196 Mo. App. 496 | Mo. Ct. App. | 1917
This is a. suit on a promissory note for $363.05 executed’ to defendant Loury by the other defendants and by him endorsed to the plaintiff bank. It is a companion case to those of Bank v. Lee et al., 182 Mo. App. 185, 168 S. W. 796 and Bank v. Lee, 193 Mo. App. 537, 182 S. W. 1016, and grows out of much the same facts. Each of said suits, however, is on different notes.
It is conceded that these notes were given for the benefit of Lee, who was in fact borrowing the money from the plaintiff bank. There is no question as to Lee’s liability and here, as in the other eases, the other defendants seek to be released by reason of the conduct and representations 'made by the bank through its cashier, by which they were caused or induced not to take security for their own protection from the principal debtor, Lee. In the first of these cases this court held that, where a creditor gives a surety to understand that he will look to the principal debtor alone for payment, thereby causing the surety to forego taking security to protect himself resulting in his loss, the surety is .released. In so doing we applied the principle of estoppel and released part of the then defendants and held others. One of the parties then released, W. L. Biggs, is a defendant here. In ihe second case, a demurrer having been sustained to the answer, we ruled that the
In the present case of pleadings' are practically the same as in • the other two cases, in the latter of which the answer is set out in full and held to state a good defense. During the course of the present trial the defendant Riggs, who had signed the note in suit as an accommodation maker, testified that he had signed two other notes for Mr. Lee which were held by the bank; that he thought these other notes had been paid but learned different; that he then went to the bank to see about getting these notes “straightened up;” that he saw the cashier and told' him that he and the other sureties intendéd to get Lee to give a mortgage to secure him and the others against loss on these notes; that a little later he again talked with the cashier. Objection being made that the statements of the cashier would not be binding on the bank, the defendant then offered to prove by this witness “that on the date mentioned, between the 25th of January and the first of February, 1912, that in a conversation with Mr. Welker (cashier) in the bank of Neelyville, while George Stout was present, he stated to Welker that he (Riggs) and the other sureties of Albert Lee were intending to take such steps as might be necessary to secure themselves against loss; that Welker, the cashier, stated to him and Mr. Stout that it wasn’t necessary for them to do so, and to rest easy because he had taken a chattel mortgage on all Albert Lee’s property, in which chattel mortgage was property enough to secure them against loss on this note in suit and other notes, and that if Albert Lee didn’t pay this note in suit when it was due the bank intended to make payment out of the property in the chattel mortgage, and wouldn’t .look to these sureties; that these sureties, relying upon the representations of Welker then and there made, took no security at all to protect themselves against loss, and that in the meantime Albert Lee
The authorities submitted to the trial court and on which he based his ruling are, Daviess Co. Sav. Assoc. v. Sailer, et al., 63 Mo. 24 and Savings Bank v. Hughes, 62 Mo. App. 576. The question of the authority of the bank cashier to do and say the things which are alleged to be binding on it' and to release the endorsers and accommodation makers, whether by way of agreement or estoppel, was not presented on either of the former appeals. It was then assumed by all the parties that the statements and representations made by the cashier were binding on the bank by way of estoppel at least. It is claimed that the above authorities hold to the contrary, but we think not. We may readily agree that a cashier of the. bank has not the authority by mere contract or promise to release a party to a note held by the bank since his authority is to collect such notes and not to release them. But to hold that no estoppel arises against a bank by reason of the acts or representations of its cashier, made in the line of his customary duties and authority, which has misled and caused another to change his situation for the worse, as to forego or release some right which he otherwise would not have done, is contrary to the fundamental principles of estoppel. [32 Cyc. 214.] The
That a bank may be and frequently is estopped by the acts and representations or even omissions of its cashier of other officer from asserting or enforcing claims which it otherwise would have, is held in many cases. In Bank v. Lillard, 55 Mo. App. 675, where the cashier of a bank had innocently taken a forged note as a renewal note and some time later, discovering the forgery, attempted to collect from a surety bn the genuine note, it being shown that when such genuine note became due the principal was solvent but later became insolvent, the court said: “If plaintiff’s act in surrendering the note to the principal debtor can-celled and marked paid, caused these surety defendants to forego or forbear securing or indemnifying themselves from the principal debtor, in consequence of which forbearance they have lost available recourse on him by reason of his insolvency, they are discharged, regardless of any negligence on the part of plaintiff. If the plaintiff has thus cáused them to forego taking security or indemnifying themselves when they otherwise would have done so, then in such case plaintiff’s utmost care and prudence would be no answer to the injury done the sureties. Both parties in such case are
The case of Savings Bank v. Hughes, 62 Mo. App. 576, relied on by plaintiff, goes no further than to hold that a bank cashier had no authority to discharge by contract a surety on a note without receiving payment. The discharge there claimed was based on a statement or promise by the cashier that, if the surety would aid the bank in getting security on another note to which he was not a party, the bank would release such surety from the note on which he was liable. There was no claim that the surety had been induced to refrain from protecting himself or that he was injured in any way. There is no estoppel in that case. The syllabus of the case of Daviess Co. Sav. Association v. Sailer, 63 Mo. 24, relied on by plaintiff, is somewhat misleading and goes further than the court actually decided. All that was proved in that case was that the surety went to the bank and asked the cashier if the note was paid; that the cashier said it was not, but that another bank had a mortgage on all the principal
If the case of Daviess Co. Sav. Assoc. v. Sailer, supra, be construed to hold that q bank cannot be es-topped by the representations of its cashier so as to discharge a surety then it is in conflict with the case of West v. Bryson, 99 Mo. 684, 13 S. W. 95. In that case the court held that an administrator whose business it was to collect debts due the estate, yet had authority to extend the time of payment of an obligation, and by so doing would discharge a surety. It being shown, however, that there was no agreement to extend payment for a valuable consideration or definite time such agreement was void. “There are, however,” says the ' court, ‘ ‘ other principles of law applicable to this case. If the creditor gives the surety to understand that he will look to the principal debtor, alone, for payment, and the surety is thereby lulled into security to his loss, the creditor should suffer the consequences. Thus it was held in Harris v. Brooks, 21 Pick. 195, that a parol declaration of the holder of the note to the surety, that he would exonerate him and look to the principal only, and the surety by reason thereof omitted- to take up the note and secure himself, constituted a good defense for the surety. Though a premise to look to the principal alone for payment, standing by itself, would be a nudum pactum; still, as has been said, ‘where, however, the surety is induced by such an assurance to surrender the securities which he has received from the
The bank had a perfect right to take security from Lee for any particular note or notes. It seems that it had done so before the sureties took action looking to securing themselves. Whether such sureties or comakers could or would .at that time have been able to secure themselves and to what extent is a question for the jury. - In no event are the sureties to be relieved beyond the extent to which they were damaged by being, caused to refrain from taking security such as they could get from the principal debtor.
There is some evidence also to the effect that the bank failed to enforce its mortgage against all of Lee’s property covered by it and apply the proceeds to Lee’s debts. This, of course, the bank was obligated to do and its failure so to do would release the sureties to the extent of their loss. [Lakeman v. North Missouri Trust Co., 147 Mo. App. 48, 126 S. W. 547; Troll v. Real Estate Co., 186 Mo. App. 196, 171 S. W. 665.] This phase of the case was not fully developed
The case is reversed and remanded, to he retried in accordance with this opinion and the opinions in the two former cases of like nature.