Judges： Clay
Filed Date： 6/22/1917
Status： Precedential
Modified Date： 11/9/2024
Opinion of the Court by
Affirming.
On January 10, 1913, the Preston Hotel Company, James R. White, B. M. McDevitt, R. R. Satterfield, Mary Bird Satterfield, Hugh. Satterfield and C. N. Satterfield, executed and delivered to the First National Bank of Princeton their promissory note, by which they jointly and severally promised and agreed to pay said bank, or order, six months after date, the sum- of $10,000.00,' with interest from maturity at the rate of 8 per cent per annum until paid. The note was secured by fifty shares of the capital stock of the American Ice & Storage Company, -and fifty-eight shares of the cap-. ital stock of the Oakland Amusement Company. On July 10,1913, this note was renewed by the same parties, with the exception of the Preston Hotel .Company, and by F. P. Satterfield and H. K.' Satterfield, who had not signed the original note. On January 10, 1914, the note was again renewed for a period of one year by the same parties and by the Preston Hotel Company. Upon the maturity of the last renewal the' bank insisted on payment or more satisfactory security. The Satterfields insisted that McDevitt should pay the note or furnish the required security, but he declined to do either. Thereupon the Satterfields mortgaged their home farm to the bank to secure the amount of their indebtedness, and also the sum of $6,000.00, which R. R. Satterfield owed to the bank. The bank then assigned the renewal note of January 10, 1914, to F. P.,Satterfield, together with the collateral-pledged by McDevitt. The Preston Hotel Co., went into bankruptcy.
The propriety of the chancellor’s judgment depends on whether McDevitt was the principal in the note sued on so far as the Satterfields are concerned, or he and they were mere joint sureties for the Preston Hotel Company. To determine this question, a somewhat extended statement of the evidence will be necessary.
The Preston Hotel Company, a corporation, was organized several years ago with a capital stock of $8,000.00, which was owned in equal amounts by James E. White, E. E. Satterfield and T. A. Green. The corporation was engaged in the operation of a hotel at Third and Main Streets in Louisville, and its business had prospered. In 1911, T. A. Green retired from the corporation. In 1912, extensive improvements were planned, to meet what apeared to be the growing demands of the business. McDevitt had been a boarder at the hotel and had frequently accommodated the' company with small loans, which had been repaid. As the contemplated improvements called for a large sum of money, White and E. E. Satterfield solicited the assist
“If you are successful in arranging the loan, I can pledge for security 50 shares (par value $100) of American Ice & Cold Storage Co. stock, never failed to pay 6%; 50 shares of Oakland Amusement Co. stock (same valué), a moving picture theatre doing big business and own its building.”
Upon receipt of this letter, Satterfield applied to the First National Bank at Princeton for the loan. At first the bank agreed to furnish the money on the faith of the collateral. When the money was needed the bank demanded additional security. When this fact was reported to MeDevitt, it was proposed that White and E. R. Satterfield should sign the note and pledge their slock in the hotel company as additional security. This proposition was rejected, by the bank, which demanded that E. E. Satterfield procure the signatures of his brothers and sister. Satterfield then reported to MeDevitt and White, who then agreed that, in order to save his brothers and sister from loss, to put up their stock in the hotel in addition .to the stock which MeDevitt had previously authorized him to hypothecate. E. E. Satterfield then secured the consent of his brothers and sister to sign the note, upon assuring them that he, MeDevitt' and White would save them from loss, and that they would be fully protected by the collateral attached to the note. His brothers and sister also say that they signed the note as sureties on the faith of the assurance thus given.
MeDevitt testified that, prior to 1912, he had been engaged in buying and selling real estate and managing two picture shows. Prior to that time he knew James E. White very well and had a casual acquaintance with
“A. I told Jim — I said I did not care to be interested in the hotel business, that I did not feel like that I knew anything about it, , or wanted to give it any of my time. I told Jim then — I said, ‘Now, Jim, I will help you in any way that I can. I will go as far with you as I can, but I don’t care about becoming interested in the hotel,’ and Mr. White then said, ‘Unless I would agree to have the stock, that he did not want to borrow the money from me.’ I said, ‘All right, Jim, go ahead your way.’ I said, ‘I have absolute confidence in your ability to pull this thing through, and I will help you in any manner that I can.’ 27. Was Mr. Satterfield present on that occasion? A. He was. 28. So that you were to become a purchaser of $12,500.00 of the stock of the company, is that true? A. That is true. I eventually
Again he testified as follows:
“77. Do you know anything concerning a note of $6,000.00 signed hy R. R. Satterfield, lodged with the First National Bank at Princeton, Kentucky? A. I knew there was such a note in existence; yes, sir. 78. Do you know under what conditions that note was made, of your own knowledge? A. No, sir; I think it was made for the purpose of advancing it to the Preston Hotel Company, for which Mr. Satterfield and Mr. White took an equal amount of stock. _ 79. Was that or was it not prior to the time that you became a stockholder in the hotel company? A. No, sir; I expect that was at the same time. I presume the amount of improvements were calculated at $15,000.00, and I think that $6,000.00 was secured at the time they made an effort to get the $10,000.00 from me to recover the entire improvements. 80. In other words, the entire improvements that was estimated then was to be $16,000.00? A. Fifteen or sixteen thousand dollars. 81. Of which $10,000.00 was to be paid by the money which you would pay for purchase of stock? A. Exactly- 82. And the other $6,000.00, was to be paid by Satterfield? A. For which he and Mr. White took an equal amount of stock.- 83! Subsequently, the hotel company was unable to complete the improvements with the $16,000.00 thus obtained. Is that true? A. The improvements cost considerably more than they had calculated them. 84. Was it or was it not for the purpose of liquidating this further indebtedness of $10,000.00— A. It was. 85 (Continuing) That the loan was made at Princeton? A. It was.”
On cross-examination he testified as follows:
“88. Mr. McDevitt, when did you become a stockholder in the Preston Hotel Company? A. About the latter part of 1912 or 1913, when the stock was issued. 89. Was it or not in November, 1912? A. I would not be sure as to the date, Mr. Gates. 90. About that time? A. Well, that is my recollection, along in the fall or probably -early part of the next year. 91. How many shares of the capital stock of the hotel company did you take? A. Twelve thousand, really. The agreement was to give me $12,500.00 worth of the stock if I would advance them $10,000.00. 92. And that stock was issued
Again he gave the following evidence:
“104. I will ask you if it is not a fact that you became interested in the hotel company under an arrangement with the then stockholders of the company, whereby you were to give the company your credit or advance it such funds as it might need to make the contemplated improvements, in consideration of the issue to you by the company of $12,000.00 of stock, and that such sums as you might advance were to be repaid to you by the company? A. I can’t answer that question exactly. Ask me that again, if you please? (The last question was thereupon read to the witness by the stenographer). A. No, sir; the company — I agreed to loan them $10,000.00, for-which they were to give me $12,500.00 worth of stock. I did give them $10,000.00; in fact, I paid in full for that $12,000.00 worth of stock. 105. At the time the $10,000.00 was borrowed from_ the First National Bank of Princeton, had you paid fo'r that stock? A. I had. 106. And you don’t now recall whether you paid it by check or in cash? A. I advanced money as the work was going on at all times. Mr. White would come to me and say we need a thousand or two thousand, whatever it might be, and I gave it to him. 107. Were the improvements actually in progress when you became a stockholder? A. No, sir; they were begun -though pretty
Ee-direct examination by Mr. Washer:
“126. Mr. McDevitt, you have been asked about the returns of the $10,000.00 that you were supposed to have made; is it not a fact that those negotiations with the hotel company and Mr. White and Mr. Satterfield representing the hotel company, as to the loan of the $10,-' 000.00, were entirely obliterated and altered when you purchased the stock of the company? A. They were. 127. So that is it or is it not true that the loan of $10,-000.00 was never actually made to the company, but in lieu thereof, an outright purchase of $12,000.00 of the stock was made for which you paid par? A. That is true. I frequently had — afterwards, I frequently had to advance the payroll for the company. 128. So that, as a matter of fact, you never did lend the $10,000.00? A. I was required to buy that stock outright. 129. Did the negotiations which you had with the officers of the hotel company before you were a stockholder relative to this $10,000.00, which has been mentioned, have anything at all to do with the loan of $10,000.00 at Princeton, Kentucky? A. Nothing whatever. 130. Had that ever been discussed at that time? A. It had not. 131.
Re-cross examination by Mr. Gates:
“132. Did you not. state a moment ago that before you became a stockholder, the improvements had been determined upon and that their costs had been approximated at $16,000.00? A. Fifteen or sixteen thousand dollars. 133. That was before you became a stockholder? A. Yes, sir. 134. Did you pay the $10,000.00 for your stock at the time it was issued to you? A. No, sir. 135. How long after it was issued to you did you pay for it? A.. In a very short while. 136. By Mr. Washer; Approximate the time on that? A. Two or three months I was required to do it.”
J. R. White testified that he was the president and manager of Preston Hotel Company. In the fall of 1912, it was agreed to increase the stock from $8,000.00 to $50,000.00, and to put certain improvements on the hotel, which were estimated to cost $15,000.00 or $16,-000.00. Of this sum he and R. R. Satterfield were to raise $6,000.00 and he proposed to McDevitt that if he would raise $10,000.00 they would give him $12,500.00 worth of stock, and pay him his money back besides. This plan, however, was abandoned, and he and Mc-Devitt afterwards endeavored to borrow $10,000.00 for. the hotel company at some bank in Louisville, but were unable to do so. Then Mr. Satterfield took the loan up with the bank at Princeton. The bank required the deposit of the collateral pledged by McDevitt to protect McDevitt’s endorsement. This note was made for the benefit of the hotel company, and not for the benefit of McDevitt. In making this loan he did not know of any other endorsers on the note except McDevitt, Satterfield and himself. Some time after the note was made the hotel company went into bankruptcy. The stock was issued to McDevitt, and though he did not pay for it at the time, he subsequently paid for it in different amounts at different times. On cross-examination he testified as follows: *
“226. Did he ever loan the company the $10,000.00 'referred to? A. Well, he never did propose to lend it himself. He proposed to get it through the bank for the company. 227. I think you are confused as to what ■ $10,000.00 I am referring to. Of the $16,000.00 that was
Again he testified as follows:
“114. Mr. White, is it not a fact that Mr. McDevitt became a stockholder1 of the Preston Hotel Company under an arrangement with the then, stockholders of the company whereby he was to lend the company his credit in procuring the money to make these improvements, and the company, in consideration of that fact, was to give him $12,000.00 of stock? A. They were to pay him the money back and give him $12,000.00 worth of stock. 115. Yes? A. Yes.”
And again:.
“118. When the stock was issued to Mr. McDevitt in the fall of 1912, did he pay the company $10,000.00 in cash? A. When it was issued to him? 119. Yes? A. No, sir.”
He further testified as follows:
“125. Do you know how long a time elapsed between the date he got his stock in the company, and this $10,-000.00 was borrowed from the First National-Bank at Princeton? A. Do I remember? Read that again. (The stenographer read the last question to the witness). A. This thing is sort getting clear to me now. I haven’t had this thing in mind for so long. I think when we got this — when Satterfield for this money, that we issued stock, and we issued it to Mr. McDevitt. Now that is my recollection, and then Mr. McDevitt, I think, in some way found out that he was liable for all this thing and he would have to buy it in, and he really .didn’t have that much in, and he put the rest in. 126. Do you mean to say that McDevitt paid to the Preston Hotel Company $10,000.00 when the stock was issued to him? A. How is that? (Last question read to witness by stenographer). A. Oh! He never paid that; that $10,000.00 came from the Princeton bank, 127. That $10,000.00 then that was paid into the company at the time the stock was issued to Mr. McDevitt came from the Princeton bank? A. Yes. 128. And that was the only money that was paid for the stock issued to him at that time? A. I think so. 129. How long after that was it that he made these additional payments that you have referred to ? A. He made them covering a period, as I said, from six months to two years, at different times. We were so harassed by our creditors that he loaned me money nearly when
From the foregoing statement of the evidence it will be seen that R. R. Satterfield, J. R. White and McDevitt all agree that the hotel property was to be improved, and that the estimated cost of these improvements was about $16,000.00. They further agree on the fact that the capital stock of the company was to be increased from $8,000.00 to $50,000.00. They also agree that additional stock \yas to be issued to R. R. Satterfield and White, who were to furnish $6,000.00 of the $16,000.00 required for the improvements. Furthermore, there is no conflict in their evidence with respect to the original proposition made by White to McDevitt. Under that arrangement, McDevitt was to take $12,000.00 worth of stock in the company and lend the company $10,000.00, which the company was to repay., The only disagreement between the witnesses is that R. R. Satterfield claims that this arrangement was carried out, while Mc-Devitt and White say that it was abandoned and that the note for $10,000.00 was not executed pursuant to the original agreement. Notwithstanding the latter contention, the following facts are fully established: R. R. Satterfield complied with his part of the agreement and raised the $6,000.00 which he and White were to furnish, and they received the additional stock therefor. The proceeds of this loan were used to pay for the improvements until it became necessary to obtain the, remainder of the required sum. Stock to the amount of $12,000.00 was actually issued to McDevitt. McDevitt and White endeavored to secure the- loan of $10,000.00 in the city of Louisville. Failing in this, McDevitt authorized R. R. Satterfield to obtain the loan at Prince
The evidence leaves no doubt that R. R. Satterfield was authorized by McDevitt to procure the loan and to pledge McDevitt’s stock in other companies as collateral security. The note signed by the Preston Hotel Company, McDevitt, White and R. R. Satterfield was forwarded to the bank with the collateral attached. The bank demanded other security. R. R. Satterfield pro
Judgment affirmed.