Title: Farmers State Bank of Ingalls v. Conrardy

State: kansas

Issuer: Kansas Supreme Court

Document:

215 Kan. 334 (1974)
524 P.2d 690
THE FARMERS STATE BANK OF INGALLS, KANSAS, (Plaintiff), LOUIS D. CONRARDY, DUANE E. WEST, et al., (Third Party Plaintiffs), Appellees,
v.
GEORGE MEEKER, (Third Party Defendant), Appellant.
No. 47,308

Supreme Court of Kansas.
Opinion filed July 17, 1974.
Lelyn J. Braun, of Garden City, argued the cause and was on the brief for the appellant.
Robert F. Glassman, of Hays, argued the cause and was on the brief for the appellees.
The opinion of the court was delivered by
HARMAN, C.:
This action commenced as one on a promissory note, brought by the Farmers State Bank of Ingalls, Kansas, against *335 sixteen defendants who signed the note to raise money in aid of George Meeker in his bid for election to Congress in the 1968 political campaign. At defendants' instance Mr. Meeker was made a third party defendant. Trial to the court resulted in judgment for the bank against the sixteen defendants for the balance due on the note and a further order that these defendants have judgment on their third party petition against Meeker for any amount they are required to pay the plaintiff bank. Mr. Meeker has appealed from the ruling against him. No appeal was taken by the sixteen defendants from the judgment obtained by the bank against them. Upon oral argument we were told they have paid that obligation and the issue now is whether Meeker is liable to them as decreed by the court.
There was some dispute in the evidence at trial and our factual recitation and consideration will be in the aspect most favorable to the sixteen defendants as the prevailing parties in the district court.
To promote the election of George Meeker, the Democratic candidate for Congress in the first congressional district of Kansas, a Meeker for Congress Committee was organized. Frank Anderson was named chairman of the committee. Ed Lewis became treasurer and Don Crane was one of several area chairmen. A Meeker for Congress account was opened with the Farmers State Bank of Ingalls in July, 1968. Mr. Lewis was on the signature card of the account, he deposited campaign contributions in it and upon Mr. Meeker's approval wrote checks to pay campaign bills.
During the latter stages of the campaign prospects for success at the polls appeared good, contributions were coming in but additional money for advertising was needed to offset increased TV promotion by the opposition. Mr. Meeker understood that election laws limited the amount a candidate could personally spend in his campaign. Some time in October and prior to the preparation of the note various discussions were had by Meeker, Anderson and Lewis concerning the possibility of inadequate funds to complete the campaign and meet accrued and prospective expenses, and also the possibility of obtaining a loan at the Ingalls bank for this purpose. The then acting president of the Ingalls bank discussed the matter with one of the three persons  he did not remember which one. In any event the banker prepared a promissory note to the bank in the sum of $25,000 dated November 1, 1968, payable upon demand and bearing seven percent interest. The note was to be taken *336 to various political rallies to obtain signatures and then returned for the bank's ultimate acceptance or rejection.
Being dissatisfied with the form of the note and desirous that no one signer be obligated for the entire amount, Mr. Meeker took the note to a Dodge City attorney, who rewrote it and added thereto a paragraph stating:
In the latter part of October, 1968, Meeker, Anderson and Don Crane were present at campaign headquarters in Dodge City at which time Meeker presented the note to Anderson and Crane to circulate and obtain signatures during the upcoming campaign caravan. Crane protested, saying he had already canvassed his area and no more money could be raised. Meeker assured him, and Anderson as well, the note was merely an instrument for Meeker to obtain campaign funds legally and the signers would not be liable; that contributions were coming in well but if there was any indebtedness remaining on the note he, Meeker, would personally pay the balance and the signers would not be called upon to pay. The goal was 100 signatures.
During the ensuing campaign caravan Anderson and Crane circulated the note on Meeker's instructions and secured the signatures of thirty-nine individuals. They testified that in each instance prospective signers were informed they would not be liable on the note, they would be signing merely to enable Mr. Meeker to borrow money from the bank and if any balance remained due on the note Meeker would take care of it. Not all those solicited signed.
Five defendant signers testified they signed upon Anderson or Crane's assurance there would be no liability on the note as George Meeker would take care of any balance remaining due. It was stipulated the testimony of the other eleven defendants would be the same.
The note was returned to and accepted on December 8, 1968, by the Ingalls bank for the sum of $15,000 which amount was credited to the Meeker for Congress account. Mr. Meeker immediately drew a personal check on the account to the High Plains Advertising Agency, which handled his campaign advertising, for $16,553.26 which liquidated the account.
Later, after discussing the matter with Meeker, the Ingalls banker sent to all note signers notices of payments due in the sum of $350.00 *337 each. Twenty-two signers eventually paid the bank. Several sent word to the bank they understood they were not to have any liability on the note. Meeker sought to have the banker send another request for payment and when the banker declined, did so himself. Anderson and Crane, who had signed the note, each told Meeker they were not going to pay until he paid them. Meeker sent his personal check for $350.00 to Anderson and to Crane, whereupon each paid that amount to the bank. This lawsuit ensued when the remaining sixteen signers did not pay (one did make a partial payment).
Meeker testified. He admitted having the note prepared for use on the caravan by Anderson and Crane to supply campaign funds but denied any attempt to evade campaign laws. He testified he did not authorize Anderson and Crane to tell signers they would not be liable; enough signers were to be secured so that no one would be hurt even if some amount was due on the note; campaign contributions from other sources were coming in well and his statement was that signers of the note probably wouldn't be called upon to pay anything. He denied telling Anderson and Crane he would pay any balance remaining due on the note. He paid their part on the note because he felt they should have some reimbursement for campaign expense they had personally incurred. He had hoped sufficient contributions would come in to take care of the note but after his defeat they were not forthcoming.
Meeker also produced evidence that two persons solicited by Crane were not told anything about Meeker picking up the note  they understood the legal implications of the note and refused to sign. Four others testified they were not told they would have no liability on the note  they signed and later paid off.
In rendering its decision the trial court made findings of fact and conclusions of law in a memorandum opinion. After reciting the making of the note opinion continued with the following:
"CONCLUSIONS
Appellant presents his points for reversal under three headings. First he asserts the trial court erred in its finding No. 5 and conclusion No. 14 in that there was no evidence to support a finding that he ever made arrangements with the plaintiff bank for the $15,000 loan. There is no conclusion No. 14 and we assume appellant is really challenging conclusion No. 4 since it parallels and amplifies finding No. 5.
The matter of obtaining a loan at the Ingalls bank was discussed between Meeker and his campaign lieutenants. Meeker admitted it might have been his idea. Although the banker was somewhat vague in his testimony as to who initially contacted him about arranging the note  he thought it was Meeker, Anderson or Lewis as all had been in the bank, and Meeker was similarly vague as to his appearances at the bank  the banker testified positively he discussed the loan with Meeker. Meeker obtained the note, supervised its redrafting, turned it over to Anderson and Crane with directions to secure signatures and once the note was credited he immediately disbursed its proceeds by his personal check honored by the bank. The matter need not be further labored. There was overwhelming evidence, including Meeker's admissions, to support the finding now complained of.
Appellant further contends the trial court's findings of fact Nos. 8, 9, 10 and 11 were not supported by evidence. These findings go to the heart of the lawsuit. Appellees presented one version of events, appellant another. In Morris v. Hoesch, 204 Kan. 735, 466 P.2d 272, the oft-repeated rule is stated:
Anderson and Crane testified positively as to their express authority and directions from appellant, which in turn they relayed on to the appellees. There was evidence to the conrtary but the fact finder resolved the dispute in favor of appellees and those findings may not now be disturbed.
Appellant levels a barrage of shots in his final argument for reversal. Most of the authority cited would be pertinent if this were a suit by the bank against appellant rather than between him and appellees. His principal point seems to be that the action is barred by the statute of frauds in that his alleged promise to pay the debt of another was not in writing as required by K.S.A. 33-106. The contention has no merit. In 2 Corbin on Contracts, § 357, it is stated:
See also 3 Williston on Contracts, 3d ed., § 478.
Our own precedent is in accord. In Hines v. Roberts Bros., 117 Kan. 589, 232 Pac. 1050, this same rule was quoted approvingly:
Appellant's oral promise here was made to the signers of the note, the debtors, rather than to the creditor bank; hence the statute of frauds is not applicable.
Appellant points out the bank never intended the instrument in question to be an accommodation note, yet, he further asserts, the trial court erroneously converted it into that kind of instrument and rendered judgment accordingly. K.S.A. 84-3-401 (1) provides:
*342 The official uniform commercial code comment to the foregoing states in part:
It is true appellant did not sign the note and the banker testified he made the loan only on the signatures attached to the note and did not look to appellant for its payment. Appellees' obligation to the bank could not in strictness be regarded as accommodation paper insofar as that term is generally understood. Under the circumstances the fact the trial court used the term "accommodation" in its conclusions does not affect the validity of its ultimate holding. It found all the requisite facts upon which to render the judgment it did. Through his authorized agents, appellant in effect promised to assume any liability which might be cast upon appellees if sufficient campaign contributions did not come in to pay the note. He alone had the authority to expend the proceeds thus otained for his benefit, which authority he exercised. The present action is not on the note; it is on an oral agreement underlying the execution of the note. We know of no reason why appellant should not be held accountable on that agreement as ruled by the trial court.
The judgment is affirmed.
APPROVED BY THE COURT.