Krebs v. Blatz

Opinion op the court by Judge Hobson — Affirming. In the year 1893 Andrew Krebs and M. A. Blatz were the only stockholders of the Blatz-Krebs Stone Company -which had a paid up capital stock of $80,-'000. About the middle of March of this year, Krebs proposed to Blatz to buy him out. The propositionwas accepted. The amount coming to Blatz under the proposition was $51,246.35. Krebs paid $1,000 of this by check and delivered to Blatz interest-bearing certificates of deposit, which he held against the Louisville Deposit Bank amounting to $19,226.17; also, a note for $1,000 on Thornton and Johnson. He wrote his name on the back of the note and on the back of the certificate of deposit, and delivered them to Blatz. For the remainder of the purchase money he executed to Blatz three notes for $8,000 each, and one for $5,027.93 which were secured by mortgage on certain real estate. Numerous payments were made upon these notes, but, a considerable sum being unpaid Blatz brought this suit against Krebs on February 24, 1908, to recover judgment for the balance of the debt, and to enforce the mortgage. The circuit court entered a judgment in favor of Blatz, and Krebs appeals. The only thing practically in contest on the appeal grows out of the certificates of deposit in the Louisville Deposit Bank assigned by Krebs to Blatz. Blatz collected about one-half of the certificates from the bank, but, before the others matured, the bank failed. After Blatz got the certificates he presented them to the bank and demanded payment. The bank declined [509] to pay those that were not due unless he would accept the amount, without interest, and this he declined to do. When the bank failed, Blatz consulted counsel as to what he should do. He was advised by his attorney that the certificates of deposit were simply promissory notes on which Krebs was liable to him as assignor, and that to hold Krebs as assignor he must bring suit against the bank, and get a judgment and return of no property against it promptly after each certificate fell due. Thereupon a meeting was held between him and Krebs and their respective attorneys. At this meeting Krebs signed a writing-waiving the right to require Blatz to sue the bank. While there is some contradiction in the evidence as to what took place at this meeting-, the weight of the evidence shows that Blatz then said that he did not wish to press Krebs, and would give him time if necessary, and that Krebs -wished time to be given him. As the certificates fell due, Krebs gave Blatz a check for the amount and took them up. These certificates were then filed by him as part of his claim against the Deposit Bank, and the pro rata allowed thereon was paid to his attorneys. When this suit was brought, Krebs insisted that Blatz took the deposit certificates as cash, that the sums which he had thus paid Blatz were paid upon the notes in suit, and he sought credit therefore. The chancellor disallowed this claim, and of this Krebs complains. The certificates were alike except in amount. One of them read as follows: “Louisville, Kv., January 28, 1903. This is to certify that Andrew' Krebs has deposited in ibis bank $1,473.32 jmyable to his order six months after date on the return of the certificate, with interest at the rate of four per cent, per annum, interest then to [510] cease. (Signed) J. B. Ohligschlager, Cashier.” Similar papers have often been held.by this court to be in effect promissory notes. Kalfus v. Watts, 16 Ky. 197; Harrow v. Dugan, 36 Ky. 341; Carson v. Lucas, 52 Ky. 213; Kendall v. Lewis, 10 Ky. Law Rep. 362; Carnegie v. Beattyville Trustees, 13 Ky. Law Rep. 431. When Krebs placed his name on the back of the paper and gave it to Blatz, nothing else appearing, he became liable to Blatz as the assignor ;• and, when the bank failed, 'and he knew that Blatz was looking to him as assignor, it was incumbent upon him to choose what course he would follow. If he had then denied liability as assignor, Blatz in a suit then brought might have been able to prove many facts which after the lapse of 14 years he is now unable to show. He then acquiesced in Blatz’s claim that he was liable as assignor. He got time. He paid the amounts to Blatz as called for in the certificates, and, after making these payments, he continued to pay annual interest on the notes without claiming that these credits should have been applied on the notes, and thus reduce the annual interest. His conduct was such as to leave Blatz to understand that this money was paid in satisfaction of the deposit certificates, and not upon the notes. One who elects to follow a certain course, and thus pays money which he knows is applied in a certain way, will not be allowed years afterward to withdraw the election he then made, and insist that the payment should have been applied to another debt. If he was not satisfied with the way the payment was applied, he should have complained at the time. To allow him to complain after 14 years, and after time has obscured or destroyed much of the evidence that might then [511] have been produced, would be to allow him to mislead Blatz to his prejudice, and to ignore the equity rule that he who is silent when he ought to speak will not be allowed to speak thereafter to the prejudice of him whom he has thus misled. This conclusion'makes it unnecessary for us to pass on other questions discussed. Judgment affirmed. Petition for rehearing by appellant overruled.