Rudolph Wurlitzer Co. v. Rossmann

1. BILLS AND NOTES: Defenses: Failure of Consideration: Statute. Under Sec. 9999, R. S. 1909, the absence of consideration for a promissory note is a matter of defense as against any person not a holder-in due course. 2. -: Sufficiency of Consideration: Benefit to Third Party. It is not necessary that the consideration for a promissory note pass directly to the maker, but it is sufficient if it passes to a third party. 3. ACTION: Equity: Mistake of Fact. Mistakes of fact are not cognizable by a court of law in a purely legal action, equity having exclusive jurisdiction, by an action for reformation. 4. BILLS AND NOTES: Defenses: Mistake in Signature. In an action at law upon a promissory note, the fact that the maker, through mistake, signed a note so as to bind himself individually, instead of signing in a representative capacity, so as to bind his principal, is not available as defense; the remedy being in equity. 5. -: Varying Terms: Mistake in Signature: Parol Evidence. Parol evidence is not admissible, in an action at law, to vary or change the effect of negotiable instruments; so that, in an action at law on a promissory note, parol evidence that the maker had, through mistake, signed a note so as to bind himself individually, instead of signing in a representative capacity, so as to bind his principal, was inadmissible. 6. -: Mistake in Signature: Liability of Maker. Where-promissory notes, given for goods purchased by a corporation, were signed by the corporation by its president, followed by the signature of another person, with no official designation whatever, the latter signer was liable thereon to the payee, under Sec. 9991, R. S. 1909, although she was, in fact, the secretary of the corporation. 7. -: -: -. Where promissory notes, given for goods purchased by a corporation, were signed by its president as an individual, and by another with the word “Secy.” affixed to her name, the notes containing no other reference to the corporation, the latter signer was liable thereon to the payee, under Sec. 9991, R. S. 1909, although she was, in fact, the secretary of the corporation. 8. COURTS: Bills and Notes: Rules of Decision. Settled rules of law, governing commercial paper, cannot be set aside because their application in a particular case will result in hardship.

Appeal from St. Louis City Circuit Court. — Eon. Leo 8. Bassieur, Judge. (1) The notes sued on were wholly without consideration passing to appellant, (a) Absence of consideration is a matter of defense as against any person not a holder in due course. Rev. Stat., sec. 9999. (b) Respondent was not a holder in due course — the notes never having been negotiated, (c) The court expressly found that no consideration passed to appellant. The situation upon the record is that appellant was secretary of a corporation for which she signed the notes sued on, as such secretary. This was the ease, even where she signed without her official character being named. The defense she interposed was clearly within the statute and should have been sustained. (2) The finding below cannot be sustained upon some hypothesis of accommodation, (a) Appellant was not an accommodation maker. She mistakenly signed without indicating in what capacity she signed, (b) It is impossible to distinguish the case, in principle, from Chicago, Etc., Co. v. Brady, 165 Mo. 197, 205. (1) The evidence showed, and the court found, that the notes sued on were for the purchase price of pianos sold to the International Electric Piano Company. The pianos were consideration for the notes. (2) The court properly refused to allow defendant to show that she signed the notes as an officer of the corporation, not intending to bind herself personally, because: (a) There was no testimony that any such intention was communicated to the plaintiff, (b) As to the first two notes, nothing appeared on the face of the notes to indicate that she signed as an officer of the corporation, nor was there any ambiguity as to her relationship to these two notes. Myers v. Chesley, 177 S. W. 326; Mineral Belt Bank v. Zinc Company, 173 Mo. App. 634. (c) As to the remaining notes, the name of the corporation nowhere appeared, so that it could not be held; and the addition of the word “Sec’y” to defendant’s name was simply descriptio personae, and did not relieve her from liability. Negotiable Instrument Act, secs. 9989-9991, R. S. 1909; Myers v. Chesley, 177 S. W. 326; Mineral Belt Bank v. Zinc Company, 173 Mo. App. 634; Bigelow on Bills and Notes, pages 30 and 31; Norton on Bills and Notes, page 66; Ogden on Negotiable Instruments, page 26; Bunker on Negotiable Instruments, pages 65 and 66; Calvert’s Daniel on Negotiable Instruments, sec. 305; Studebaker Mfg. Co. v. Montgomery, 74 Mo. 101; Sparks v. Dispatch Transfer Co., 104 Mo. 531; San Bernardino Nat’l Bank v. Anderson, 32 Pac. 168 (Cal.); Davis v. England, 141 Mass. 587; Keokuk Palls Improvement Co. v. Kingsland, 47 Pac. 484 (Okla.); Mellon v. Moore, 68 Me. 390; Kohrs v. Smith, 45 Mont. 467. (3) The defendant did not include in her motion for a new trial as a ground for a new trial the alleged error of the court in excluding testimony that she signed the notes as an officer of the company, not intending to bind herself personally; hence, on the record, she cannot now avail herself of this defense. (4) The court properly allowed a reasonable attorney’s fee, as provided in the first two notes. Ogden on Negotiable'Instruments, pages 409-411; Bank v. Sutton Mfg. Co., 57 Feb. 191. Statement. — This action was brought against the appellant on nine promissory notes. The first and second are of date September 8, 190.9, each for $60. After the date they read: “Eleven months after date, for value received, I promise to pay to the order of the Rudolph Wurlitzer Company sixty dollars, payable -at-with inter- est thereon from date at the rate of 6 per cent, per annum, with exchange at the current rate and with cost of collection and an attorney’s fee in case payments shall not be made at maturity. ’ ’ Following this and in the first person singular is a clause waiving the benefit of all exemption laws and authorizing any attorney at law to appear in any court of record “for me” in any action on the note, and waiving issue of service and confessing judgment, etc. This is signed, “International Electric Piano Co., M. D. Cross, Pres. Tekla Rossmann.” Of the remaining notes, six of them for $50 each, and one for $20, all dated February 4, 1910, after the date read : “Six months after date we promise to pay to the Rudolph Wurlitzer Company or order $50, for' value received, with interest from February 4, 1910, at the rate of 6 per cent, per annum until paid, and we agree to pay same at 912 Pine Street.” Each of them is signed, “M. D. Cross, Tekla Rossmann, Secy.” The petition counting on these nine notes, prays for judgment for the amount of them and interest, as also for attorney’s fees as to the first and second. The answer, after a general denial, and taking np each note in a separate paragraph, sets ont as to the two notes for $60 each, that appellant Rossmann, on or before September 8, 1909, was secretary of the International Electric Piano Company, a corporation having its office in the city of St. Lonis, incorporated under the laws of this State, and engaged in selling electric pianos and piano players; that on September 8, 'that corporation was selling almost exclusively the electric pianos made by plaintiff, it buying all of them from it; that the notes sued on are wholly and entirely without any consideration and therefore not binding on this defendant; that on September 8, the date upon which the first two notes were executed, the International Electric Piano Company, in the ordinary course of business, bought a number of pianos from the plaintiff and gave to plaintiff a chattel mortgage and its notes as security for the purchase price of the pianos, and that these two sixty-dollar notes are notes of the International Electric Piano Company given for the purposes aforesaid, and that they were signed by defendant (appellant here) as an officer of that company, and in the ordinary course of business of that company, by authority and direction of the company and as and for an obligation of the company, intending thereby to bind the company only, all of which facts were known to plaintiff, as is alleged, and done by and with the consent of plaintiff and accepted by plaintiff as the note and obligation of the International Electric Piano Company. It is further averred that her signatures on the notes are not her individual signatures but her signatures as an officer of the International Electric Piano Company and as and for the obligation of that company,' and that no consideration moved to her for signing the notes. Further answering defendant states, on information and belief, that the plaintiff foreclosed on the; chattel mortgage referred to, and in pursuance of this' foreclosure sold the pianos and that the proceeds of the sale were sufficient and fully paid and satisfied the notes. Averring that no notice of protest or dishonor of these notes had ever been given defendant, she prays that she be discharged from the action with her costs. The answer as to the remaining notes is' practically identical in its averments with the foregoing, save as to the change necessary by the difference in the date,all these latter notes being dated February 4, 1910. It does not appear that any reply was filed but the case was treated as being at issue on the petition and answer. A jury was waived and the cause heard before the court, the notes referred to being offered in evidence, without any objection. It was admitted that the six fifty-dollar notes and the twenty-dollar note were secured by chattel mortgages executed by the International Electric Piano Company to plaintiff, on a piano bought by the former company from the latter, aud that from the selling price of the piano the plaintiff received the sum of $230 on November 2, 1912. The mortgage referred to was offered in evidence but is not in the abstract. There was evidence as to the value of the services of the attorney in bringing the action, and plaintiff rested. Defendant in her own behalf offered the record of the voluntary assignment of the International Electric Piano Company, in the proceedings under which the plaintiff had presented for allowance all the notes referred to except the first and second. This was objected to but the objection overruled. This record is not in the abstract before us, and we have no evidence of its contents or scope, other than above. The two chattel mortgages referred to were also introduced but they are not before us; how and by what officers executed does not appear; it is stated, however, that they covered all the notes except the two for $60 each. Defendant thereupon took the stand as a witness in her own behalf and staled that her connection with the International Electric Piano Company on September 8, 1909, and February 4, 1910, as well as before, between and after those dates, was that of secretary; that she never had any dealings personally with plaintiff and did not personally buy any pianos from it and never owed plaintiff company anything. Admitting her signatures to the notes as signed, she testified that she never received anything personally, and she added that she had signed these notes as an officer of the company. This latter was objected to on the ground that the notes spoke for themselves. The objection was sustained, defendant excepting. Defendant repeating that she never received anything personally for the notes and was never obligated in any way to the plaintiff, stated that she had signed the chattel mortgage at the same time she had signed the notes; that when she signed these notes and when they were received by the plaintiff company, that company knew that she was an officer of the International Electric Piano Company; that that fact had been known to them for years. Slie further testified that the plaintiff company had been doing business with the International Eléctrie Piano Company, certainly since 1906, possibly earlier. She was then asked:' “Can you state to the court the procedure that was followed when the International Electric Piano Company bought pianos from the Rudolph Wurlitzer Company?” The court said: “Is not that an effort to change the terms of this written contract?” To which counsel for defendant said that they maintained, “that in a note, as between the original parties, where the payee of the note knew the capacity in which the defendant in this case was signing and accepted it with that knowledge — ” The court: “Is not this changing the terms of that written contract? If the contract incorrectly recites what has taken place is not your remedy to reform it?” The court, however, announced that it would hear the testimony subject to the objection of counsel for defendant. Witness then answered: “The pianos have been secured by a mortgage given by the International Electric Piano Company and notes given in payment, and those notes payable different months and at different times and signed by the officers of the company.” Plaintiff, then asked if the notes were ever presented to her for payment before the winding np of the business of the International Electric Piano Company, answered, “No;” that she had never been asked to pay these notes. This was her testimony in chief. On cross-examination defendant admitted that payment had been demanded of her on the notes before the action was commenced; that at the time of the execution of the notes one Unger was manager of the business of the International Electric Piano Company and that she (defendant) had nothing to do with the active business of the concern; that Unger had presented the notes to her for signature and that she had never had any communication personally with plaintiff. The court asked her if these notes involved had not been given in payment of the merchandise received. Witness answered that the merchandise had been received by the company hut not by her, and that all she ever learned with respect to the transactions was from some of the employees of the International Electric Piano Company, of which company Mr. Gross was president. The defendant, still on the stand as a witness, stated that she would like to show under what conditions she signed these particular notes. That was objected to and objection sustained. No exception to this ruling is noted. Mr. Gross testified that he had been president of the International Electric Piano Company in 1909 and 1910. Shown the notes and asked under what circumstances they were signed, he answered that they were signed by himself and the defendant as officers of the company. This was objected to, hut no ruling made. He was then asked to state the circumstances under which the notes had been signed and who asked him to sign. That was objected to but no ruling made nor answer given. He was then asked what the notes were given for and he answered that they had been given for pianos bought from the Rudolph Wurlitzer Company by the International Electric Piano Company; that at the time he was president and the defendant secretary of the company.. Asked if he knew whether Mrs. Rossmann, the defendant, had received any money or goods or any consideration for the signing of the notes, he said he did not know. This was the substance of all the testimony in the case. The trial judge thereupon taking the case under advisement rendered a finding of facts not necessary to set out, it being sufficient to say that, in effect, he found that defendant was bound individually on the notes, that the consideration for the notes wa's the piano purchased by the International Electric Piano Company, that the notes were entitled to a credit of $230, and allowing $50 for an attorney’s fee on the first and second notes, he rendered judgment in favor of plaintiff in the' sum of $351.64. Defendant in due time filed a motion for new trial, assigning four grounds: First, the verdict and judgment of the court is against the evidence and the weight of the evidence; second, is against the law under the evidence; third, is against the law and the evidence; fourth, in failing to give findings of fact requested by defendant. The motion for new trial being overruled, the plaintiff excepting, duly appealed to our court.