{ "id": 8721285, "name": "Behl v. Mutual Bank & Trust Company", "name_abbreviation": "Behl v. Mutual Bank & Trust Co.", "decision_date": "1940-11-25", "docket_number": "4-6101", "first_page": "445", "last_page": "448", "citations": [ { "type": "official", "cite": "201 Ark. 445" }, { "type": "parallel", "cite": "144 S.W.2d 1081" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "265 S. W. 955", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "166 Ark. 269", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1378609 ], "opinion_index": 0, "case_paths": [ "/ark/166/0269-01" ] } ], "analysis": { "cardinality": 446, "char_count": 6316, "ocr_confidence": 0.533, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.20853030427642694 }, "sha256": "b7baf58f3611ff72f8e014f1492f25d828035ecf033cacd56bf2012e87067697", "simhash": "1:b493924c8a95a06b", "word_count": 1033 }, "last_updated": "2023-07-14T22:44:11.265597+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Behl v. Mutual Bank & Trust Company." ], "opinions": [ { "text": "Griffin Smith, C. J.\nNovember 28, 1938, Mutual Bank & Trust Company purchased of National Coil Piston Bing Sales Corporation twenty-four trade accept-anees,' payable monthly. They were executed by B. Frank Behl and L. R. Sherry, partners doing business as Little Rock Auto Parts Company.\nThe first eight acceptances, amounting to $456.97, were paid. Thereafter the acceptors repudiated the remaining sixteen on the ground that fraud perpetrated by the payee induced acceptance, and that the bank was not an innocent purchaser. The unpaid obligations varied in amounts from $68.97 to $73.92.\nSince 1934 the Little Rock firm had sold piston rings manufactured by National Corporation, and supplied by it, the business having been on a consignment basis.\nIn 1938 National experienced financial difficulties, due to the fact that manufacturers of automobiles made changes in engine construction. National pistons did not function satisfactorily in the new models, and complaints became general.\nI. W. Klumb of National came to Little Rock and converted the consignment account of Behl and Sherry into trade acceptances. Behl says that Klumb told him the paper would not be discounted. When this transaction occurred National owed the bank between $12,000 and $14,000. November 25, 1938 \u2014 two days after date of the acceptances \u2014 National\u2019s account was credited with $1,496. Action of the-bank\u2019s loan board in approving the transaction was not expressed of record until November 28.\nIn January, 1939, National owed the bank about $10,-000 for borrowed money and had a contingent liability of $20,000 to $25,000 on rediscounted paper. In November, 1938, while National was liquidating, Coil Piston Bing Company of America was organized with funds advanced to a third party by Mutual Bank & Trust Company on the guaranty of officers of the bank who were to share in profits.\nIt is insisted by appellants that there was a plan by officers of the bank to embarrass National in order that the new organization might capitalize upon its plan of business. There is the allegation that before appellants knew that piston rings made by National had become obsolete, bank executives conceived the two-fold purpose of procuring trade acceptances covering National\u2019s consigned stocks and applying them on the bank\u2019s credits, while at the same time (through refusal to advance additional funds) National would be impaired to such an extent that the new company could take over the distribution of pistons then being manufactured, which were suitable for late model cars.\nIt is urged that appellants were not, in November, 1938, informed of the \u201cworthlessness\u201d of the old piston rings, and that Klumb, under direction of the bank, came to Little Bock and converted the consignment account into trade acceptances for the sole purpose of salvaging values which in due course would have represented a total loss. Of course, if the evidence sustains these conclusions, relief should be given. But does it?\nBehl testified that beginning in April, 1939, and through June, he discovered that piston rings supplied by National were defective. Thereafter, he continued to purchase rings, dealing with Coil of America. In September, 1939, he returned to National $1,480 worth of rings. Behl admitted that these rings were suitable for old cars. It is clear from the testimony that they were being used generally in November, 1938, and that they did possess value. Hence, there was no failure of consideration.\nIt may be argued with some conviction that officers of Mutual Bank & Trust Company should not have mixed banking with manufacturing, and that when Byron Moser, president, and E. S. Schmid, executive vice-president, underwrote advances to Coil of America there was expectation of profit upon the wreck of National. On the other hand, it is quite evident that for a year prior to final parting of the way the bank had consistently endeavored to terminate its credit arrangements with the corporation, without unnecessary harshness. This it had a legal right to do, and we are not willing to say that the evidence warrants a finding that there was a conspiracy, or even an independent design, to injure National\u2019s business. The bank\u2019s primary purpose was to have its loans to National repaid; and, while acquisition of control of the new company seems to have been an incident to knowledge of National\u2019s business and the scope of its operations, this affords no basis for holding that trade acceptances acquired in due course without knowledge of infirmities should be canceled. Citizens Union Bank v. Thweatt, 166 Ark. 269, 265 S. W. 955.\nThe chancellor was correct in finding that the bank was an innocent holder of the commitments. Affirmed.\nThe bank and the sales corporation were domiciled in St. Louis.\nAcceptance No. 22545 is: \u201cSt. Louis, Mo., November 23, 1938. To Little Rock Auto Parts Co., 813 Izard St., Little Rock, Ark. On August 25, 1939, pay to the order of National Coil Piston Ring Sales Corp. $66. The obligation of the acceptor hereof arises out of the purchase of goods from the drawer. The drawee may accept this bill payable at any bank, banker or trust company in the United States, which such drawee may designate with 6 per cent, interest. Accepted at Little Rock on November 23, 1938. Payable at W. B. Worthen Co., Bankers. Buyer\u2019s signature: Little Rock Auto Parts C'o., by agent or officer, B. P. Behl. National Coil Piston Ring Sales Corp., by B. B. Smith, president.\u201d\n[\u25a0Of trade acceptances, Prof. James A. Ballentine, in his Law Dictionary, says: \u201cA draft or bill of exchange drawn by the seller on the purchaser of goods sold, and accepted by the. purchaser. It is a form of obligation revived in this country in recent years under the regulation of the Federal Reserve Bank Board.\u201d]\nWhen National Coil Piston Ring Sales Corporation became insolvent a new company was organized known as Coil Piston Ring Company of America. For the purpose of brevity the old corporation will be referred to as \u201cNational Corporation,\u201d and the new organization will be identified as \u201cCoil of America.\u201d", "type": "majority", "author": "Griffin Smith, C. J." } ], "attorneys": [ "T. J. Gentry, Jr., and Eugene R. Warren, for appellant.", "Milton Keiner, Barber <& Henry and John B. Thurman, for appellee." ], "corrections": "", "head_matter": "Behl v. Mutual Bank & Trust Company.\n4-6101\n144 S. W. 2d 1081\nOpinion delivered November 25, 1940.\nT. J. Gentry, Jr., and Eugene R. Warren, for appellant.\nMilton Keiner, Barber <& Henry and John B. Thurman, for appellee." }, "file_name": "0445-01", "first_page_order": 463, "last_page_order": 466 }