Ray County Savings Bank v. Hutton

• Citation: 123 S.W. 47,224 Mo. 42
• Parties: RAY COUNTY SAVINGS BANK v. THOMAS S. HUTTON, Appellant
• Decision Date: 29 November 1909
• Court: United States State Supreme Court of Missouri

123 S.W. 47

224 Mo. 42

RAY COUNTY SAVINGS BANK v. THOMAS S. HUTTON, Appellant

Supreme Court of Missouri

November 29, 1909

Appeal from Jackson Circuit Court. -- Hon. Jas. H. Slover, Judge.

Reversed.

Botsford Deatherage & Creason for appellant.

(1) An agent of a principal is never liable to a third party except where the case reveals on the part of the agent facts and circumstances of actual, positive and intentional fraud and deceit. There is not a particle of evidence in this case to show actual fraud or deceit on the part of defendant Hutton. O'Neill v. Young, 58 Mo.App. 628; Thompson v. Irwin, 76 Mo.App. 418; Buis v Cook, 60 Mo. 391; Fusz v. Spaun-horst, 67 Mo 256; Bank v. Hill, 148 Mo. 380; Dederick v. Bank, 100 Tenn. 457; Utley v. Hill, 155 Mo. 232. (2) It is the settled law in Missouri that in actions of this kind if the defendant who made the representation charged had reason to and did believe it to be true, he has incurred no liability. The gist of this action is actual fraud. Bank v. Sells, 3 Mo.App. 85; Arthur v. Mfg. Co., 13 Mo.App. 335; Koontz v. Kaufman, 31 Mo.App. 397; Florida v. Morrison, 44 Mo.App. 529; Sanders v. McClintock, 46 Mo.App. 216; Green v. Worman, 83 Mo.App. 568; Edwards v. Noels, 88 Mo.App. 434; Lovelace v. Sutter, 93 Mo.App. 429; McCauley v. Brown, 99 Mo.App. 625; Dulaney v. Rogers, 64 Mo. 201; Anderson v. McPike, 86 Mo. 294; Waddington v. Loker, 44 Mo. 132; Funkhauser v. Lahy, 78 Mo. 458; 14 Am. and Eng. Ency. Law (2 Ed.), 203; Smith v. Bolles, 132 U.S. 125; 14 Am. and Eng. Ency. Law (2 Ed.), 63-177; Stevens v. Rainwater, 4 Mo.App. 292. (3) None of the averments of fraud in this case against defendant are proven. In the consideration of this case, we call the court's attention to the leading case of Derry v. Peek, 14 App. Cas. 337. That celebrated case was decided by the House of Lords in England in 1889. The opinions in the case were given unanimously by the judges who sat in the case. The principal opinion, however, in the case was delivered by Lord Herschel, commencing at page 359. We cite this case because in the summary of it it has received the approval of our Supreme Court in the case of Bank v. Byers, 139 Mo. 653. The judgment in the case of Derry v. Peek has been approved by others of our American courts. Nash v. Ins. & Trust Co., 163 Mass. 574; Kountze v. Kennedy, 147 N.Y. 124; Donnelly v. Trust & Guaranty Co. (Md.), 61 A. 301. The doctrine of that case has become the settled law wherever it has received consideration. The doctrine of Vose v. Grant, 15 Mass. 505, has also been approved by our Supreme Court in Fusz v. Spaunhorst, 67 Mo. 256. (4) The propositions of this brief are also supported by Pomeroy, 2 Eq. Juris. (3 Ed.), secs. 881, 886, 888. See also: Bank v. Trust Co., 179 Mo. 648; Boddy v. Henry, 113 Iowa 462; Webb v. Rockefeller, 195 Mo. 57; Priest v. White, 89 Mo. 609.

J. L. Farris, Jr., and J. S. Rust for respondent.

LAMM, J. Burgess, J., not sitting; Woodson, J., dissenting. Valliant, C.J., Gantt, Fox and Graves, JJ., concur.

OPINION

In Banc

LAMM J.

Suit for fraud and deceit. Defendant was vice-president of a corporation known as "Strahorn-Hutton-Evans Commission Company." It will be called the "Company." Plaintiff will be called the "Bank." The bank bought at a discount from the company a note known as the Huntley note, for which it paid $ 5,856.49. Failing to collect from the payors or the indorser (the company), the bank sues to recover that sum from defendant. A jury being waived, the court gave judgment for $ 6,882.07 -- filing the following memorandum: "While a decision for the plaintiff in this case must necessarily result in great hardship to the defendant, yet it is the duty of the court to declare the law as announced by the Supreme Court of the State, and under the facts and the law as thus declared the judgment must be for the plaintiff."

From that judgment, defendant appeals.

The pith of the petition is that the bank was doing a general banking business at Richmond; that the company had an office in Kansas City, Kansas, under the control of defendant, one of its executive officers; that the company on May 26, 1903, "was in a failing condition, all of which was well known to said T. S. Hutton;" that in September, 1901, William M. and Kate Huntley were the owners of 1180 head of cattle ranging near Rush Springs, Indian Territory, and executed a chattel mortgage on them to secure to the company their notes aggregating about $ 20,000; that subsequently such shipments were made of said cattle to the company that "on the -- day of December, 1902," the cattle were reduced to 545 head; that on said day in December, the company took possession of said remnant and sold them to one Peery who, in turn, executed a chattel mortgage on certain cattle, including said remnant, to secure his note to the company for $ 12,041.65; that all security was thereby withdrawn from the Huntley chattel mortgage; that the Huntleys were then and are now insolvent; that afterwards on the 29th of April, 1903, said company "by direction of the defendant, well knowing that the security originally given by the chattel mortgage . . . was no longer available and had been exhausted either by sale, death, theft or by straying of cattle away, and with intent to cheat and defraud, did procure from William M. Huntley, acting for himself and as agent for Kate Huntley, their certain promissory note" -- a renewal note; that "defendant, for the purpose of selling said renewal note to plaintiff, falsely and fraudulently represented . . . that said note was secured on 1180 head of cattle" by its form of chattel mortgage, "and falsely and fraudulently pretended that said cattle were then at or near Rush Springs, Indian Territory, and subject to said mortgage, all of which was untrue." These false and fraudulent representations are alleged to have been made by a letter of date May 26, 1903. The recitals in the note are then set forth, one of them being: "That this note is given in renewal of unpaid indebtedness, secured by a chattel mortgage on 1180 head of cattle, given by (Kate Huntley, by W. M. Huntley, agent, and W. M. Huntley) to Strahorn-Hutton-Evans Commission Company, date Sep. 21, 1901, filed for record at Ardmore, I. Ty., on 27 day of Sep., 1901."

In connection with that recital in the note inclosed with defendant's letter, it is charged that several other notes were sold to the bank at the same time and that the letter states as follows: "You will note that all these are renewals except one note, for which ample provision is made in our form of mortgage, and all this paper will be met promptly at its maturity."

It is next charged that by such statement in said letter, "defendant fraudulently intended to cause plaintiff to believe and did cause plaintiff to believe that said note was a renewal of unpaid indebtedness" secured on the 1180 cattle as recited in said note. It is next alleged that the bank relied on such fraudulent and false representations, pretenses and statements contained in said note "and set forth in said letter" and, believing the same to be true, bought said note "at the request of defendant and at his request paid" said sum therefor; that shortly thereafter the company "proved to be insolvent, and was at the time of said purchase and now is insolvent, which fact was and is well known to defendant."

The answer was a general denial.

I. Error is assigned in admitting testimony. When plaintiff offered the deposition of one Huntley, counsel objected to the whole of it upon the ground that matters testified to by him are conversations with one Peery and the transactions between him and Peery are hearsay in character, etc. Then, this from the court: "I will pass upon the objections to the deposition when I pass upon the case." At the conclusion of the reading of the deposition counsel moved to strike it out for the same reason. When the deposition of one Harness was read, this from counsel: "I want to make the same objection that I made to the deposition of W. M. Huntley;" and after Harness's deposition was read, this: "I would like to interpose this same objection to all other depositions and the same motion at the end of each." And when the deposition of one Burke was offered counsel said: "The same motion at the beginning and end as made to other depositions." The record does not disclose any ruling made except the judge's promise to pass on objections and case together. We do not find that counsel objected or excepted to that course, or that any ruling was made subsequently on these objections, or that when judgment was rendered there was any exception to the failure to rule as promised.

Under such circumstances the assignment cannot be considered. This because: (1) In the first place, we are prohibited by statute from allowing an exception here not expressly decided below. [R. S. 1899, sec. 864.] (2) In the second place, even if we (ex gratia) should construe the judgment as, in effect, an adverse ruling on the objections and motions, yet such ruling would be correct because of the general form of objections and motions. If there be any proper testimony in a deposition a general objection to the whole is bad. In like case a motion to strike out is bad. Now, there was matter in all these depositions objectionable as hearsay and conclusions, but there were none not containing some proper testimony. Learned counsel should have segregated the good from the bad, leveled their objections specifically at the bad, earmarking it in some distinguishable way, obtained a ruling and excepted to that ruling; or, failing to get a ruling, objected and excepted to such failure to rule. This they did not do.

There are other objections to testimony which, in the view we...