Clay County Bank v. Keith

ELLISON, J. — This action is on a promissory note alleged to be in possession of defendant. The judgment in the trial court was for defendant. It appears that defendant and four others were directors of the plaintiff bank. That the bank had impaired its capital to the amount of $850 and the state bank examiner was about to make examination of the bank. Not desiring to make an assessment on the stockholders and in order to prevent the examiner from discovering the bank’s condition, the directors, one of them being the cashier, concluded to execute their note to the bank for $850, the amount of impairment aforesaid. [411] The secretary of state, who has general control of state banks, disapproved of this and required of the directory that they make an assessment upon the stockholders for' the amonut of the shortage. They reported to him that they preferred not to make an assessment as it might injure the bank and that they had paid the note themselves. This was satisfactory to the secretary. Instead of having paid the note-they cancelled it and in its stead, substituted the separate note of each of themselves for $170, the one executed by defendant being the one in suit. These notes were also executed with the understanding among them that they were merely to “tide over” and were not to be paid. Afterwards, the directors made an order that these notes be cancelled and they were so marked and delivered to the signers. The notes were executed for the purpose of evading the law and of deceiving the secretary of state, though at the time the directors did not, so understand it and supposed it was a valid and proper proceeding. The result however is the same and there can be no recovery on them. A note (not in the hands of an innocent purchaser) executed to defraud creditors is invalid, though the maker participates in the fraud. Hamilton v. Scull, 25 Mo. 165 ; Fenton v. Ham, 35 Mo. 409. ■ Plaintiff contended in argument that the cashier had no authority by virtue of his office to bind the bank by an agreement that the note would not be collected. We grant this to plaintiff, but the law is the authority: it is the law which says such a note can not be collected. The agreement with the cashier is no aid to defendant; a recovery could not have been had if the cashier’s agreement had been that they should, instead of should not be collected. It results that the judgment should be affirmed. All concur.