Loy v. McClure , 124 Mo. App. 689 ( 1907 )

GOODE, J.

This action was instituted before a justice of the peace on two promissory notes, one for $50, dated July 19,1904, and one for $51.50, of the same date, both payable to G. A. Paul, or order, executed by clefendant and drawing interest at the rate of eight per cent per annum. The first note fell due six months after date and the second one in ninety days. Both were indorsed on the back by G. A. Paul, the payee, to D. B. Loy, cashier, and protest, demand and notice of dishonor waived. The cause went from the justice’s court to the circuit court where defendants offered to allow plaintiff to take judgment on the note for fifty dollars. Plaintiff had judgment on said note, but the verdict and judgment were for defendants on the other one. The other note was given to the payee in payment for a horse and was secured by a mortgage on the animal. Subsequently the horse was sold under the mortgage with plaintiff’s consent and forty dollars realized and credited on the note. There were no pleadings in the case, but the defense is that the horse was warranted by Paul and not proving to be as warranted, was, by an agreement between Paul and defendants, turned back to the former in payment of the note. At the time this arrangement was made the note was owned and held by plaintiff, to whom it had been assigned for value, and there is no contention to the contrary. Neither is it asserted that plaintiff was directly a party to the arrangement to satisfy the note by giving thé horse back to Paul. What is contended is that the Miners and Merchants Bank, for which Loy, the cashier, held the note in trust, had conferred authority on Paul to collect the money on the note. The only evidence adduced to establish this defense was that at the trial of the cause in the justice’s court, Ruppell, the assistant cashier of the bank, had been heard to say, in substance, that Paul, who had sold various notes to the bank, collected money on them from time to time and turned it over to the bank and was authorized to do so. It was not shown that the defendants relied on any Such authority in dealing- with Paul, or, indeed, knew of’ it until after they had been sued. Nevertheless if he had authority to act as the bank’s agent, and his arrangement with defendants was within the scope of his authority, the bank is bound by it. In our opinion the testimony shows Paul never had been given any positive authority, but that now and then he made payments on the notes he had indorsed to the bank and the bank accepted such' payment, which in some instances, had been collected by Paul from the makers of the notes; and perhaps the bank’s officers knew he had, though they denied knowing it and denied, too, that he was the bank’s agent for any purpose. Granting for the argument that the evidence tended to prove he was the authorized agent of the bank to collect the notes indorsed by him, including the one in suit, there is no evidence whatever to show his authority went further and embraced the right to take back tbe horse be bad sold in satisfaction of the note. There is no merit in tbe defense. Defendants relied on no authority, real or apparent, in Paul in making tbe arrangement with him, and certainly be bad no real authority to make it. One of tbe defendants swore they gave back tbe borse because they believed Paul was honest and would procure tbe note and tbe other defendant swore Paul was to give tbe note back. It is plain defendants relied on no authority in Paul to represent tbe bank, but on bis promise to procure tbe note. In truth it is doubtful if defendants knew tbe bank bad tbe note when they settled with Paul. That they did not regard their arrangement with him as binding on tbe bank is shown by tbe fact that they cooperated with the latter in enforcing, by a sale of tbe borse, tbe mortgage they bad given to secure the note; a circumstance which proves conclusively they bad looked on tbe note, not as extinguished, but as an outstanding obligation. Therefore it is clear Paul bad no authority from tbe bank to settle with defendants by taking back tbe borse and that defendants neither believed, nor bad cause to believe, be was acting for tbe Bank.

The judgment is reversed and tbe cause remanded.

All concur.