Case Name: CLARENCE L. STEPHENSON, Appellant, v. JOPLIN STATE BANK, Respondent
Court: Springfield Court of Appeals
Jurisdiction: Missouri
Decision Date: 1911-12-04
Citations: 160 Mo. App. 47
Docket Number: 
Parties: CLARENCE L. STEPHENSON, Appellant, v. JOPLIN STATE BANK, Respondent.
Judges: All concur.
Reporter: Missouri Appeal Reports
Volume: 160
Pages: 47–53

Head Matter:
CLARENCE L. STEPHENSON, Appellant, v. JOPLIN STATE BANK, Respondent.
Springfield Court of Appeals,
December 4, 1911.
1. JUSTICES’ COURTS: Filing Instrument Sued On: Filing Note On Appeal. Where defendant files a written statement before a justice of the peace in which the amount of the set-off or counterclaim was specified with the further allegation that the indebtedness from plaintiff to defendant was upon a note, he may, on appeal by the plaintiff in the circuit court, offer to amend the counterclaim by filing the note on which it was based.
2. BILLS AND NOTES: Evidence: Parol Evidence Showing Party Signed as Surety. The rule that one who, on the face of a note, is a joint obligor, may show by parol that he was in fact but a surety, is upon the theory that the note or contract does not disclose the capacity in which he executed it and that therefore the written instrument is not contradicted by proof that a party in fact signed as surety.
3. -: -: -■ — : Contradicting Written Instrument. Where a note or other contract shows upon its face that a party executed it as principal, he cannot then be permitted to show that he did not so execute, for to do so would be to contradict his written obligation by parol and this cannot be done.
4. -: -: -: -. Where plaintiff signs a note which reads, “We or either of us, as principal,” etc., he cannot, when sued upon the. note, show by parol that he was in fact but a surety and that the payee had accepted him upon the note as such, for he would thus be contradicting the terms of his written obligation.
5. -: -: -: -: Knowledge of Payee. Where a party signs a note to a bank by the terms of which he promises as principal to pay the same, he cannot subsequently show, in an action against him hy the bank, that he was only a surety and it makes no difference if the cashier of the bank knew that as between him and the other maker he was only a surety and that the cashier had prepared a chattel mortgage, which was executed by the other maker to secure him as surety, for under the expressed terms of the note given to the bank, his contract was that of a principal.
6. COSTS: Successful Party Entitled to Recover. Under the statute the successful party in a law suit is entitled to recover his costs, so wnere plaintiff failed to recover on his cause of action and defendant, who filed a set-off succeeded only in defeating defendant’s recovery, but failed to obtain a judgment over for any balance, Ivélü, that any costs made by defendant, outside of defeating plaintiff’s recovery, should be taxed against him.
Appeal from Jasper Circuit Court. — Noto. D. E. Blair, . Judge.
Affirmed.
II. 8. Miller for appellant.
(1) The chattel mortgage and the notes in question were in writing and both were written at the same time by Mr. Ramsay, cashier of defendant' and Mr. Ramsay also admitted that the plaintiff signed the said note as surety. We contend that a party who has with knowledge of the facts assumed a particular position in judicial proceedings is estopped to assume a position inconsistent therewith to the prejudice of the other party, particularly if the position previously taken be’ successful. 16 Cyc. 796. (2) A bank has no right to apply money of its depositors to the payment of a note on which he is security, or guarantor. Bank v. Green, 32 L. R. A. 568; 0 ’Grady v. Bank, 106 Mo. App. 366; Harrison v. Harrison, 4 L. R. A. 112; Bank v. Hill, 76 Ind. 223; Bank v. Peck, Í27 Mass. 298; Gupton v. Carr, 147 Mo. App. 121. (3) The authorities in this State make a distinction between set-off and counter-claim as shown by the following author ities. Scarritt Estate Co. v. Arms Co., 110 Mo. App. 412; Empire Co. v. Boggiane, 52 Mo. 249; McAdow v. Ross, 53 Mo. 199; Emery v. Railroad, 77 Mo. 341; National Handle Co. v. Huffman, 140 Mo. App. 642. (4) The statute provides that in all civil action the prevailing party shall recover his costs, unless otherwise provided by law. Surely plaintiff was the prevailing party as to the defendant’s cause of action and practically all of the hosts were made on it. Lbr. Co. v. Tiede & Co., 130 Mo. App. 272; Launn v. Railey, 127 Mo. App. 726.
R. P. Stone for respondent.
(1) The question raised in plaintiff’s brief that plaintiff was a surety on the note and not a principal, was net raised in the trial of the case until the trial was almost finished, and on that proposition the court ruled against the plaintiff and very properly so under the rule laid down in the following cases. Picot v. Signaiago, 22 Mo. 587; McMillen v. Parkell, 64 Mo. 286; Banks v. Wells, 98 Mo. App. 573; Beers v. Wolf, 116 Mo. 183; Reissaues v. Whites, 128 Mo. App. 13i5-; Wood v. Motley, 83 Mo. App. 97. (2) Under the second sub-division of section 1807', Revised Statutes 1909, a defendant may set up a counterclaim on any other contract with the plaintiff if a cause of action existed when the original suit was begun; Green v. Conrad, 114 Mo. 677; Herman v. McNamara, 77 Mo. App. 7. (3) The statute merely means that the indebtedness must be such as to entitle the plaintiff to an action against the defendant, and the defendant to an action against the plaintiff. Weiss v. Wahl, 5 Mo'. App. 408; McCuin v. Frazier, 38 Mo. App. 63; Crone v. Murry, 106 Mo. App. 411. (4) A defendant may set off, against an individual demand sued on by plaintiff, an indebtedness held by him against a partnership firm of which the plaintiff is a member. Rud.dle v. Horine, 34 Mo. App. 616. (5') The purpose of section 1807, Revised Statutes 1909', is to simplify the. proceedings and settle the whole contention between the parties in one action. Martin v. Turnbaugh, 153 Mo. 186; Bealy v. Smith, 158 Mo. 526; Ashley v. Shaw, 82 Mo. 81.

Opinion:
COX, J. —
Action begun before a justice of the peace to recover the sum of $103 which plaintiff had <jn deposit in defendant bank. The defendant filed before the justice a set off or counter-claim in which it claimed plaintiff was indebted to it upon a note in the sum of $103.98 and asked judgment against plaintiff for ninety-eight cents. The defendant was successful in the justice court and recovered judgment against plaintiff for 98 cents as asked. Plaintiff appealed to the circuit court where upon trial de novo plaintiff or defendant neither recovered anything and plaintiff has appealed to this court!
The first error assigned is that defendant cannot avail itself of its plea of counterclaim or setoff for the reason that it is based upon a note and the instrument was not filed before the justice. Defendant did file a written statement before the justice in which the amount of the setoff was specified with the further allegation that the indebtedness from plaintiff to defendant was upon a note. Before the trial began in the circuit court the defendant offered to amend' the counterclaim by filing the note on which it-was based. This it was permitted to do over plaintiff's objection. This was clearly permissible. [Statute 1909, sec. 7412-13; Keys v. Watkins Livery Co., 102 Mo. App. 315, 76 S. W. 698; Conn. Co. v. Orr et al., 150 Mo. App. 705, 131 S. W. 765.]
The real contention in this case arises upon the following state of facts: Defendant admitted that it had had on deposit $103 to plaintiff's credit and that plaintiff bad demanded the same but contended that it bad applied tbe money in discharge of a note held by it against plaintiff. Plaintiff admitted tbe execution of tbe note but contended be only signed it as surety and for that reason defendant could not apply bis deposit to its payment. Also that tbe note bad been paid by tbe principal debtor. Tbe latter question was one of fact on which tbe evidence was conflicting, hence tbe finding of tbe trial court is binding upon us.
Tbe important question in this case is whether plaintiff can be "permitted to prove by parol that be was a surety only on tbe note in question. If be can, then tbe right of tbe bank to apply tbe deposit of a surety on a note held by it arises, but if be cannot then that question is not in this case. Tbe note in question is as follows:
$100 "Joplin, Mo., Jan, 21st, 1909.
Six months after date, we or either of us, as principal, promise to pay to tbe order of tbe Joplin State Bank, of Joplin, Missouri, one hundred dollars, for value received, payable at tbe Joplin State Bank, of Joplin, with interest at tbe rate of eight per cent per annum from date, said interest being due and payable semi-annually, and if tbe interest be not paid annually, to become as principal and bear tbe same rate of interest, and we hereby waive notice of extension.
P. O. address, Joplin, Mo. J. H. Bacon.
Due......'. . Gen. Delivery, N. A. Tinker,
No. 1583. C. L. Stephenson."
It will be observed that tbe note provides that each of tbe makers agrees to pay as principal. Can be now be beard to say that be did not agree to pay as principal? If be can then be can contradict tbe plain terms of bis written contract and this be cannot do. We are not unmindful of tbe line of authorities which bold that one who is on tbe face of tbe note a joint obligor may show by parol that be was in fact but surety and thus avail himself of the rights of a surety. This is upon the theory that the note or contract does not disclose the capacity in which the parties execute it and that therefore the written contract is not contradicted by proof that a party in fact signed as surety. [Markham v. Cover, 99 Mo. App. 83, 72 S. W. 474; Reynolds v. Schade, 131 Mo. App. 1, 109 S. W. 629.]
But when the note or other contract shows upon its face that a party executes it as principal he cannot then be permitted to show that he did not so execute it for to do so would be to contradict his written obligation by parol and this cannot be done. [Picot v. Signiago, 22 Mo. 587; McMillan v. Parkell, 64 Mo. 286; Wood v. Motley, 83 Mo. App. 97; Banks v. Wells, 98 Mo. App. 573, 73 S. W. 293; Beers v. Wolf, 116 Mo. 179, 183, 22 S. W. 620.]
The plaintiff in this case by the terms of the note which he signed contracted as principal, hence, as between him and the bank he was a principal and that being true the bank had the undoubted right to apply his deposit on his note to the bank. It is therefore unnecessary for us in this case to pass upon the question of the right of a bank to apply the money of a surety upon a note to its payment in the same way as it may the money of a principal.
At the time this note was given, a chattel mortgage was executed by Bacon to Tinker and Stephenson, the other makers of the note to secure them as surety for him. This chattel mortgage was prepared by the cashier of the bank and he knew that, as between themselves, Tinker and plaintiff Stephenson were sureties for Bacon. Upon these facts it is contended by plaintiff that his relation as surety was established. We do not think so. It was wholly immaterial to defendant what relation these parties sustained to each other and notice to it of that relation would not change its rights. It was interested solely in their relation to it, and it was careful to insert in the note the provision that they should each he held as principal so that any question of suretyship should he eliminated as far as it was concerned, and as was well said in Picot v. Siguí ago, supra, after it had taken this precaution to safeguard its own interests where is the justice in depriving it of the fruits of its vigilance1? As to the defendant plaintiff was a principal in the note because his contract so provided and he cannot now escape from its terms.
Contention is also made by appellant that' the court erred in taxing all the costs to plaintiff. We do not understand that. this was done by the form of judgment entered but if, as a matter of fact, all costs have been taxed to plaintiff and there is any error in it, that can yet be remedied by motion to retax. In this connection it may be proper to state that under the statute the successful party recovers his costs and as plaintiff failed to recover on his cause of action and defendant failed on his setoff as such, but was only allowed to de'feat plaintiff's recovery because of its right to apply his money on the note held against him, if there were any costs made by defendant outside of that issue those costs should be taxed to defendant.
Judgment affirmed.
All concur.