156 Ky. 386 | Ky. Ct. App. | 1913
Reversing.
In May, 1907, and for some time prior thereto, appellees, Charles J. Doherty and C. C. McClarty, and one George M. Boone (now deceased) were officers and di-" rectors of a corporation known as the Paracamph Company, said Doherty being president and said Boone being treasurer of said corporation. All the directors of said Paracamph Company were' directors of appellant, the First National Bank of Louisville; and all the directors of said bank were directors of said Paracamph Company. Said McClarty was president of appellant bank and secretary of the Paracamph Company.
On May 2, 1907, appellant bank owned and held notes of said Paracamph Company aggregating over $60,000; there were a number of these notes, and they were payable on different dates, part of them bearing the endorsement of Doherty, McClarty and Boone, and part of them the endorsement of only Doherty and Boone.
On said date, there was drawn up and signed by them, a writing which reads as follows: (it was written upon letter-heads of the appellant bank):
“Louisville, Ky., May 2nd, 1907.
“We the undersigned, being officers and directors in the Paracamph Company, agree in consideration of loans already made and to be made by the First National Bank of Louisville to said Paracamph Company, to be jointly bound to said bank on all obligations of the above company endorsed by either one of us, to the extent of seventy thousand dollars. ($70,000.)
(Signed) “Charles J. Doherty,
“Clint C. McClarty,
“Geo. M. Boone.”
It is contended by appellant bank that this writing was executed and delivered to it as collateral security for the above stated indebtedness of said Paracamph Company. On the next day after this writing was executed, said Doherty, McClarty and Boone agreed among themselves that they would, from time to time, as the Paracamph Company notes fell due in appellant bank, execute new note to said bank to be signed by said Paracamph Company, but to bear the endorsement of only one of the three persons named, until each had endorsed one-third in amount thereof, which was done.
The Paracamph Company went into bankruptcy. Appellee Doherty paid the notes which he endorsed under the last-named agreement, but declined to pay those
Their defense was that the writing of May 2, 1907, was merely a private agreement between themselves, and one with which appellant bank had nothing to do; that it was neither executed nor delivered to appellant bank; that appellant bank nevefi had any interest in said writing of May 2,1907; that prior to the execution of that instrument Boone and appellee Doherty had been endorsers upon the notes of the Paracamph Company,but that there had been a verbal understanding between them and Mc-Clarty that all three of them were to be equally bound on those notes, and that the writing of May 2, 1907, was executed only for the purpose of putting that- understanding into writing; that said writing was signed in triplicate, each party thereto taking one copy; that shortly after its execution, and under the subsequent agreement among themselves, as above mentioned, they carried out this understanding by endorsing the notes separately as same matured and were renewed, each of them endorsing one-third of said notes in amount, and thus separating their liabilities, after which the said writing of May 2, 1907, was no longer of any force or effect.
Upon a trial of the case, at the conclusion of the evidence for defendants, the court instructed the jury to find a verdict for defendants; and from the judgment dismissing the petition, this appeal is prosecuted.
There is nothing in the record to indicate the reason which actuated the lower court in dismissing the petition; and we have been unable to find any; more especially as to McClarty, who is endorser upon one-half of the notes sued on. j
H. L. Rose testified for appellant bank that he was discount clerk of said bank at the time of the execution of the writing of May 2,1907; that as such he had charge •of the notes and collateral of said bank; that appellee, McClarty, then president of appellant bank, handed the said writing of May 2, 1907, to him, stating to him, on that date, that it was to be held by the bank as security for the Paracamph Company’s loans; and that he, the witness, then placed it with the collaterals of said appellant bank, where it remained until called for by the Na
It was also shown by appellant bank that on September 1, 1908, a meeting was held of the board of directors of said appellant bank, at which meeting both Boone and McClarty were present; and that at that meeting, this writing was brought before said board and they ordered that it be spread upon the minute book of the directors’ meetings, which was done. Mr. James Clark, who was secretary of that meeting of the board of directors, testified that when the order was made to spread the writing of May 2, 1907, on the minute book, neither Mr. McClarty nor Mr. Boone made objection or any claim that it was merely a private paper, or that it had performed its purpose, or ceased to exist. McClarty neither denies nor attempts to explain this testimony.
It is insisted by appellees that there was no consideration for the writing mentioned, and that appellees, therefore, are not bound by it. They contend that it is clear that the Bank did not thereby become bound to make any new loans to the Paracamph Company, nor to renew those already made. But, if this writing was executed to, or for the benefit of the bank, and the bank did in fact grant the renewal of those notes, or make new ones, on the faith thereof, there was sufficient consideration to support the agreement.
It is also contended by appellees that the writing of, May 2, 1907, could only be construed as an attempt toj make the signers thereof liable as endorsers; that is, to be jointly bound as endorsers, with the endorser upon;
But, it is contended by appellees that the writing of May 2, 1907, was never accepted, or adopted by appellant bank and that it was no party to the consideration therefor, and for that reason, it cannot sue thereon. The testimony for appellant bank showed that the writing was, by the president of said bank, delivered to the discount clerk, and placed in the collateral files of said bank; that it was presented to and considered by the National Bank examiners in July and August, 1907; that it was thereafter spread upon the minute book of the board of directors; and we think these quite sufficient to refute the claim that appellant bank was an alien to the writing in question. If the contract was made for the benefit of the bank, it could sue thereon even if it was a stranger to the consideration. In Blakely v. Adams, 113 Ky., 392, a deed had been made to a married woman, in which a lien was reserved in. favor of a third person, who was not a party to the deed. It is not even shown that the person in whose favor this lien was reserved knew anything about the purpose to reserve the lien in his favor at the time of the execution of the deed. He seems to have been a creditor of grantees and they wanted his debt secured by their deed. In its opinion this court said:
It follows, therefore, that even if appellant bank was a stranger to the consideration, it could sue on the writing in question.
In this case, if the contention of appellees; should ‘be upheld, we would have a case where they, being endorsers upon over $60,000 of .the notes of the corporation, which notes were owned and held by a bank of which they were directors, would obtain their release from approximately two-thirds of that liability by procuring the renewal of notes evidencing their original liability, without their endorsement thereon. There can be no doubt in the mind of any reasonable man that such release from liability could not have been effected except by reason of their connection as directors with said bank; nor could they, even by reason of their being directors, have obtained the renewals to be continued without their endorsements as originally made, had it •not been for the execution and delivery to appellant bank of the writing of May 2, 1907.
Moreover, the writing itself contradicts the contention of appellees. It states that they “agree in consideration of loans already made and to be made by the First National Bank of Louisville to said Paracamph Company, to be jointly bound to said bank, on all obligations of the above company endorsed by either of us, to the extent of $70,000.” It is in fact susceptible of but one construction and that is the manifest and literal meaning of the language used.
We are therefore of the opinion that the writing of May 2, 1907, was executed for the benefit of appellant bank; that there was sufficient consideration to support the agreement; and we therefore conclude that the lower court erred in instructing the jury to find for defend
The judgment is reversed for proceedings, consistent with this opinion,