Shepherd v. Hill

WADDILL, Commissioner. The basis of this suit is a $5,000 promissory note executed by Dr. W. J. Hill to R. L. Shepherd. The court found that the note was executed for a fraudulent purpose and without consideration and dismissed the petition seeking a recovery upon it. In 1931 Dr. Hill was an accommodation endorser on several notes held by the First National Bank of Stone, Kentucky. During that year the bank went into receivership. In an effort to avoid his liability on these notes, Dr. Hill executed his note dated January 8, 1934, for $5,000' to his brother-in-law, R. L. Shepherd. A suit was filed by Shepherd in 1936 to enforce its collection, but no action was. taken to reduce to judgment, and in 1941 the suit was ordered dismissed for lack of prosecution. Shepherd was committed to- a mental institution in 1938 and Dr. Hill died in 1947. The present action was filed March 12, 1948, by the divorced wife of Shepherd, who had qualified as his committee, against the heirs-at-law of Dr. Hill. The suit was. defended upon the grounds sustained by the court. It is a well settled proposition of law that, as between the original parties, the consideration of a promissory note may be impeached and an absence or failure of consideration will bar a recovery. KRS 356.028; First State Bank of Nortonville v. Morton et al., 146 Ky. 287, 142 S.W. 694. Inasmuch as Shepherd had not negotiated the note, the parties to this action stand in the same position as the original parties to the note, thus making available the plea that no consideration had. been given for the note. The court tried the case without, the intervention of a jury and filed a. written opinion from which the following-excerpt is taken: “Judge Hill seems to-agree in his testimony that there was no. consideration for the note and that Dr. Hill did not owe R. L. Shepherd the amount of this note or other sum. If Dr. Hill had owed R. L. Shepherd the said sum sued for or any substantial part thereof, judgment would have been taken. The note was due January 8, 1935, and Dr. Hill did not die until the first part of the year,. 1947, almost twelve years after the note-allegedly became due and payable. People just don’t forget about having a debt of $5,000 and the conduct of the parties, shows that the note was without consideration and fraudulently executed as between the maker and the holder of the note.” The witness, “Judge Hill” referred to in the opinion, was a member of the law firm [1017] that filed the suit for Shepherd in 1936 upon the note. We have considered the entire record in this case and are of the opinion that the court correctly decided the controversy. Judgment affirmed.