Court Opinion

ID: 7809837
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:11:29.983586+00
Date Added: 2024-06-11T16:30:26.405596
License: Public Domain

McCULLOCH, C. J., (dissenting). The only relationship between appellant and the Bank of Rogers was, according to the undisputed evidence, that appellant held notes of W. R. Felker aggregating $30,000, secured by mortgage on a cattle ranch and the cattle thereon situated in Texas, which Felker sold to the Bank of Rogers subject to said mortgage. The notes were to become due in about one, two and three years, respectively, from the date of the transaction now under investigation bearing interest at 8% per centum per annum from date. It was a part of the plan for Talley and the Felkers, representing themselves and the Bank of Rogers, to get the notes into the hands of the Mississippi Valley Trust Company of St. Louis, to be carried at a lower rate of interest, and they, together with Mr. Lackey, representing the trust company, went to Dallas, where appellant resided, for the sole purpose of inducing appellant to part with the notes. The security was abundant, and appellant declined to assign the notes or to allow them to be paid off unless a satisfactory sum was paid in consideration of a commutation of the unearned interest. Finally the parties agreed on the sum of $3,100 as the consideration to be paid, and this arrangement was consummated. Appellant assigned the notes to the Mississippi Valley Trust Company and the latter paid to appellant the face of the notes with accrued interest. The $3,100' was paid to appellant by cashier’s check on the Bank of Rogers— the payment proceeding through regular channels without anything to indicate secrecy. Now, there was nothing illegitimate about this transaction. The unearned interest on the notes would have amounted to about $5,100, and the security being good, appellant refused to surrender the notes and mortgage unless something was paid him for the loss of the unearned interest. The transaction was not an unusual one, and no charge of fraud can be predicated on it. Talley was in absolute control of the affairs of the bank, and even if there was any question about his authority to carry out this transaction, it was not repudiated by the bank, which continued business for nearly a year after this occurrence. Passing to the other question in the case of appellant’s liability for the $10,000 on the notes- which had been paid but which were embraced in the deal between the Mississippi Valley Trust Company on the one side and the Bank of Rogers, the Ozark Land & Lumber Company and the Felkers on the other side: Appellant was not a party to that transaction, either directly or indirectly, and had no interest in it, and was to derive no benefit under it. He merely sold the notes secured by the mortgage on the cattle ranch and cattle in Texas and received compensation for giving up the unearned interest. The contract between the parties named above recited that the Ozark Land & Lumber Company, the Bank of Rogers and the Felkers owed the Mississippi Valley Trust Company $45,000 evidenced by certain notes due on demand, and secured by a mortgage executed by the Ozark Land & Lumber Company, and the agreement was,. in substance, that the Trust Company should take up the $30,000 in notes held by appellant, and the other two notes aggregating $10,000 (which the contract recited to be then held by Talley and J. E. Felker), and that Talley and Felker were to pay to the trust company $10,000 to be applied on the aforesaid $45,000 debt, and that the balanee of $35,000 on that debt should be paid by sale of cattle on the Texas-2ranch (to which sale the trust company was to consent and release the cattle from the mortgage). It was further agreed that the trust company should subsequently make advances out of a certain trust fund to the Ozark Land & Lumber Company to enable it to begin construction of a short line railroad. The net result to be obtained under the contract was that the trust company was to be paid its debt of $45,000 against the Ozark Land & Lumber Company, the Bank of Rogers and the Felkers, and should carry, at six per centum interest, $40,000 in notes against the Texas ranch. The $10,000 paid by the trust company for the notes which had previously been paid to appellant and which the contract recited were held by Talley and J. E. Felker, was to go in part payment of the $45,000 debt, and the balance of $35,-000 was to be paid from proceeds of sale of cattle on the Texas ranch. In other words, the trust company was to obtain payment of the Ozark Land & Lumber Company debt of $45,000, but was to carry a debt of $40,000 secured by mortgage on the Texas ranch. I fail to discover the slightest circumstance connecting appellant with any design to defraud the Bank of Rogers. He concedes that the two notes had been paid and that he had mailed them to J. E. Felker, which occurred on October 23, 1913, about ten days before he assigned the remaining notes to the trust company. The evidence does not show that appellant made any indorsement on the notes after he mailed them to Felker. Not a single witness testified that such was the case and appellant himself testified that he had no recollection when he indorsed the words “without recourse” on the back of the notes. It is undisputed, however, that appellant received no part of the funds paid to the trust company on those notes. All that he received was the amount of the $30,000 in notes then held by him, and the so-called bonus of $3,-100. The endorsements are on the notes in appellant’s handwriting, but the question is when were they made? They may have been made by appellant when he mailed the notes to Felker or even before then—no witness pretends to remember about that. But, even if it be conceded that appellant did in fact make the indorsements on those two notes at the time they were delivered to the trust company,' he did so at the request of the Felkers and with the approval of Talley, who was acting for the Bank of Bogers. The Bank of Bogers was interested in carrying through the deal with the trust company. It was responsible with the Ozark Land & Lumber Company and the Felkers for the debt of $45,000 to the trust company ; and the evidence shows also that it was interested in preventing threatened bankruptcy proceedings by the trust company. against W. B. Felker which would nullify the sale of the Texas ranch by Felker to the bank. The bankruptcy proceedings were never instituted, it is true, but, according to the evidence, there was such a threat and it was not carried into execution for the reason that the debt was satisfactorily arranged through the contract now under consideration. Mr. Lackey, the representative of the trust company, insisted on the deal being closed before November 5, 1913, the expiration of the time within which the sale of the ranch could be set aside in bankruptcy as an unlawful preference. The agreement with the trust company in which the Bank of Bogers, acting through its representative, was a participant, provided that the trust company should have a lien on the Texas ranch for $40,000, and if the two previously paid notes had not been used to make up the required amount, then it would have been necessary for the bank to make it up in some other form—a new note secured by mortgage on the ranch and cattle. The bank was already liable for the debt of the Ozark Land & Lumber Company, which was to be discharged under this arrangement, and it was, therefore, directly interested in the deal.- It was represented in the deal by Talley, the president, and if it be conceded that appellant participated to the extent of making a new indorsement on the previously paid notes so as to put them into the hands of the trust company, the transaction was a perfectly legitimate one, for the reason that it was done at the instance of the hank itself. If any wrong was done to the hank at all it was in making it liable for the obligations of the Ozark Land & Lumber Company, or in unloading on it the Texas ranch, hut there is no claim that appellant had any part in either of those transactions. The decision of the majority is based solely on an unfounded inference that appellant was in league with Talley and the Felkers to use the proceeds of the Bank of Bogers for their own private enterprise, i. e., the promotion of the Ozark Land & Timber Company, but in my opinion there is not even grounds for suspicion, under the proof, that appellant was a party to, or the beneficiary of, those transactions. He merely looked after his own interest in a perfectly legitimate way in disposing of the immature notes of which he was the owner, and he was not responsible for the misconduct and bad motives of Talley and the Felkers.