Farmers' Bank v. Bayliss

Holmes, Judge, delivered the opinion of the court. The case comes up by appeal from the District Court of the 5th District, in which the judgment obtained by the plaintiff in the Ray Circuit Court was reversed. The petition must be regarded as stating a cause of action against the members of the firm of Wm. Hudgins & Co. for — 285 — money loaned to them by the plaintiff, and not as an action founded on the note. It contains but one count, and appears to have been framed with a view to maintaining the action both against the parties to the note, as upon a liability created by the instrument, and against the members of the firm, as upon a liability for money loaned to them. It is apparent that such causes of action were improperly united in the same count. This is not one of the causes of demurrer contemplated by the act concerning practice, and the error should have been corrected by a motion to strike out the surplus matters. No such motion was filed ; and in such case the irrelevant matters will be treated here as surplusage. The averments concerning the note and the parties thereto, looking to the instrument as the foundation of the cause of action, will therefore be considered as merely statements of matters of evidence, which might have been omitted in the pleading. To the cause of action founded on money loaned to the firm, the defendants Garner, Stewart and Shaw were unnecessary and improper parties. A demurrer to the petition, for this reason, was filed by the defendants Hudgins and Bayliss; but it does not appear by the record what disposition was made of it, otherwise than as it appears that these defendants afterwards had leave to answer. The demurrer should have been sustained—Gen. Stat. 1865, ch. 165, § 6. The trial proceeded against all these parties, and a verdict and judgment were rendered against them all. This error was made the ground for a motion in arrest of judgment, which was overruled. We think it should have been sustained. There can be no doubt that such a judgment is erroneous. It was insisted by the respondents that the record shows that the motion for a new trial was filed after the motion in arrest, and was impliedly withdrawn or wholly superseded, and that therefore the case must be considered here as if no motion for a new trial had been made. We do not agree to this view of the matter. The bill of exceptions shows that the motion for a new trial was filed first, and first disposed — 286 — of. By an entry in the record it would appear that the motion in arrest was filed first, and then the motion for a new trial afterwards, on the same day ; and both motions were continued to the next term, and were finally disposed of together on the same day. It is true that the motion for a new trial comes first in the logical order of pleading, and when a motion in arrest has been made and overruled it will then be too late to file a motion for a new trial afterwards, for the motion in arrest presupposes and admits that the verdict was correct; and so it was held in McComas v. State, 11 Mo. 116: but where both motions are filed together and are disposed of in their logical order, as in this case, we see nothing substantial in the objection. The principal difference between this case as presented here on the merits, and the same case as it was presented in the Farmers’ Bank v. Bayless et als., 35 Mo. 428, is in the form of the petition. In that case the note was declared on as the note of the firm. This suit is founded on the loan of money, which was the original consideration of the note; and the plaintiff seeks to establish by proof, that the money for which the note was given was a direct loan from the bank to this firm, and to hold the members of the firm liable upon the original consideration of the note. It was also argued, upon the theory on which the case seems to have been tried below, that they might also be held liable as parties to the instrument on the proof made that the note was executed by James F. Hudgins, the maker and one of the firm, by authority and in the name of the firm as their act, using the style of “ James F. Hudgins” instead of their usual partnership name. Thus the plaintiff endeavors to avail himself of two distinct grounds of liability and two causes of action in one count. With reference to the evidence and the questions of law arising in the case, it would seem to be a matter of little importance which ground of liability was relied upon, for the evidence fails to sustain either view. The state of the case is not materially changed, by the introduction of any new or further evidence, in this case, from — 287 — what it was before. The law of the subject is carefully considered in the Farmers’ Bk. v. Bayless et als., 85 Mo. 428, and we entirely agree with the conclusions there arrived at. It is not doubted that the note might be the note of the firm by one style as well as another, if it were distinctly proved that the firm had authorized it to be drawn and negotiated in that form, and that it was the act of the firm in that name ; and if it were clearly proved to have been a loan of money made to the firm, they might he liable in this action. The burden of proving these facts was on the plaintiff. On the face of the note, it would be presumed to have been the note of the individual maker,.and- a loan of money made to him ; and this presumption must be overcome by clear evidence that it was intended to be, and was in fact, a partnership style — an act of the firm, and a loan of money to the firm—Boyle v. Skinner, 21 Mo. 82. The evidence fails to show that such was the nature of this, transaction ; on the contrary, it is made very clearly to appeapthat it was drawn and negotiated as the individual note off the partner signing it in his own name, and that the money; was loaned on the credit of the parties to the note,. &nds not on the credit of the firm; such appears to have bean, thp.understanding of all parties concerned. It is qt®qed.ed to.,be (, immaterial that the money, when obtained,op,the-note, was / applied to tire use of the partnership; that(W\Ou]^imorely create an individual account between the partner-and his firm,. It is equally unimportant that the parties to the note and the<, members of the firm understood that, the money was to,he borrowed for the use of the firm, or- was applied to the bush ness of the firm, when they were al¡l, at the same time, fully, aware that the note was to be drawn and negotiated as the individual note of the maker and, in his own' name only; and they knew that the reason for. this was, that it was supposed that the maker, being a director and a stockholder in the bank, could obtain the loan on better terms than the firm itself could do in their own name. There was really no transaction whatever between the bank and the firm. The — 288 — individual partner was not in that matter acting as the agent of the partnership but for himself; nor is it a matter of importance that the stock, which was really owned by the firm, stood in the individual name of this partner on the books o£ the bank for the very purpose of giving him an individual credit with the bank. With reference to the bank, it was simply a discount of the note on the credit of the parties to the instrument. The money was doubtless paid over, according to the usage of banks, to the last endorser and by him to the maker, for whose accommodation the other parties signed the paper and for whose benefit it was discounted ; and by him, it must be supposed, the money was applied to take up the previous note, for the renewal of which the money had been borrowed. The previous note was thereby paid and extinguished, and there was an entire substitution of the new debt for the old one ; and it matters not that the previous note was the actual consideration of the new one, and so back to the fii'st and ox-iginal note on which the moxxey was actually obtained from the bank by the maker, and when obtained applied to the uses of the partnership. Nor can the admission of the other partners, by paying interest on renewals out of the partnership funds, or by stating that the money ■was designed for their benefit, or that they would see the note «paid, have the effect to change the nature of the transaction. Their proper meaning would be only that they would provide the individual maker with funds to meet his obligations to the bank, and carry it to his individual account with the firm. If a recovei’y could be had against the members of the firm, the matter would still have to be adjusted between the partners in the partnership account; and if the endorser's on the note-are obliged to pay it, they have their recourse upon the maker’, for whom they are sureties, and he may have his account against his firm, to whose use he has applied the money. These conclusions will so far determine the case that it will he unnecessary to examine the instnictions in detail. It will be apparent that most of the instructions given by the court — 289 — were erroneous : they proceeded upon a theory that was not warranted by the state of the evidence, and several of them propounded questions of law to the jury. The instructions refused for the defendants Hudgins and Bayliss were correct enough, and should have been given. The judgment of the District Court reversing the judgment of the. Circuit Court will therefore be affirmed, and the cause is remanded to the Circuit Court. The other judges concur.