Gover v. Empire Bank

574 S.W.2d 464, 1978 Mo. App. LEXIS 2399
CourtMissouri Court of Appeals
DecidedNovember 17, 1978
Docket10034
StatusPublished
Cited by30 cases

This text of 574 S.W.2d 464 (Gover v. Empire Bank) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gover v. Empire Bank, 574 S.W.2d 464, 1978 Mo. App. LEXIS 2399 (Mo. Ct. App. 1978).

Opinion

STONE, Judge.

In this court-tried action, plaintiffs-appellants Gover, Johnston, Kretsinger, Sapp and Tate, who were “at all times relevant herein” members of the board of directors of Refrigerated Food Lines, Inc. (RFL), sought a decree cancelling a “Loan Guaranty Agreement” dated June 9,1971, admittedly executed by each plaintiff individually, which guaranteed payment to defendant-respondent Empire Bank of Springfield, Missouri (Empire), “of any and all indebtedness, liabilities and obligations of every nature and kind of said (RFL) to (Empire), and every balance and part thereof, whether now owing or due, or which may hereafter, from time to time, be owing and due, and howsoever heretofore or hereafter created or arising or evidenced, to the extent of Sixty Thousand Dollars . . . .” By initialed handwritten interlineations of the printed guaranty agreement (Empire’s ex. I), 1 the liability of each of four individual signatory directors, namely, M. G. (Gene) Rippey, 2 Vance K. Gover, Kenneth E. Johnston and William H. Tate, was limited to 20% of any sum payable under the guaranty agreement, and the liability of each of the *466 other two individual signatory directors, 3 Tom B. Kretsinger and Warren H. Sapp, was limited to 10% of any such sum. 4

In due time, defendant-respondent Empire answered and also counterclaimed for the unpaid principal balances owing by RFL upon notes held by Empire, and for interest thereon and attorney’s fees. At the conclusion of a plenary trial, the court took the case under advisement, requested written suggestions from opposing counsel, and in due time entered judgment embracing, inter alia, (1) a general finding of the issues for defendant Empire on both plaintiffs’ petition and defendant’s counterclaim, (2) a finding that after Empire “realized on” all available collateral securing its loans to RFL, “there was a deficiency” of $27,019.26, accrued interest thereon of $5,586.98 to the date of judgment, and (as provided in the guaranty agreement) a reasonable attorney’s fee of $4,890.93 (15% of the principal and accrued interest), and (3) in accordance with the guaranty agreement, “an individual judgment” against each of three plaintiffs, Gover, Johnston and Tate, in the sum of $7,499.43 (20% of the above “deficiency,” accrued interest and attorney’s fee), and against each of the other two plaintiffs, Kretsinger and Sapp, in the sum of $3,749.72 (10% of the “deficiency,” interest and attorney’s fee), all of those “individual judgment[s]” aggregating $29,997.74.

RFL was a Missouri corporation “reorganized under that name” in May 1969, based in Springfield, and engaged in the interstate “hauling [of] swinging meat from the midwest to the southeast” in refrigerated trailers. Rippey, the only director residing in Springfield was “president and chief executive officer” of RFL and “operated the company.” At the time of reorganization, “a number of personal guaranties” (not here involved or in issue) were executed by RFL’s shareholders-directors who guaranteed repayment of a substantial loan by Empire “on the [operating] rights.”

Empire’s evidence was that shortly after reorganization, to wit, under date of July 10,1969, Rippey delivered to Empire a copy of resolutions of RFL’s corporate board certified by Rippey as president, his wife as assistant secretary, and his brother-in-law, Howard A. Wood, Sr., then a member of the board, which authorized the “[president” to “[njegotiate and procure loans from The Empire Bank,” give security therefor, and “[e]xecute in such form as may be required by the bank all notes and . . . instruments of pledge, assignment or lien . . .” On the other hand, plaintiffs herein denied that the board of directors authorized or adopted that resolution.

However that may have been, in July 1970 Rippey, as president and on behalf of RFL, entered upon a course of frequently borrowing from Empire on collateral notes, each of which was secured by the assignment of accounts receivable itemized in an attached list showing as to each account RFL’s invoice number, the name and address of the buyer-consignee, and the amount owing on that invoice. Empire also received a carbon copy of the freight bill for each such shipment. On the accounts receivable thus assigned, Empire loaned 80% of the amount billed. No notice of such assignment was given to any consignee; but the agreement between RFL’s Rip-pey and Empire’s Stewart, then vice president in charge of Empire’s commercial loan department, was that, as remittances on these assigned accounts were received by RFL, they would be delivered to Empire and credited on the respective notes for which they were specifically assigned. Empire made twenty such loans to RFL during the period from July 29, 1970, to May 24, 1971, but RFL’s indebtedness at the time of suit was for unpaid balances on the last *467 four notes, to wit, those dated on the 10th, 14th, 19th and 24th days of May, 1971, respectively.

In reviewing between May 24 and June 1, 1971, “the overall situation” as to Empire’s loans to RFL, Stewart observed that Rippey had been “coming in a little more frequently,” that “[t]he last time or two, he was really pressed for funds," that in April 1971 RFL’s application for a $100,000 S.B.A. loan had been denied, and even more significantly and importantly that some remittances in payment of later assigned accounts of certain consignees had been forwarded by Rip-pey to Empire whereas remittances in payment of earlier assigned accounts of the same consignees had not been received by Empire. Confronted with this last-noted circumstance, Rippey tendered the belated confession that “I needfed] some operating capital” and “I just didn’t bring them in.” Whereupon, in the same discussion Stewart told Rippey that “if we don’t have a guaranty on this, we’ll just call our loans and pick up your receivables and collect the money and see where we do stand.”

Facing this financial crisis, RFL’s board of directors (with all of the six members in attendance) convened in the Kansas City law office of directors Kretsinger and Sapp on Wednesday, June 9,1971. No representative of Empire was present. Three directors, namely William H. “Bill” Tate who “operated a cheese plant” at Hannibal, Missouri, Kenneth Johnston who was “general transportation manager” for a cheese plant in Clinton, Missouri, and attorney Sapp, testified at length concerning the discussion and action taken at that meeting; and, over timely objections, those three directors were permitted to relate that Rippey had then told the board no money had been theretofore borrowed on RFL’s accounts receivable. Whatever may have been said in that meeting, the end product was the guaranty agreement executed in the language and form of the appended copy, which on the following day, June 10, was delivered by Rippey to Stewart at Empire. According to Sapp, Rippey called that same day and declared that Empire “had turned down another loan” but “had kept the guaranty.”

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Bluebook (online)
574 S.W.2d 464, 1978 Mo. App. LEXIS 2399, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gover-v-empire-bank-moctapp-1978.