State Savings & Commercial Bank v. Winchester

LENNON, P. J.

This is an appeal from a judgment and from an order denying a new trial. The action was one to foreclose a mortgage executed by defendant and respondent, Elisabeth F. Winchester, as security for the payment of a promissory note in the sum of eleven thousand five hundred dollars, made by the Main-Winchester-Stone Company, as maker, and the respondent as indorser and guarantor. The execution of both the note and mortgage was an admitted fact in the case; but as a defense to the foreclosure proceedings, it was alleged that the note and mortgage were executed

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without consideration to either the respondent, Elisabeth F. Winchester, or to the Main-Winehester-Stone Company, and that the same were both obtained by false and fraudulent representations.

The facts leading up to the transaction in suit, and out of which the claim of fraud arises, are in substance as follows:

On December 13, 1906, A- G. Stoll, the then president and general manager of the Main-Winehester-Stone Company, made application to the appellant bank upon behalf of said company for a credit loan of fifteen thousand dollars. The application for the loan was approved; and a credit was thereupon given to the Main-Winchester-Stone Company upon the books of the bank in the sum mentioned, for which three notes were executed in different sums to the bank by Stoll in the name of the company. Thereafter, these notes were taken up with a renewal note of said company for fifteen thousand dollars, which renewal note was indorsed by A. G. Stoll, R. P. Grubb, a Mr. Richardson, and Frank Winchester, all directors of the Main-Winehester-Stone Company. After the sum of three thousand five hundred dollars had been paid and indorsed thereon, Richardson, having sold his stock in the Main-Winchester-Stone Company, desired to be released as an indorser of said renewal note. The bank thereafter released him, in consideration of the giving by respondent, Elisabeth F. Winchester, of the mortgage in question, as security for the payment of the indebtedness due upon the renewal note. A second renewal note was thereupon executed in the sum of eleven thousand five hundred dollars, upon which the name of Elisabth F. Winchester replaced that of Richardson as indorser, and at the same time and as a part of the same transaction, the mortgage in question was executed as security therefor. The indorsement of the second renewal note and the execution of the mortgage by respondent were in lieu of the prior indorsement of Richardson.