Miller v. Exchange Nat. Bank of Tulsa

This was an action to recover upon a promissory note in the sum of $50,000 given by the defendant Alma Miller England to the defendant Zack T. Miller, secured by a real estate mortgage, which note had in turn been assigned by Zack T. Miller to the plaintiff as collateral security for the payment of a note of $89,300 given by the defendant Zack T. Miller to the plaintiff. No money judgment was sought against Zack T. Miller, who was joined as a party defendant for the purpose of foreclosing any right which he, as pledgor of the Alma Miller England note and mortgage, might have in the mortgaged premises, and in order to determine the amount due on his note of $89,300. There was no controversy over the amount due on either note. Execution of both notes, and the assignment to plaintiff by Zack T. Miller of the Alma Miller England note and mortgage, were admitted. The trial court entered judgment in favor of the plaintiff, and the defendants appeal. The defendant Alma Miller England presents no argument upon appeal other than by reference to the brief of the defendant Zack T. Miller, and the issues in this case are argued between him and the plaintiff.

The defendant Zack T. Miller first urges that the judgment of the trial court is against the clear weight of the evidence. He contends that the weight of the evidence was with his defense of failure of consideration for the execution of the $89,300 note. The theory upon which he defended the action was that prior to execution of the note lie was not personally indebted to the plaintiff, but that the Miller Brothers 101 Ranch Trust was indebted to plaintiff, and that the plaintiff was threatening to institute receivership or bankruptcy proceedings against the ranch trust, in which he owned a considerable share, and that lie executed this note, assigning at the same time the $50,000 note in suit as collateral, for the promise of the plaintiff bank made by its vice president that it would in any event defer the filing of such action against the ranch trust for a period of one year from the date of his note; that the plaintiff bank had not kept the agreement, but did file such action for the appointment of a receiver, and said receiver was appointed, in a little more than six months following the date of the agreement and the execution of the note. He contends that this was an oral agreement made by the plaintiff with him at the time and on the date when he signed said $89,300 note. Therefore he contends that, since the promise of the bank was not kept, which promise was the consideration for which he signed the note, the $89,300 note should be canceled, and that likewise his assignment to the plaintiff of the $50,000 note in suit, which was merely collateral to the $89,300 note, should also be canceled and rescinded.

Considering the case on its merits, and disregarding questions involving the parol evidence rule, still the evidence does not bear out the contention of the defendant. The record clearly indicates the following to be the facts: On and prior to February 6, 1931, which was the date of the $89,300 note and of the collateral assignment to the plaintiff of the $50,000 note in suit, the Miller Brothers 101 Ranch Trust was indebted to the plaintiff in the approximate sum of $121,000 on five promissory notes. The defendant Zack T. Miller owned about one-third of the trust estate and was managing it. The notes of the trust estate were past due and the plaintiff bank had been pressing Miller for payment, and had been threatening to institute court proceedings for that purpose. Miller on behalf of the trust estate was at that time negotiating with certain interests in New York for financial assistance. Miller fearing the effect upon those negotiations of any suit which might be instituted by the bank, arrangements were made between him and the bank whereunder he was to buy from the bank the $121,000 face value notes for the sum, of $100,000, the bank agreeing to discount them that much for Miller's personal note if he would give the bank sufficient collateral security for his said personal note. However, before the execution of the agreement, the trustee of the trust paid the bank $10,700 on the indebtedness of the trust to the bank, and accordingly the $100,000 purchase price which had originally been agreed upon was reduced to $89,300, the face amount of Miller's note.

On February 6, 1931, the date of the execution of the $89,300 note and of the assignment of the $50,000 Alma Miller England note by Zack Miller to the bank, Mr. Thompson, vice president of the plaintiff bank, by prearrangement went to the ranch and there had an extended conference with defendant Miller and certain attorneys then representing him. Four or five persons were present during the negotiations. The bank, acting through Mr. Thompson, there assigned to Miller the notes of the trust estate which had been owned by the bank, and the consideration for the sale of said notes to Miller was Miller's execution of the $89,300 note to the bank. Miller then assigned back to the bank the notes of the trust estate which it had owned, as collateral for his $89,300 note. He also assigned as collateral the $50,000 note and mortgage which was the subject of this action. As further collateral he assigned the bank certain life insurance policies.

The $89,300 note which he gave the bank was to mature in six months. During the conference at the ranch and preceding his signing of the note, he contended that six months would not be long enough for him to get straightened out financially, and that he would need a year for that purpose. His testimony was (and this is the meat of his defense) that Thompson then and there made an oral agreement with him to the effect that, although the bank could not give him a year to pay the note on the face thereof, the bank would forego the filing of any court action against the trust estate, in bankruptcy or for the appointment of a receiver, for at least one year from that date. He testified that Thompson made this agreement orally, and that the bank thereafter did, within less than a year, institute such receivership action. But the evidence further discloses that Miller insisted upon this agreement being put in writing, and he stated on cross-examination that it was put in writing in the form of a letter from Thompson to him, written at that time, but that he had lost said letter. Being shown by plaintiff's attorney a carbon copy of a letter, he admitted that it was a true and correct copy of the letter of which he had been speaking. The letter reveals that the promise of the bank was, not that it would defer instituting any action, such as described by the defendant Miller, but that the bank agreed that if Miller would pay $40,000 on the note within six months afterward, the bank would surrender back to Miller the $50,000 note and mortgage which is the subject of the present action, and would also extend the $89,300 note for an additional period of six months. It does not appear that said $40,000 was paid to the bank by the defendant Miller. The letter follows:

"February 6, 1931.

"Mr. Z.T. Miller, "Ponca City, Oklahoma

"Dear Mr. Miller: Pursuant to our agreement made coincident with the execution by you of a note to our Bank in the sum of $89,300.00, dated February 6, 1931, and maturing six months after date, we hereby agree that upon the payment to us of $40,000.00 plus interest at 6% from the date of said note, to surrender to you or your order the $50,000.00 first real estate mortgage described in the promissory note.

"It is understood, however, that the said $40,000.00 and interest must be paid to our bank on or before six months from date of said note.

"We further agree that on or before the maturity of said $89,300.00 note in the event you pay us $40,000.00 and interest of said note in money, we agree to extend the unpaid balance for an additional period of six months.

"Very truly yours,

"Exchange National Bank of Tulsa "By Elmo Thompson, Vice President."

We see no necessity of going into further detail in narrating the evidence. The cross-examination of the defendant Miller revealed grave weaknesses in the statements made in his direct examination; and, furthermore, pleadings of his filed in a former lawsuit not connected with the instant action admitted that there were conditions attached to the promise of the bank to extend the note. The testimony of defendant Miller himself having been weakened by such admissions, and the testimony of his supporting witnesses being vague and hazy and tending to make plausible the testimony of Thompson, rather than to support the defense attempted, we are of the opinion that the trial court was correct in his implied finding of fact, to the effect that no such agreement ever existed as that which was claimed by the defendant. The witnesses all stated that the various agreements which were made on the date of the execution of the note were reduced to writing as they were made. In view of the probability that the agreement concerning the one year feature was reduced to writing, and that such instrument when produced did not support defendant's contention, the correctness of the judgment is further evident.

The defendant Zack Miller further contends that the trial court erred in refusing him a jury trial. As stated above, the maker of the note and mortgage in suit, Alma Miller England, did not deny execution of the note and mortgage, nor the amount due. Neither did the defendant Zack Miller deny the execution of his note, nor the amount due on that or the other note. His contention was that the consideration for the execution of his $89,300 note had failed, by reason of which the note should be canceled, and he asked for an affirmative equitable relief, namely, the cancellation of said note. Thus the relief sought both by the plaintiff and by the defendant Zack Miller was equitable in nature. In Moore v. Stanton, 77 Okla. 41,186 P. 466, we said:

"Where, in an action on a promissory note and to foreclose a mortgage executed to secure payment of same, defendant admits execution of the note and mortgage and by cross-complaint sets up a defense involving the application of equitable doctrines, and seeks affirmative relief that only a court of equity can give, such defendant is not entitled to a jury trial."

In the body of that opinion, we further stated:

"When defendants admitted the execution of the notes and mortgage, and by cross-petition set up a defense and presented issues involving the application of equitable doctrines and prayed a rescission of the contract and cancellation of the notes sued upon, affirmative relief that only a court of equity can give, the issues of fact to be tried did not arise concerning the execution or amount due on the notes. The execution of the notes having been admitted and no issues made as to the amount due, the money judgment was only incidental to the issues presented by defendants' cross-petition, following as a matter of course when the equitable issues were determined against defendants, and on these equitable issues presented by defendants' cross-petition the defendants were not entitled to a jury trial."

It appears that the defendant had less claim to the right of trial by jury than in such a case as Newbern v. Farris,149 Okla. 74. 299 P. 192, where the following pronouncement was made:

"When plaintiff's cause of action depends on equitable jurisdiction of the court and defendant pleads a counterclaim and set-off presenting such issues as constitute an action at law triable by jury, this does not change the nature of the action, nor entitle defendant, as a matter of right, to a jury trial on the issues arising therein."

The decisions of this court are uniform in holding that actions involving only equitable issues are not triable to a jury as a matter of right, and that if a jury is impaneled to try the same, its verdict can only be advisory to the court, which must itself determine the facts and the legal principles applicable thereto. Crawford v. Hemingway, 116 Okla. 192,244 P. 198.

The judgment is affirmed.

OSBORN, C. J., and WELCH, CORN, and HURST, JJ., concur.