12 S.W.2d 755 (Mo. 1928), 26842, Farmers' & Traders' Bank of Auxvasse v. Harrison

Docket Nº:26842
Citation:12 S.W.2d 755, 321 Mo. 815
Opinion Judge:ELLISON
Party Name:Farmers & Traders Bank of Auxvasse, Appellant, v. J. S. Harrison et al
Attorney:Cave & Cuthbertson and Rodgers & Buffington for appellant. Baker & Baker and Greensfelder, Rosenberger & Grand for respondents.
Judge Panel:Ellison, C. Lindsay and Seddon, CC., concur.
Case Date:December 31, 1928
Court:Supreme Court of Missouri

Page 755

12 S.W.2d 755 (Mo. 1928)

321 Mo. 815

Farmers & Traders Bank of Auxvasse, Appellant,

v.

J. S. Harrison et al

No. 26842

Supreme Court of Missouri

December 31, 1928

Appeal from Callaway Circuit Court; Hon. David H. Harris, Judge.

Reversed and remanded.

Cave & Cuthbertson and Rodgers & Buffington for appellant.

(1) Under the terms of the bond plaintiff made a clear primafacie case for the jury and the demurrer or peremptory instruction thereto should have been overruled. Henry County v. Salmon, 201 Mo. 136; Weed Sewing Mach. Co. v. Maxwell, 63 Mo. 488; Lionberger v. Kreiger, 13 Mo.App. 318; Jamison v. Griswold, 6 Mo.App. 405; Campbell v. Pope, 96 Mo. 472; 7 R. C. L. 621, sec. 616; 3 Fletcher, Corporations, 2100, sec. 1916. (2) The execution of the bond by the cashier of the bank, if irregular, was ratified by defendant directors and the giving of the peremptory instruction or demurrer was erroneous. Josephine Hospital Corp. v. Realty Co., 270 S.W. 642; Lungstras v. Ins. Co., 57 Mo. 109; Watson v. Bigelow, 47 Mo. 415; Smith v. Richardson, 77 Mo.App. 432; Norton v. Bull, 43 Mo. 116; Suddath v. Lime Co., 79 Mo.App. 597; Adv. Co. v. Wanamaker, 115 Mo.App. 270; Gatzweiler v. Morgner, 51 Mo. 47; Western Bank v. Gilstrop, 45 Mo. 422; Chouteau v. Allen, 70 Mo. 326. (3) Defendant sureties, by signing the bond with full knowledge of the cashier having executed it for the bank, either with or without record authority so to do, and the bank thereafter receiving and retaining all the benefits under the contract, estopped themselves from disclaiming liability on the bond. Slate v. Blackwater, 205 S.W. 629; Mining Co. v. Taylor, 247 Mo. 25; Bank v. Trust Co., 187 Mo. 536; Schlitz v. Brewing Co., 229 S.W. 814; Cass v. Ins. Co., 188 Mo. 26; 21 R. C. L. 999, sec. 47.

Baker & Baker and Greensfelder, Rosenberger & Grand for respondents.

(1) Where a bond shows on its face that it is to be signed by a principal, unless there is a valid signature by the principal, the sureties are not bound. Gay v. Murphy, 134 Mo. 106. (2) The power of a cashier of a bank to bind his principal is limited by statute, and the whole policy of the banking act is to forbid him to incur any liability on the part of the principal without authority of the board of directors expressed in the minutes. Secs. 11752, 11762, R. S. 1919. (3) A bank has no power or authority to execute a bond except in certain specific instances prescribed by law. Secs. 9749, 11737, R. S. 1919. (4) Both public policy and the provisions of the Banking Act forbid a banking corporation giving to one general depositor any preference over and above other general depositors. Any attempt on the part of a bank to give one general depositor a bond or other security is void, unless all general depositors are given like security. Commerce Trust Co. v. Trust & Guaranty Co., 165 S.W. 160; Art. 2, Chap. 108, R. S. 1919. (5) The defendants as voluntary sureties are favorites of the law and have a right to stand on the strict letter of their undertaking, and under the terms of the bond sued on there was no showing of any liability on the part of the defendants. Citizens Trust Co. v. Tindle, 272 Mo. 681. (6) The plaintiff bank having made substantial deposits in the Auxvasse Bank prior to July 18, 1923, the date of the bond, there was no consideration for the bond, and hence defendants incurred no liability in signing the same. Ring v. Kelly, 10 Mo.App. 411; Peck v. Harris, 57 Mo.App. 467.

Ellison, C. Lindsay and Seddon, CC., concur.

OPINION

ELLISON

Page 756

[321 Mo. 818] This is a suit on a bond given by the defendants as sureties to the plaintiff, the Farmers & Traders Bank of Auxvasse. The principal in the bond is another bank called the Auxvasse Bank, but it had failed before the suit was brought, and was not joined as a defendant. The amount involved is $ 12,488.06 with interest. The court gave an instruction in the nature of a demurrer to the evidence at the close of the plaintiff's case and the plaintiff thereupon took an involuntary nonsuit with leave, etc. This appeal followed the court's refusal to set aside the nonsuit.

[321 Mo. 819] Both banks were located at the village of Auxvasse in Callaway County, and were organized and operated under the banking laws of this State. For two years prior to May 7, 1923, the appellant bank had been county depository, and on that day was again designated as such for a like period of two years. Some two months thereafter, on July 18, 1923, the $ 40,000 bond in suit was executed, the Auxvasse Bank signing as principal by F. E. Stokes, its cashier, and the five defendants signing as securities, they being five of the nine directors of the Auxvasse Bank. The bond provided:

"The condition of the above bond is such, however, that Whereas, the said Farmers & Traders Bank of Auxvasse, Missouri, was on the 7th day of May, 1923, duly selected as depository of all the public funds of every kind and description going into the hands of the county treasurer, the...

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