Opinion
No. 27793.
June 20, 1950. Rehearing Denied July 18, 1950.
APPEAL FROM THE CIRCUIT COURT, ST. LOUIS COUNTY, JOHN A. WITTHAUS, J.
John K. Lord, Jr., St. Louis, for appellant.
Champ C. Stonebraker, St. Louis, for respondents.
This is a suit for $730, together with interest and attorney's fee, the alleged balance due on a promissory note for the principal amount of $1,600.80, dated January 18, 1947, payable to plaintiff, and signed by Norma Jean Stout, Leota Melvin and Claude Melvin.
The petition is in conventional form. The separate answer of Norma Jean Stout is that she was a minor; that the note was obtained by fraud, duress, misrepresentation, and coercion on the part of plaintiff, and that she had repudiated the note or any obligation therein; and that there was no consideration for the note. The answer of Leota and Claude Melvin plead that the note was obtained by misrepresentation, fraud, duress, and coercion on the part of plaintiff; that they were accommodation endorsers and the note was wholly without consideration and that they owed plaintiff nothing.
The evidence disclosed that Guy B. Stout, husband of Norma Jean Stout, bought a trailer, taking title in his own name, and gave his own note to plaintiff for part of the purchase price, and a chattel mortgage on the trailer as security. Later, he executed another note in favor of plaintiff and, as security, gave plaintiff a chattel mortgage on a Buick automobile, which afterwards proved fraudulent because the automobile was already under mortgage. Stout defaulted in his payments on both notes, and disappeared and deserted his wife and their infant child. Norma Jean Stout and her child continued to live in the trailer as their home. Leota Melvin is the mother of Norma Jean Stout and Claude Melvin is her stepfather.
In January, 1947, plaintiff demanded payment of the notes from Mrs. Stout and its representatives told her they would take possession of the trailer under the mortgage if payment was not made by the following Monday. Mrs. Stout desired to continue to live in the trailer with her child. On the morning of January 18, 1947, Mrs. Stout and Mr. Melvin called at plaintiff's office and discussed arrangements with plaintiff's representatives under which Mrs. Stout and her child might continue to live in the trailer, and offered to pay the trailer note in full. Plaintiff refused to accept payment of the trailer note, and demanded that they execute a new note to cover not only the balance due on the note secured by the mortgage on the trailer, but also the additional note given by Mr. Stout and secured by the mortgage on the Buick automobile. At the time they refused to do so.
In the afternoon of the same day plaintiff's representatives, Mr. Peck and Mr. stocksdale, went out to the trailer and found the three defendants engaged in packing Mrs. Stout's property preparatory to removing it from the trailer. The parties again discussed the matter and it resulted in the signing of the note herein sued on. Mrs. Stout continued to live in the trailer. Three monthly payments of $40 each were made as provided in the $1,600.80 note. About six months after the last payment Mrs. Stout, with the bank's consent, sold the trailer and paid plaintiff $750, the amount the trailer was sold for, which was credited on the $1,600.80 note and also on the Buick note. The balance has never been paid and this suit was brought to recover the same.
At the trial it was shown that Norma Jean Stout was a minor at the time she signed the note, and also at the time of the trial, and at the close of the evidence plaintiff dismissed the action as to her — plaintiff's attorney stating to the court, "I will dismiss as to Mrs. Norma Jean Mahan; she is a minor, and I don't believe I am entitled to recover from her." The evidence further showed that the respondents, though appearing on the face of the note as makers, were in fact gratuitous sureties or endorsers.
Norma Jean Stout after the signing of the note was divorced from Guy B. Stout, and later married a man named Mahan. It developed that at the time the note was signed Norma Jean Stout did not know where her husband was, but later learned that he was a convict in the Mississippi penitentiary.
Norma Jean Mahan testified to the following effect: On Saturday afternoon Mr. Stocksdale and Mr. Peck came to the trailer where she and her mother and father were packing her things preparatory to leaving the trailer, and they insisted she sign a note including the amount of the trailer note and the Buick note of $838.33 "to take the heat off of Mr. Stout." They insisted the Buick note hadn't been paid, "and it was a Federal charge, or something." She said that they insisted that they wanted to take the heat off of Mr. Stout, and that she couldn't pay the trailer off without putting all that in.
Norma Jean Mahan's testimony as to what occurred when the note was signed was corroborated by the testimony of the two respondents, and by the testimony of Patsy Joe Nelson, a cousin of Mrs. Mahan, who was also present.
Mr. Peck, assistant vice-president of plaintiff bank, testified that the bank held the two notes signed by Guy B. Stout, both of which were in default; that when Stout executed the Buick note and chattel mortgage, the Buick automobile was already under a prior mortgage. That when Norma Jean Stout and her stepfather came to the bank on Saturday morning they were interested in retaining the trailer for Mrs. Stout, and they offered to arrange some means of paying off the trailer note, "and I pointed out that any equity belonged to Stout, in any event, and that the only way we could deal with them or give title, would be to repossess from Stout, and we did have the other item on which we were entitled to recover, and if there was any way of working it out, I was willing to do that." He further said that Mr. Melvin "told me that there were other people interested in this Mr. Stout — I mean from a criminal standpoint, and I told him the Mutual Bank had no intention of seeking to recover criminally, and it was his thinking that if Stout could come in and take care of the family, they wouldn't have to move back in with them, and I told him if you can get these other people straightened out, we have no desire for criminal action, in any event." The amount owing on the trailer at that time was $804.11. Stout was the actual maker of the original notes, "we owed Mrs. Stout nothing at that time, but what we did, we did out of kindness." That Mrs. Stout owed the bank nothing at that time. That Mrs. Stout and Mr. Melvin offered to take over and pay off the balance due on the trailer, but "we have the right to offset, since the trailer belonged to Stout, and since he had defrauded, we were entitled to recover, so we couldn't very well sell a trailer that belonged to Stout and allow them to take the equity which he had defrauded from us." That we estimated the trailer was then worth $1,500.
At the close of the evidence appellant offered a peremptory instruction to find for plaintiff, which was refused.
At the request of respondents the court gave an instruction to the jury to the effect that if nothing was paid to defendants, and plaintiff did not part with anything of value, the note was without consideration and the verdict should be for the defendants.
The jury found for the defendants. Appellant filed its motion for a new trial or a judgment for the appellant, which motion was denied. Appellant then appealed to this court.
Appellant has given us the benefit of a brief showing careful study of the questions involved. We quote without comment as follows: "Respondent has not favored us with a brief in support of his judgment; and we desire to say here that we do not commend the conduct of a respondent in resting on his oars after he has successfully passed the trial court." Stephens v. Bowles, 202 Mo.App. 599, loc. cit. 602, 206 S.W. 589, loc. cit. 591.
The defendants admit that they signed the note in question. The law imports that there was a consideration for the note. However, it is also the law that the signers of the note may plead and adduce evidence to show that there was in fact no consideration, and that the signing of the note was induced by fraud or misrepresentation, and to show that any one or more of the signers were sureties and not makers, or that any one or more of the signers were minors and had repudiated the indebtedness. These matters were the issues under the pleadings and the evidence in this case.
The proof conclusively shows that the Melvins, although signing the note as makers, were in fact sureties or endorsers for Norma Jean Stout. If there was any consideration it had to be as between the plaintiff bank and Norma Jean Stout. The case was finally submitted to the jury on the question of no consideration; however, it was proper to show all of the facts and circumstances surrounding the transaction between the bank and Norma Jean Stout as bearing on the question of whether or not the note was supported by a valuable consideration. These facts did show that Norma Jean Stout owed the bank nothing. The bank held two notes signed by Guy B. Stout, the errant husband of Norma Jean. As to one of these notes (the trailer note) the bank held as security a chattel mortgage on a trailer. This note was past due and in default, hence the condition of the chattel mortgage was broken, and the bank had a right to take possession of the trailer and dispose of it under the terms of its mortgage and apply the proceeds to the trailer note. But Guy B. Stout was still the general owner of the trailer and the bank had only a special interest therein. Brandtjen Kluge v. Hunter, 235 Mo.App. 909, 145 S.W.2d 1009. The bank had no authority or right to possession of the trailer because of the Buick note. If Guy B. Stout had appeared on the scene and offered to pay the trailer note he would have been within his rights, and the bank would have had no lien on or further interest in the trailer because of the unpaid Buick note. But the bank refused to allow Norma Jean or her stepfather to pay the trailer note without also paying the Buick note, and all back interest, amounting in the aggregate to $1,600.80. Norma Jean and her parents finally executed the note for $1,600.80 in order that Norma Jean could remain in and finally own a $1,500 trailer. What did the bank give for the $1,600.80 note? It retained both the trailer note and the Buick note. It never extended time of payment of either note to the maker, Guy B. Stout. Norma Jean was in possession of the trailer, but not by permission of the bank, and the bank not being the owner would have had no right to give Norma Jean or any one else permission to use it. Norma Jean was in possession with the owner's consent and not because the bank consented.
The evidence was ample to submit to the jury the question of whether there was a bona fide consideration for the note in suit.
There is a further reason why the verdict and judgment were for the right parties and should not be disturbed. The contract and note to the bank were with a minor. A contract with a minor is not void but it is voidable at the option of the minor. The contract between Norma Jean and the bank was repudiated and voided by her. It must be remembered that the Melvins were only secondarily liable, if liable at all, as they occupied the position of gratuitous sureties or endorsers. Where the holder of a note releases the maker such release operates as a discharge of the endorser. Eggemann v. Henschen, 56 Mo. 123. In this case appellant's able counsel correctly stated to the court, "I will dismiss as to Mrs. Norma Jean Mahan; she is a minor, and I don't believe I am entitled to recover from her." If the Melvins had been makers instead of sureties or endorsers the law appellant seeks to apply would control, and the minority of one maker would not release another maker who had received a part of the consideration. The Eggemann case was followed by this court in the case of Broadway Sav. Bank v. Schmucker, 7 Mo.App. 171, where it is said, "If the maker's indebtedness be absolutely released, it is thereby extinguished as fully as if it were paid. Logically, the extinguishment enures to those collaterally, liable, as well as to the primary debtor." In the case of Brown v. Croy, 74 Mo.App. 462, it is again held that the release of the maker of a promissory note discharges all subsequent parties including the endorser thereof. To the same effect is the case of Phenix Nat. Bank of New York v. Hanlon, 183 Mo.App. 243, 166 S.W. 830, and the case of Windisch v. Farrow, Mo.App., 159 S.W.2d 392. See also the case of Freiburghaus v. Herman Body Co., Mo.App., 102 S.W.2d 743. The disaffirmance of a contract made by a minor nullifies it and renders it void ab initio. Phillips v. Savings Trust Co. of St. Louis, 231 Mo.App. 1178, 85 S.W.2d 923. Furthermore, it is expressly provided by our negotiable instrument law, Sec. 3135, R.S., 1939, Mo.R.S.A. § 3135, that a person secondarily liable on the instrument is discharged "by the discharge of a prior party, except when such discharge is had in bankruptcy proceedings."
The judgment of the circuit court should be affirmed. It is so ordered.
ANDERSON, P. J., and McCULLEN, J., concur.