Court of Arkansas

March 1, 1909

Appeal from Mississippi Circuit Court; Frank Smith, Judge; affirmed.

STATEMENT BY THE COURT.

Appellee who was plaintiff below, instituted this suit against appellants, A. M. Winer and Ike Levine, who were defendants below, upon five promissory notes which had been executed by them to the order of the Archillion Plantation Company. Within ten days after the execution of these notes, they were duly indorsed by the payee thereof and then transferred to the Mississippi County Bank, and by the latter transferred to the appellee. The notes were executed on February 18, 1904 and were for $ 100 each, maturing respectively on the first day of February, the first day of March, the first day of April, the first day of May and the first day of June, 1906.

This suit was instituted on these five notes before a justice of the peace, and by him a judgment was rendered for the full amount of the notes in favor of the plaintiff; and the defendants appealed to the circuit court. The consideration for these five notes was a part payment for a stock of goods which was purchased by the defendants from the Archillion Plantation Company. The Archillion Plantation Company was a private business corporation, organized in February, 1903. Its capital stock was divided into eight hundred shares, of which Reginald Archillion and his wife, whom he represented as agent, owned 796 shares. Reginald Archillion was treasurer of the company, and from the date of its organization and continuously during its existence he was the sole manager of its properties and business affairs. The evidence tended to prove that, by an agreement of the board of directors of the company, he was given full power and authority to transact any and all of the business of the company; and with the knowledge and consent of its board of directors--in fact, of all of the five stockholders of the corporation--he had unlimited authority to do and transact all of the business of the company, and was permitted and authorized to execute and indorse the notes and paper of the company. The evidence tended to prove that the officers and stockholders of the company held him out to the world as having full authority to do and perform any act and thing relative to the business and assets of the company.

In February, 1904, Reginald Archillion, on behalf of the company, sold to the defendants a stock of merchandise, and as part payment therefor took 29 notes, each of which was for the sum of $ 100, and they matured respectively on the first day of March, 1904, and on the first day of each succeeding month thereafter. They were made payable to the order of the Archillion Plantation Company, and were signed by the defendants, and were indorsed and guarantied before delivery by one Sam Levine. Five of these notes are the ones upon which this suit was instituted. Reginald Archillion had been given by the officers and stockholders of the company such full control and management over its properties, and was held out to the world as having such full management thereof, that when the sale of the stock of merchandise was made to the defendants, one of them, Ike Levine, testifies that he did not know whether he was buying from Reginald Archillion or from the company. In February, 1904, Reginald Archillion was individually indebted to the Mississippi County Bank in the sum of $ 2,500; the five notes herein sued on, and about fifteen of the other notes which had been executed by the defendants to the Archillion Plantation Company had been duly indorsed in blank by the Archillion Plantation Company by a written indorsement thereon duly signed by that company, and all these notes were duly transferred by it, and within ten days after the execution of the notes, and before the maturity of any of them, Reginald Archillion delivered and transferred the same to the Mississippi County Bank to secure his said indebtedness to that bank. His indebtedness was subsequently reduced to $ 1,500, and on May 24, 1904, the indebtedness was extended for six months by the execution of a new note by him to the Mississippi County Bank, and the notes of the defendants were still retained and held by the bank by virtue of said transfer to it as collateral security for the payment of said note.

In 1904 Reginald Archillion was president of the Mississippi County Bank, and continued as such until June, 1905. In 1907 the Mississippi County Bank consolidated with the Bank of Blytheville, and the said individual note of Reginald Archillion, and all the said notes of the said defendants which were collateral thereto, were transferred to and became the property of the appellee.

During the years of 1904, 1905 and 1906, the Archillion Plantation Company was engaged in farming and other business, and during those years purchased goods and merchandise from the defendants, who were conducting a mercantile business. The company purchased these goods upon a running account, which continued during each month of said years, and amounted in the aggregate to several thousand dollars, upon which account payments were credited from time to time. In selling these goods to the company, and in transacting this business, the defendants actually had the transactions with Reginald Archillion for the Archillion Plantation Company, and they gave the credit, relying on Reginald Archillion and the solvency of the company. It is claimed by the defendants that they paid all the 29 notes which had been executed by them to the Archillion Plantation Company in the following manner Some of the notes they paid in cash, and some of them they paid by crediting the amounts of the notes on the above running account. They claim that they would make payment in cash to Reginald Archillion on some of the notes, and after such payments he would deliver to them the note so paid; or they would give credit upon the account on their books to the amount of certain of said notes, and then Reginald Archillion would bring to them the notes and deliver same to them. At the time of such payments on said notes and at the time of giving credit on the account for any of said notes the notes themselves were never actually present or delivered to them but it was always after such payments or credits given that the notes were actually brought by Archillion and delivered to them. The evidence tended to show that the defendants knew that the notes were at the Mississippi County Bank prior to any of such payments or credit given; but they claim that they thought that the notes were at said bank for safe keeping by Reginald Archillion.

It is conceded that they paid the first note, maturing March, 1 1904, by check to the Mississippi County Bank, and that the indorsement of payment on this note was signed by the Mississippi County Bank. On the trial of the cause, defendant Ike Levine, who was manager of the mercantile business of defendants, testified as a witness; and he was asked how many of the notes had been paid, and he replied 24. He was then asked if there were not five of the notes then that had not been paid, and he replied that there were. Subsequently, however, he testified that all of the twenty-nine notes were paid. Upon the books of the defendants there appears upon the account of the Archillion Plantation Company the following credit: "Notes to be paid--Cr. $ 1,900." The notes thus referred to in this entry of credit were notes that had been executed by defendants to the Archillion Plantation Company, and this entry is of blank date. It is claimed by the defendants that, after the allowance of all credits for all of said notes, there was still due to the defendants by the Archillion Plantation Company the sum of $ 905.71, which was subsequently paid by that company.

At the time of the institution of this suit, the appellee still held and claimed title to the five notes herein sued on as security for the said indebtedness of Reginald Archillion to it, which then amounted to $ 604, and which was less than the amount, with interest, that was due upon said five notes.

Upon a trial of the cause in the circuit court, a verdict was rendered in favor of plaintiff for $ 604; and from the judgment rendered thereon this appeal is prosecuted.

Judgment affirmed.

Appellant, pro se.

1. The cause of action was the balance due on the note, $ 604, and the justice of the peace had no jurisdiction. The circuit court acquired none on appeal. Kirby's Dig. § 4552.

2. Reginald Archillion was without authority to pledge the company's paper to secure his individual debt. The company itself, through its board of directors, could not authorize him to do so, nor could they afterwards ratify it. 84 N.E. 585; 62 Ark. 33; 61 Ark. 317; 85 Ark. 185.

Murphy, Coleman & Lewis, for appellee.

1. The maker of a note cannot question the capacity of the payee to indorse. Joyce on Defenses to Com. Paper, § 95; 49 Me. 421; 29 N.Y. 554; 109 Ind. 313; 4 Espinasse, 187; 3 Doug. [26 E. C. L.] 65; 24 Cal. 195; 14 Ind. 382; 38 Me. 450; 3 Hurlst. & N. 222; 15 Mass. 271.

Under the statute appellee would not be required to prove the assignment, without an affidavit attached to the defendant's answer denying such assignment. Kirby's Dig. § 517; 48 Am. Dec. 329. One who pays without the production of the note paid on does so at his peril. 75 Ark. 170; 55 Ark. 347; 10 Cyc. 1028.

2. The court had jurisdiction. 35 Ark. 287.

OPINION

FRAUENTHAL, J., [after stating the facts.]

This suit was originally instituted in the court of a justice of the peace upon five several notes, each of which was for the sum of $ 100. These notes had come to the appellee by successive transfers from the payee as collateral security for a total...