Apperson v. Security State Bank

528 P.2d 1211, 215 Kan. 724, 1974 Kan. LEXIS 564
CourtSupreme Court of Kansas
DecidedDecember 7, 1974
Docket47,381
StatusPublished
Cited by50 cases

This text of 528 P.2d 1211 (Apperson v. Security State Bank) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Apperson v. Security State Bank, 528 P.2d 1211, 215 Kan. 724, 1974 Kan. LEXIS 564 (kan 1974).

Opinion

The opinion of the court was delivered by

Kaul, J.:

This action stems from a controversy over the application of funds to a payment on a promissory note executed by Joe R. Bailey (defendant) and payable to Security State Bank of Fort Scott (defendant-appellant).

In 1966 defendant Bailey was the operator of a feed lot near Fort Scott, Kansas. In the fall of 1966 Bailey had 4,000 head of cattle in his feed lot, which were costing him $70,000.00 a month to feed. In addition to feed costs, Bailey testified he had expenses for help, equipment and upkeep. He was receiving $50,000.00 a month from tihe owners of the cattle — in other words, Bailey was losing money at the rate of more than $20,000.00 per month. In the spring of 1966 Bailey became hard pressed to continue his feed lot operations. He had borrowed to the loan limit from Citizens National Bank of Fort Scott and had other substantial indebtedness. In April 1966 Bailey secured his first loan from defendant Security State Bank (hereafter referred to as Bank). This loan was paid off shortly thereafter. On May 4, 1966, Bailey borrowed $32,828.00 from Bank; signed a six month promissory note due November 4, 1966) in that amount; and executed a security agreement upon 257 head of cattle which Bailey had previously shown to Floyd Dotson, who was president of Bank. In the early part of September 1966 Bank discovered Bailey did not own 176 head of the cattle covered by the security agreement. Bank confronted Bailey with a demand for immediate payment of the May 4 note. Bailey responded by offering Bank a security interest in a substantial amount of farm machinery, which Bailey claimed he owned free and clear. Dotson, for Bank, inspected the machinery and on Bailey’s assurances a new security agreement was executed on September 8, 1966, by which Bailey gave Bank a security interest in the machinery. Thereafter Bank discovered that Bailey did not, in fact, own some of the machinery and, further, the part which he did own was encumbered by a prior security agreement. When Bank made *726 this discovery Bailey was again confronted with a demand for immediate payment of his note. This time Bailey responded by suggesting he could assign certain accounts owed to him by owners who had placed cattle in his feed lot. At this time plaintiffs-appellees had 1,036 head of cattle in Bailey’s feed lot. Plaintiffs’ cattle were owned one-half by plaintiff Apperson, individually, and one-half by Apperson and his son-in-law, William Langley, doing business as the J & J Cattle Company, a copartnership. For convenience the plaintiffs-appellees will hereafter be referred to as Apperson or plaintiffs. Plaintiffs operated a cattle business and resided near Miami, Oklahoma.

Bailey informed Dotson that he was feeding plaintiffs’ cattle under an agreement whereby plaintiffs would pay him $14,000.00 on the first of each month as partial payment against the total feed bill, which was finally to be computed on a basis of twenty-three cents per pound of weight gained by the cattle while they were being fed by Bailey. The $14,000.00 payments were not payments in advance, but were due the first of each month following a month’s feeding by Bailey. Plaintiffs’ cattle were delivered to Bailey’s feed lot in August of 1966 and according to Apperson would have been fed out in January 1967. There is no substantial dispute concerning the arrangements between plaintiffs and Bailey regarding the feeding of the cattle and payments to be made therefore.

The upshot of Bank’s last confrontation with Bailey was that Bank drew the two identical assignments in question — one assigning the payments to be made to Bailey by Apperson, individually, and the other assigning payments to be made by Langley. The assignments were executed by Bailey on October 25, 1966. Bank prepared and appended to the assignments a paragraph entitled “Acceptance Of Assignment.” Thereafter Bank mailed the assignments to plaintiffs’ bank in Miami, Oklahoma.

Omitting the acknowledgement and notarization of Bailey’s signature, the assignment of the Apperson feed bill by Bailey and the acknowledgement of the notice and acceptance by Apperson reads as follows:

“ACCEPTANCE
“Existing and future loans to me shall be considered as revolving credit funds and the assignment made herein is collateral security for all indebtedness now existing or which may hereafter exist between me and said Bank. Boyd Apperson, Welch, Okla., is hereby directed to make all payments jointly to Joe R. Bailey and Security State Bank of Fort Scott, Kansas to be applied *727 Seventy-five Hundred dollars ($7,500.00) due November 1, 1966 and Nine Thousand Five hundred eighty-seven and 23/100 dollars ($9,587.23), for which Joe R. Bailey is indebted to bank at this date and to be applied to loan made subsequent to this date by him, and balance due December 1, 1966. Witness my hand this 25th day of October, 1966.
“/s/ Joe R. Bailey
“ACCEPTANCE OF ASSIGNMENT
“Receipt is hereby acknowledged of a signed original of the foregoing assignment; said assignment is accepted this_day of October, 1966, and I agree to abide by the terms of said assignment insofar to make all payments jointly to Joe R. Bailey and Security State Bank of Fort Scott, Kansas and to pay over funds to the above mentioned parties, November 1, 1966 Seventy-five hundred dollars ($7,500.00) and December 1, 1966, Nine Thousand five hundred eighty-seven and 23/100 dollars ($9,587.23), for funds due Joe R. Bailey for feed bills.
“Boyd Apperson”

An identical assignment of the moneys owed by Langley was executed by Bailey and acknowledged and accepted by Langley.

It is to be noted that the total of the sums set out in the two assignments amounted to $34,176.46, which was stipulated to be the amount of Bailey’s loan plus interest due on December 1, 1966.

The exact date of signing the acceptances by Apperson and Langley is not shown in the record, but was apparently done on November 7, 1966, after a telephone conversation between Apperson and Dotson. The acceptances were signed before the payments due Bailey on November 1 were made.

On November 7, 1966, checks were written by Apperson and J & J Cattle Company payable to Bank and Bailey in the amount of $7,000.00 each. The checks were delivered to Bank which credited the sum on Bailey’s loan reducing it by $14,000.00.

Bank received no part of the December 1 payments which were made 'directly to Bailey. Sometime early in December Dotson telephoned Apperson and made inquiry concerning the December 1 payments. In this connection Apperson testified:

“I told him I give them to Joe. He wanted to know how come and I told him he didn’t do what he agreed on the others and I wasn’t going to give him any more money.”

Apperson made several trips to the Bailey feed lot during November and December. Apperson testified that he visited the lot about the middle of December when Bailey told him he was having a hard time getting corn. Apperson observed that Bailey did not have very much com. On New Year’s Day (January 1, 1967) *728

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Cite This Page — Counsel Stack

Bluebook (online)
528 P.2d 1211, 215 Kan. 724, 1974 Kan. LEXIS 564, Counsel Stack Legal Research, https://law.counselstack.com/opinion/apperson-v-security-state-bank-kan-1974.