Opinion ID: 2463110
Heading Depth: 1
Heading Rank: 2

Heading: controverted facts

Text: W. C. Blewster on direct examination testified that Dr. Rushton became trustee in the transaction leading up to and involved in this lawsuit because he, as president of First National Bank, asked him to act as trustee; that in attempting to keep Numark going he was trying to prevent First National Bank from having a substantial loss; that this transaction was for the bank's benefit and at his suggestion, and it was not his intention for Dr. Rushton to be personally liable; and that up until this Numark transaction First National Bank had never sustained large losses and everything was going well until the ARA ran out of money and he was forced to resign. Mr. Blewster stated that First National Bank had had other trusteeships to work out situations like this one and they had never been questioned by the bank examiners. Dr. Rushton testified that when it became apparent that Odyssey was not going to make a go of the trailer business, he told the board of directors that the best thing to do was to shut it down and let it fold up. Mr. Blewster then suggested that Mr. Drew, manager of Odyssey, take a look at the Magnolia Wood Products property and see if business could be continued with a merger of the two companies. The bank had taken a loss in both companies and Mr. Blewster did not want to see that happen. At Mr. Blewster's suggestion, Mr. Drew decided that perhaps he could put the two companies together, go into wood products manufacturing and pull the situation out of the fire. Dr. Rushton stated that he could not attend the meeting after the merger because of surgery, and that when he called Mr. Blewster to see what they had decided, he found that they had elected him president. He reluctantly accepted the office at Mr. Blewster's request. Mr. Blewster told him that through Hamilton Moses they were going to arrange an ARA loan; that Mr. Blewster wanted him to act as trustee to make loans to this new company so the bank could get its money back from the ARA loan. Dr. Rushton stated that his position as trustee was explained at a meeting of the bank's board of directors; that the bank had asked him to act as trustee for it so the bank could arrange for him to pay off its indebtedness on notes it was about to lose; that this was the same arrangement the bank had used before with Mr. Shanehouse and Mr. Varner and one or two others who had served in the same capacity as had Dr. Rushton; that all the time endeavors were being made to secure an ARA loan and that while he himself had nothing to do with it, he knew it was being done because the bank had helped in filling out the forms. With respect to the February 25, 1965, collateral pledge (see item 20 above) Dr. Rushton testified: [1] After Mr. W. C. Blewster had resigned, I put up my stock in Magnolia Broadcasting Company and the rest of the stock I had in Berry Petroleum Company to secure the $97,000 mortgage. I did not receive any money or consideration for the warranty deed to Numark Manufacturing. The reason I put up this security for the trustee mortgage in 1963 was that T. A. Monroe called me to come to the Bank. I went down there and Mr. Eckert told me I was in serious trouble. He said that W. C. Blewster was going to the penitentiary and I might be going with him. He said I had better clear my name at the First National Bank; that I was part of the whole thing. He asked me what I did with the money, and I said I never got any of the money, and he said the money is somewhere and you might be investigated by the Federal Government and you will lose everything you have; your home and clinic and everything, and I thought I was doing the right thing. I followed the advice of the Bank's attorney and put up this security. I was subsequently advised by legal counsel that I did not have to do that. I put up my stock in Magnolia Broadcasting Company and about 10,500 shares of Berry Petroleum. This was after the blowup at the Bank. I did not put up any security in 1961 when I signed the Odyssey note. The Magnolia Broadcasting Company stock and the Berry Petroleum stock was typed on that note without my consent, and I did not know it was on there. I was coerced into putting up the security on the Bank note. Mr. Eckert was acting as my legal advisor while he was acting as legal advisor for the Bank. I was not paying him any fee. We had been close friends for 10 or 15 years and I had no reason not to trust him. M. T. A. Monroe testified: In some ways, the whole board of directors had been derelict in their duty but in other ways they did not fail because they did not know some of the things that were going on.    I did not tell Dr. Rushton in the executive meetings between myself, Mr. Eckert and Dr. Rushton that his activities were in violation of federal law and he was in serious trouble. I did not hear Mr. Eckert tell him that. I might have gone out of the meetings or been called out. I don't know. But Mr. Eckert was advising Dr. Rushton on his legal liability.    We told him if he put up securities it would be his free and voluntary act.    We merely asked him to secure the loan to prevent him from being embarrassed before the board of directors. We wanted the securities brought in but I don't think we mentioned voluntary.    It was more just appealing to him to help us get his loan straight. We did not tell him it would be his free and voluntary act. Later Mr. Monroe testified: I don't recall saying to Dr. Rushton what did you do with that money a number of times. It did come up on one or two occasions. I didn't emphasize. A statement like that might carry its own emphasis. I told Dr. Rushton the FBI was investigating the bank, but if he put up property and securities, it would take the heat off. I don't think Dr. Rushton was threatened to the extent of being intimidated. Q. When was the first time you heard Doctor Rushton state to anyone in your presence that he was acting as trustee for the First National Bank of Magnolia, in taking this Numark property? A. That was in our first meeting with him. Q. That was in your first meeting with Doctor Rushton? A. Yes sir. Q. When Mr. Laney asked you this question on direct examination, every time he asked you this question you answered `no.' You had heard him tell other people in your presence that he was acting as trustee for the bank, had you not? A. Yes sir, but not in a Board Meeting. Mr. Laney asked me if I had heard him say that in a Board Meeting. Q. Then all of your answers of `no' pertained only to Board Meetings, Mr. Monroe? A. Yes sir. Q. Mr. Laney told you that he was going to ask those questions and would put in the word `Board Meetings'? A. Yes, but I knew he would have to ask that. Following Mr. Monroe's testimony, W. A. Eckert was called as a witness to testify for defendant. At the time he was called, counsel for Dr. Rushton made the following objection: I want to object to Mr. Eckert testifying. He has sat here during the entire testimony and we asked for the rule on the witnesses and he did not leave the Courtoom, Your Honor. The court overruled this objection and thereupon Mr. Eckert testified that he was at several conferences with Dr. Rushton over a period of time from December 1964 to February 1965 and the first time he ever heard about Dr. Rushton claiming he had been authorized to act as agent or trustee for the bank was when the complaint was filed in the instant suit; and that no one had ever coerced anyone in his presence in connection with the Dr. Rushton affairs. Mr. Eckert stated that he had regularly attended the bank's board meetings and had never heard any discussion at any of them that the bank had agreed to hold Dr. Rushton harmless in connection with his endorsement of papers or notes for Numark. Following direct examination of Mr. Eckert, counsel for Dr. Rushton refused to cross-examine him and made the following motion: Your Honor, we ask that the testimony of this witness be stricken from the record. By his own testimony, he has admitted that he is Counsel for the bank and, therefore, he is ineligible to testify. He was a known witness and he was allowed to remain in the Courtroom. Mr. Rogers was announced to be the representative of the defendant bank, Your Honor, not Mr. Eckert. Appellant's argument with reference to the rule is as follows: At the beginning of this case the plaintiff asked `the rule' on the witnesses. The defendant announced that the president of the bank, Mr. Rogers, would be the representative of the defendant corporation who was permitted to remain in the court room. Counsel for Dr. Rushton pointed out that Mr. W. A. Eckert was sitting at the counsel's table and that Mr. Eckert had participated in a number of these transactions and would undoubtedly be called as a witness. Counsel for the bank announced that Mr. Eckert would participate as an attorney and would not be called as a witness.       We recognize that the trial court has a great deal of discretion in applying the rule but that discretion is not without limitation. When it is called to the attention of the Court and counsel that an obvious witness is in the courtroom and specific objection is made to that witness, it is an abuse of discretion for the trial court to permit that witness to participate in the trial of the case and then take the witness stand and testify. Appellee in its argument states the matter as follows: It is true this case was conducted under `the rule.' This did not exclude Mr. Eckert who was an attorney of record for the Appellee. He had every right to be present and it was his duty to be there having been the bank's attorney through all the years during which the involved transactions occurred. The actual trial of the case was conducted by other counsel. As we see it the only question which could possibly be involved is whether Mr. Eckert's testifying was proper under Canon 19 of the Canons of Professional Ethics. This Canon reads: `When a lawyer is a witness for his client, except as to merely formal matters, such as the attestation or custody of an instrument and the like he should leave the trial of the case to other counsel. Except when essential to the ends of justice, a lawyer should avoid testifying in Court in behalf of his client.' In the opinion of bank's counsel conducting the trial it was `essential to the ends of justice' that Mr. Eckert testify and he was called as a witness. If trial counsel was in error in his appraisal of what was `essential to the ends of justice' then he is subject to criticism but we fail to see anything else involved.