Gershon v. AshkanazieGershon v. Ashkanazie
A. J. Granoff, for respondents.
The answer denied that plaintiff was the owner and holder of the note and alleged that the named payee, Bernard Gershon, loaned defendants the $3000 evidenced by said note, but charged them $1000 interest for the use of said money for a period of five and one half months; that as part of the same transaction and at the same time said note was executed, defendants executed to said Bernard Gershon another note for the sum of $1000 to evidence said interest indebtedness; that said transaction was usurious; that plaintiff was the father of said payee, Bernard Gershon; that plaintiff at all times knew of the usurious agreement and that if plaintiff was the owner and holder of said note, which defendants deny, he acquired the same with knowledge it was executed and delivered pursuant to a usurious agreement.
The reply was a general denial.
By agreement the case was tried to the court without a jury, and it was further agreed that the parties waived any right to submit oral testimony and that the case be submitted both as to plaintiff and defendants on depositions taken by the respective parties. Pursuant to said agreement, plaintiff offered in evidence the depositions of plaintiff and Bernard Gershon previously taken at the instance of defendants; and defendants offered in evidence the depositions of Saul and Irving Ashkanazie which had been taken by agreement and at the instance of plaintiff‘s attorney. Defendant Sadka Ashkanazie signed the note in question as surety but did not testify, and further reference to his interest in the case will be unnecessary. In the interest of brevity, we will refer to Jacob Gershon as plaintiff, and to Bernard Gershon, his son, as Bernard, and to Saul and Irving Ashkanazie as Saul and Irving.
All of the parties resided in Kansas City, Missouri. Plaintiff had been engaged in the real estate business for many years and his son, Bernard, was about 25 years of age. Saul and Irving were engaged in merchandising under the corporate name of A & A Linen Outlet, Inc., with an established place of business at 1108 Main Street. They de-
At the conclusion of the evidence, and upon submission of the case, the trial judge took the cause under advisement, and on the 25th day of January, 1945, rendered judgment in the case in which it is recited that the court found the issues for the defendants, and it was therefore adjudged by the court that plaintiff recover nothing and that defendants be discharged with their costs and have execution therefor against the plaintiff. The record does not show what facts were found by the
In considering the validity of the finding upon the issues made by the trial judge and the judgment rendered, we start with the proposition that the burden of proof upon the affirmative defenses raised by the answer was upon the defendants, and that such proof must be clear and convincing. [Zancker v. Northern Insurance Company of New York, 176 S. W. (2d) 523, 527; General Motors Acceptance Corp. v. Weinrich, 218 Mo. App. 68, 262 S. W. 425, 430; Tower Grove Bank & Trust Co. v. Duing, 346 Mo. 896, 902, 144 S. W. (2d) 69, 72; Hansen v. Duvall, 333 Mo. 59, 71, 62 S. W. (2d) 732.]
The determinative question for this court to answer upon this appeal is this: Does the evidence by a clear preponderance of the proof justify a finding in favor of defendants upon the issues raised by the pleadings? The case is here for decision in accordance with the provisions of
Plaintiff testified that he obtained the notes in question from his son in August or September, 1943; that Bernard owed the $4000 which he had advanced, and other money besides; that he took over both notes to apply on the indebtedness of Bernard to him. “Q. Do you know anything Mr. Gershon about how or why the Ashkanazies gave Bernard those two notes? Do you know anything about that? A. Well, all I knew, they dissolved partners and they gave him those notes back. I don‘t know how it happened. All I know when the partnership blew up, you know, why, they gave him notes, and so I got those notes back on those payments when he owed me the money, what I gave him, on the four thousand dollars.”
Plaintiff further testified that he gave Bernard $4000 to be used by him to go into a partnership; that before he advanced the money he made inquiry of the Ashkanazies, and they explained to him what they could do and how much money they could make; that after he
Bernard testified that he had been approached by Irving to enter business with the defendants and that he had an oral agreement with them to enter into a partnership on a 60-40 basis; that he was to put $4000 into the business and the defendants were to up an equal amount in value of money or merchandise; that the defendants had procured a lease on the store building and he believed they had obtained the lease before they approached him about the partnership. In reference to their personal services in the store, Bernard testified they had sort of a tentative agreement that each should give his services to the store and should draw $50 a week out of the business for personal services, and that he was to assist in the store as a salesman; that they had reached such an understanding about the 10th or 15th of July; that thereafter he assisted in bring in merchandise into the store; supervised the construction of wall cases and partitions, and
Bernard further testified that shortly after the 22nd of July, 1943 he was approached by Saul who told him that the business was not big enough for both and that he, Bernard, was out of the partnership. Bernard then walked out, but said he did not do so willingly, and that he was ashamed to tell his father what had occurred, but shortly afterwards he did tell his father what had happened upon inquiry from him; that his father said he had made a very poor deal and that he wouldn‘t have approved it; that his father then demanded the return of the money which he had advanced to him to go into business; that he then turned the notes over to his father as part payment on debts which he owed him; that he owed his father money in addition to the $4000 which he had received; that the notes were delivered to his father as security for and to reduce his total indebtedness to his father. The notes mentioned in evidence showed that they were endorsed to J. Gershon, and bore the date 9-7-43.
Saul testified that he had known Bernard Gershon intimately for about three or four months prior to the execution of the notes and that he met him through his brother; that there was a discussion about a contemplated partnership probably a couple of weeks before they leased the store; that the substance of the conversation about the proposed partnership, he did not remember, whether it was two thirds and one third, but it was purely in the negotiating state and was subject to the approval of his attorney and to a written agreement, and that was all there was to it so far as the partnership was concerned. He further said: “I frankly was all for it,” and that he discussed it with his attorney several times who was opposed to it and would not advice a partnership with anybody; that notwithstanding his attor-
Saul was asked about the state of his credit at the time with his merchandise creditors and said: “Well, some would give us a substantial credit and some wouldn‘t, and in some cases there was a shortage of merchandise. We would have to pay cash for the goods and that is why we agreed to pay such a price for obtaining three thousand dollars from Bernard Gershon.” He said he was not in desperate financial straits; that he considered his credit was sound; that he was solvent at the time he got the money from Bernard, and that his assets were greater than his liabilities; that at the time Bernard knew that he, Saul, needed cash badly because he had purchased merchandise in New York and paid a deposit on it; that it had been shipped here C. O. D. and could not be taken out and put in the store without cash to pay for it; that he didn‘t try to borrow money anywhere else; that he had borrowed money from the bank previous to this loan, but needed more money; that he had never before paid above the legal rate for loans; that approximately a couple of months after the notes were signed, plaintiff advised him that the notes had been transferred to him and not to make any more payments to Bernard except upon his order; that $337.50 had been paid to Bernard while he was still in possession of the notes; that thereafter the father had possession of the notes and payments continued to him, or to Bernard for plaintiff when plaintiff requested it. Saul testified again about how plaintiff found out about the actual situation and said: “Well, the way he found out about it when he questioned us whether his son was a partner or not and we told him exactly what happened, that he was not a partner, that he invested or gave us three thousand dollars with a thousand dollars additional as interest or compensation for him personally.”
Irving testified that he had a discussion with Bernard about opening up a new place and a partnership being formed with Bernard one of the partners; that he also discussed it with Bernard‘s father before his father would give him the money to go into a partnership; that plaintiff called him and asked him to come to see him; that he went to plaintiff‘s home and plaintiff asked him if he though Bernard would work in the store becaues he wasn‘t doing anything and he wanted to keep him out of mischief, and that he told plaintiff he thought Bernard would take an interest in the store, and a few days later he understand that his father gave him money to go into a partnership; that he told the father the amount that would be necessary for Bernard to put in would be three or four thousand dollars; that at the time he discussed the matter with plaintiff there was nothing said about executing a note and nothing like that was said; that up to the day the notes were signed there was going to be a partner-
Irving further testified that plaintiff would come to the store practically every day to see if Bernard was there; that he would come in and see that he wasn‘t there and ask where he was, and when told he wasn‘t in the store he would leave; that about a week or ten days later he told plaintiff that Bernard was not a partner and plaintiff asked him: “What did he do with the money? And I told him that he had loaned us three thousand dollars and that he was to get a thousand dollars interest.” He said that plaintiff didn‘t ask for any details and left. Irving was unable to state with any degree of certainty as to how he fixed the time of this conversation, but claimed that it occurred about a week or ten days after the notes were signed; that he had no further discussion with plaintiff about the matter but continued to make payments to the father on the notes; that plaintiff told him he owned the notes, but he could not state when it was, but said it was about a month or a month and a half later.
Both Irving and Saul very positively denied that they were indebted to Bernard in the sum of $1000 for money advanced to them, or that the $1000 note was executed for that reason. The notes referred to, together with a number of receipts and cancelled checks which were given as payments by the defendants on the notes, were presented here as exhibits in the case. Such exhibits show that after January 3, 1944, the defendants made a total of eighteen payments to the plaintiff, or to Bernard for the plaintiff, most of said payments being for the sum of $50.
We approach the decision in this case in view of the provisions of
After careful examination of the evidence in this case in an effort to assay the testimony of the witnesses with a view of determining its true value, and in considering matters affecting the credibility of witnesses, we have reached the conclusion that a finding that the note in suit was infected with usury cannot be made without accepting as the absolute truth and at its face value the testimony of the two defendants that they borrowed $3000 and agreed to pay $1000 as interest thereon for the use of the said $3000 for five and one half months. We think such testimony cannot be accepted as true under the admitted facts and other evidence in the case. It is incredible that they would obligate themselves in that manner when their business was sufficiently prosperous that they deemed it advisable to establish two stores instead of one, and when their credit was good and they were solvent at the time. Respondents complain bitterly that under the arrangement made they were obliged to pay 60% interest. As a matter of fact, if what they say is true, an agreement to pay $1000 for the use of $3000 for five and one half months would be equivalent to more than 70% per annum for the use of the money. An attempt to swallow such testimony as the truth would choke the gullet of belief. Such a transaction as that described by the defendants is wholly contrary to the common experience of men in the business world. Saul testified that he had previously obtained loans from the bank, but had never paid more than a legal rate of interest; that his credit was good and he was solvent, and while he needed money at the time he made no effort to borrow from any one else, but made the deal which he described with Bernard. There is no showing whatever in this entire record that the amount of money which the defendant required for the conduct of their business could not have been obtained by them in the usual and ordinary manner and at a legal rate of interest.
There is another aspect of this case proper to take into consideration in evaluating the testimony of the witnesses and determining its credibility, and that is in reference to the manner in which the defendants obtained three thousand dollars of plaintiff‘s money for use other than plaintiff intended it. It is clearly established that both Saul and Irving were instrumental in encouraging Bernard with the prospect of a partnership in the business and in inducing his father to advance money for that express purpose, and with a view of establishing his son in business. There never was anything said by either
Respondents claim that Bernard deceived his father in obtaining and applying the money which had been advanced to him. This record clearly shows that the defendants were parties to such deception and that they and Bernard are tarred with the same stick in that respect. The weakness of the testimony of Bernard does not in any manner lend force or strength to that of the defendants. There is some evidence which indicates that the $1000 note was given Bernard as personal compensation to him at the time defendants refused to execute a contract of partnership. Saul in effect so testified when he said the $1000 was given as interest or compensation for him personally. There is no denial or dispute that the defendant definitely and specifically promised Bernard the right of a partnership in their business and led him to believe that he would be a partner up to the very day they received the money from him. He had been in the store for several weeks and defendants had represented to plaintiff that he was a partner and had invested $4000 in the business. At that time and under such circumstances, Bernard had some enforceable legal rights, clearly on the theory of promissory estoppel, and a relinquishment of such rights would be a good consideration for the $1000 note. Plaintiff said that Irving stated to him that they had bought Bernard out; and Bernard reported to his father that “they paid me out.” [Sec. 90 Restatement of the Law of Contracts, page 110; 60 C. J. page 960.]
The note for $1000 and the note for $3000 recite that they were given “for value received.” Our statute,
After plaintiff obtained the notes and after the time defendants claim they informed plaintiff of the infirmities in the notes which they now claim, they continued to pay on the notes and paid the note for $1000 in full, and paid all of the note for $3000, except the sum of $850, without ever mentioning the matter of usury to plaintiff or without any protest whatever. If the note in suit was in fact usurious, defendants knew it all the time and their conduct in making the payments aforesaid is quite inconsistent with their present attitude and claim in this case, and has a definite bearing upon the reasonableness and credibility of their testimony. Just when or why defendants determined they were not liable for the balance due on the notes does not appear, but they did cease and refuse to pay the balance, and plaintiff placed the note in the hands of his attorney for collection.
There are various inconsistencies in the testimony of the two defendants, particularly in reference to their claim that plaintiff had been notified that the note for $1000 had been given as interest for the loan of $3000. It is unnecessary to pass upon the question of notice to plaintiff of the alleged claim of usury before he obtained the note in question because of our conclusion, as above indicated, that there was no sufficient proof to establish usury according to the standard of proof required by law.
The case is now here after rehearing, and the parties have filed additional briefs. That in behalf of respondents emphasizes the assertion that a finding of fact by the trial court, sitting without a jury, is equivalent to the verdict by a jury and cannot be disturbed on appeal, and that the judgment of a jury-waived case can be set aside only when it is not supported by any substantial evidence in the case.
The authorities cited by respondents declare the law to be such as contended for by respondents at the time the cases referred to were decided, but they were all decided long prior to the adoption of the
“No finding of fact, except such as shall have been specifically requested, and no conclusions of law or objections to the judgment or to the opinion of the court are necessary for purposes of review. The question of the sufficiency of the evidence to support the judgment may be raised whether or not the question was raised in the trial court. The appellate court shall review the case upon both the law and the evidence as in suits of an equitable nature. The judgment shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses. The appellate court shall consider any evidence which was rejected by the trial court and duly preserved for the appeal when the appellate court believes such evidence to be admissible. The appellate court may also order any rejected evidence to be taken by deposition or under a reference and returned to said court.”
In view of the foregoing provision there is no possible doubt of the legislative intent to change the previously existing rule of procedure on appeal in a jury-waived law case, and to adopt a new and different procedure in accordance with such provision. Nor can there be any possible doubt that upon appeal in such a case, it is to be reviewed upon both the law and all the evidence. Since adoption of the new Code our Supreme Court and our appellate courts have many times in effect so ruled. [Davidson v. Eubanks, 189 S. W. (2d) 295, 296; Anson v. Tietze, 190 S. W. (2d) 193, 198; A. A. Electric Machinery Co. v. Block, 193 S. W. (2d) 631; Sutton v. Gilbert, 193 S. W. (2d) 928, 929; Gray v. Kansas City, Mo., 194 S. W. (2d) 207, 208; Kuhn v. Zepp et al., 196 S. W. (2d) 249; Deffry v. American Life & Accident Ins. Co., 193 S. W. (2d) 509, 510; A. J. Meyer & Co. v. Schulte, 189 S. W. (2d) 183, 188.]
Respondents further urge that the trial court‘s finding upon issues of fact must be presumed to be correct and should not be set aside unless clearly erroneous. Further reliance is placed upon said
It is our view that the statute places a duty upon the appellate court to consider and weigh the evidence and to reach its own conclusions upon issues of fact, notwithstanding the fact that such conclusions may conflict with the findings of the trial court. The trial court in this case, in order to reach the judgment rendered, necessarily found that the defendants had sustained the burden of proof as the law requires in establishing usury. We have found that such a finding
Respondents further insist that this court should accord more deference to the findings of the trial judge than it has heretofore in regard to the opportunity of the trial judge to determine the credibility of the witnesses, although the case was submitted and tried entirely upon depositions. Respondents suggest that inasmuch as the record in the case shows that the respective parties appeared in person and by their attorneys of record when the case was called for trial, “it is possible that the judge looked at the parties and many have judged their personalities while they were sitting in the courtroom for the few minutes it took to submit the case to the trial judge,” and that he may have formed some conclusions of the character of the men as they stood in open court.
We see no particular merit in such contentions according to the circumstances under which this case was presented to the trial court, and we are further of opinion that the conduct and demeanor of the defendants, as shown by the record in this case, afford a much better index of character and credibility than a mere possible casual view of them by the trial court.
In view of all of the foregoing, we have concluded that the learned trial judge was in error in entering judgment for the defendants in this case, and that said judgment is clearly erroneous, because of insufficient credible evidence to establish clearly the facts necessary to support it. It therefore results that the judgment should be reversed and the cause remanded with direction to the trial court to enter judgment for the plaintiff for the balance due on the note in suit.
The Commissioner so recommends.
Sperry, C., concurs.
PER CURIAM.—The foregoing opinion of BOYER, C., is adopted as the opinion of the court. The judgment is reversed and the cause remanded with direction to the trial court to enter judgment for the plaintiff for the balance due on the note in suit. Sperry, C. All concur.