Pierce City National Bank v. Hughlett

BIGGS, J. This is an action on three notes. The first is dated June 9, 1893, for $300, due thirty days after date; the second is dated July 8, 1893, for $400, due in ninety days, and the third is dated July 11, 1894, for $300, due sixty days after its date. The notes were signed by one "W. D. Stockstill and the defendants, and it is recited in the notes that the parties executed them as principals. The defendants admitted the execution of the notes. They interposed two defenses. The first defense is to the effect that the defendants Hughlett and Bowman were accommodation makers for Stockstill; that the officers of the plaintiff bank knew this; that in addition to the indebtedness represented by the notes, Stockstill owed the plaintiff a large sum of money, to wit, about $2,700; that at the time Stock-still owned a large amount of personal property of the value of about $5,000; that the president of thé plaintiff offered and promised to release the defendants from the notes if they would induce Stockstill to execute to the plaintiff a chattel mortgage on said property to secure the whole of his [272] aforesaid indebtedness, and that subsequently, to wit, in October, 1894, tbe defendants did induce Stockstill to give tbe mortgage, whereby the defendants claimed that they were released of all liability. As a second defense the defendants re-stated that as to Stockstill they were sureties on the notes in suit; that the officers of the plaintiff knew this, and that for the purpose of securing these notes and the other indebtedness of Stock-still the mortgage in question was obtained, and that subsequently the officers of the plaintiff knowingly and willingly permitted Stockstill to sell the bulk of the mortgaged property and to appropriate the proceeds to his own use. The defendants then claimed and averred that the property so mortgaged was of sufficient value to pay all of Stockstill’s indebtedness, and that by reason of the conduct of plaintiff’s officers in allowing Stockstill to wrongfully convert the property the defendants were released from liability on the notes. On a trial before a jury the issues were found for the defendants and the plaintiff has appealed. The defendant Hughlett testified that the president of the bank made the agreement with him that if the defendants should induce Stockstill to give the mortgage mentioned they would be released from the notes. The plaintiff objected to this testimony. It may be conceded that the power of an officer or agent of a bank to release a surety without payment is not within his implied powers, but such a power can be conferred by direct action on the part of the board of directors of the bank, and this need not be shown by the records of the board, but may be inferred from evidence of a general course of dealing, or from proof that the officer or agent had been intrusted with the entire management of the business of the bank. Savings Bank v. Hughes, 62 Mo. App. 576; Washington Bank v. Butchers’ Bank, 107 Mo. 133. There was evidence that Scott, the president of [273] the bank, assumed, when present, the entire control over the negotiations of loans, and he himself testified that ho “had authority to make loans; to take security, to take renewals and new securities.” This made the testimony of Hughlett competent. Besides his testimony was rendered admissible on the theory of ratification. The contract testified to by Hughlett was not one of voluntary release, but Avas an agreement to accept new and adequate security for the entire indebtedness of Stockstill, and in consideration of this he agreed to release the partial security which the bank held. Accepting Hughlett’s statement, this arrangement AAas clearly to the advantage of the bank. Subsequently the bank availed itself of the new security or what was left of it, which afforded some evidence of ratification by it of the alleged unauthorized act of its president. Mr. Morawetz says: “Where an unauthorized act of an agent of a corporation is clearly beneficial to the corporation, a presumption of ratification will arise from slight circumstances.” 2 Morawetz on Private Corp., sec. 629. We conclude that the testimony excepted to was properly admitted, and we Avill therefore overrule the assignment. The plaintiff complains of the following instruction giAren for the defendants: “The court instructs the jury [that if they believe from the evidence] that defendants signed the notes sued on in this action for the accommodation of said Stockstill and that Stockstill received to his own use the money obtained on said notes, and that plaintiff kneAV that they signed the same for the accommodation of Stock-still, and Stockstill received all the money so obtained on said notes, and that afterwards plaintiff by its officers, and that said officers were duly authorized and empowered so to do, represented and stated to defendants or either of them that plaintiff Avould release and discharge defendants or the one to Avhom said representations were made from all fur [274] ther liability on said notes, if they or either of them would induce and procure said Stockstill to give to plaintiff a chattel mortgage or lien on a sufficient amount of property to pay off and discharge said notes and that defendants oí either of them relied upon such statements and by reason of reliance on such statements and representations refrained and desisted from taking to themselves or either of them security from said Stockstill to secure themselves or himself against loss by reason of any payment that he or they might be compelled to make on said notes, and that defendants or either of them induced and procured said Stockstill to give to plaintiff said chattel mortgage read in evidence-and that the same covered a sufficient amount of property to pay off and discharge said notes, then you will find the issues for the defendants.” In setting forth the foregoing instruction we have supplied that portion in brackets, it having been omitted. That the instruction as read to the jury is subject to objection, Can not be questioned, but in view of the plaintiff’s instructions in which the facts were hypothetically stated, the conclusion must be that the jury was not misled and induced to believe that the facts stated in the instruction were to be accepted by them as true. To authorize a reversal of a judgment for error in obtaining it, the appellate court must be satisfied that the error complained of materially affects the merits of the action. R. S. 1899, sec. 865. What we have said in discussing the first assignment answers the plaintiff’s exception to the refusal of the court to give the fourth instruction asked by it. There are other exceptions discussed in the briefs which we will not notice. It seems to us that the case has been fairly tried, and the judgment of the circuit court will therefore be affirmed. All concur. Judge Bond in the result only.