Sedgwick v. National Bank of Webb City
| Decision Date | 28 August 1922 |
| Parties | FRANK L. SEDGWICK v. NATIONAL BANK OF WEBB CITY, Appellant |
| Court | Missouri Supreme Court |
Appeal from Jasper Circuit Court. -- Hon. Joseph D. Perkins, Judge.
Reversed.
Frank L. Forlow and Howard Gray for appellant.
(1) The petition is in one count and the nature of the cause of action is to be determined from the facts stated therein. The notes are described, giving their dates and amounts, but the action is founded upon fraud, and therefore this is not a suit or action on the notes or ex contractu based on the notes, and although the amount of the notes is stated in the prayer of the petition, this is done merely as the basis of the measure of damages, and the action is in tort. Rawlings v. Bean, 80 Mo. 614. (2) The suit being for fraud and deceit, the question then arises on the liability of the bank for the conduct of its president. Walker although president of the bank, was from the beginning acting for himself. It is true Walker as president had his offices in the bank and transacted not only the business of the bank but his individual business, which he had a right to do. Merchants National Bank v. Lovitt, 114 Mo. 519. The doctrine of constructive knowledge is founded solely upon the presumption that the agent will perform his duty, and communicate his own knowledge to his principal, but where such communication would defeat the agent's own purposes or disclose his own fraud or misconduct, the presumption does not obtain and the principal is not charged with the knowledge of the agent. Hummell v. Bank, 75 Iowa 689; Dillaway v. Butler, 135 Mass. 479; Frenkel v. Hudson, 82 Ala. 158. When an officer is individually interested in a note or other matter, his knowledge is not to be imputed to his bank, since his interest is best served by concealing it. 5 Cyc. 461; Hickman v. Green, 123 Mo. 165; Benton v. German Am. Natl. Bank, 122 Mo. 332; Merchants National Bank v. Lovitt, 114 Mo. 519; Johnston v. Shortridge, 93 Mo. 227; Mechanics Bank v. Schamburg, 38 Mo. 228; Manhattan Brass Co. v. Webster Glass Co., 37 Mo.App. 145; State Sav. Assn. v. Nixon Jones Printing Co., 25 Mo.App. 642. Walker and not the bank procured the notes from Williams for sale to plaintiff, and Walker retained all of the commissions paid him by Williams and was an interested party, and his interest was opposed to the bank's interest, and any information Walker had regarding the notes he sold to plaintiff, it was to his interest to keep from the bank, and under such circumstances Walker's information was not the information of the bank. Ruohs v. Chattanooga Bank, 94 Tenn. 57. National banks have no authority to act as a broker in the loaning of money of others; to lend its credit by becoming surety, endorser or guarantor; and it cannot for the accomodation of another endorse his note or guarantee the performance of an obligation. First National Bank v. American National Bank, 173 Mo. 153; Merchants Bank v. Baird, 160 F. 642; Grow v. Caskell, 63 Ark. 418; Bank v. Townsend, 139 U.S. 67; Bank v. Kennedy, 167 U.S. 362; McCarney v. Chambers, 48 Ill. 445. The law will not permit an agent's private interest to come between himself and his principal. Its actual presence always disables the agent from binding his principal in the transaction. Claflin v. Farmers & Citizens Bank, 25 N.W. 293; Mercantile Mutual Ins. Co. v. Hope Ins. Co., 8 Mo.App. 408; West St. Louis Savings Bank v. Shawnee Co. Bank, 95 U.S. 557. The theory of the plaintiff by his petition is that the bank owned the notes, sold them to him and received his money for them, all of which is wholly untrue. Before the plaintiff would have any right to claim the bank liable it must show that the bank received the money paid by him to Walker and that the bank had his money, which it of right should return to him. Bank v. Lyons, 220 Mo. 572. If Walker as its president even tried to bind the bank he could not have done so and his conduct would have been ultra vires. First National Bank v. Monroe, 69 S. E. (Ga.) 1123; Aldrich v. Chemical National Bank, 176 U.S. 618; Hanover National Bank v. First National Bank, 109 F. 421; Western National Bank v. Armstrong, 152 U.S. 346. (3) The burden was on the plaintiff to establish his charge of fraud by clear testimony. Mere suspicion will not answer, nor will fraud be presumed. In determining the question of fraud or fair dealing, the person charged starts with the presumption that he acted in good faith. Zchnder v. Stark, 248 Mo. 50; People's National Bank v. Century Trust Company, 179 Mo. 648; Bank v. Hutton, 224 Mo. 72. The rule is well settled in this State that in order to make out a case of fraud, the plaintiff must prove that the party making the alleged false statements believed, or had good reason to believe, at the time he made them that they were false, or that he assumed or intended to convey the impression that he had actual knowledge of their truth, conscious that he had no such knowledge. Lovelace v. Suter, 93 Mo.App. 429; Dulaney v. Rogers, 64 Mo. 201; Bank v. Hutton, 224 Mo. 70. It is also as well settled that absence of knowledge which renders a representation fraudulent does not cover a case like this one where the party making the representation has such information as comes from a fair investigation and the exercise of his own faculties by one having a fair knowledge of the subject. Bank of Polk v. Wood, 189 Mo.App. 71; Peters v. Lohman, 171 Mo.App. 465; Bank v. Hutton, 224 Mo. 42, 123 S.W. 47; Miller v. Rankin, 136 Mo.App. 426; Atchison v. Byers, 139 Mo. 627; Snyder v. Stemmons, 151 Mo.App. 156; 20 Cyc. 24-27. The fact that Walker said that the loan was gilt edge did not make him guilty of fraud. It has often been held that a statement that a bond was "good," or "good as gold" or "A 1," or "good as old wheat in the mill," made by the vendor as to the value of the property cannot be made a basis of an action for fraud and deceit. Gordon v. Parmalee, 2 Allen (Mass.) 212; Van Epps v. Harrison, 5 Hill. 63; 40 Am. Dec. 314. (4) It was error to give plaintiff's instruction numbered 4. It authorized a recovery on a cause of action not alleged in the petition. By this instruction the jury were told that, even though the original transaction was in good faith, and even though Walker was deceived as to the number of cattle Williams had, yet if subsequently the stock owned by Williams, which was described in the mortgage, was sold by and with the consent of Walker, then the plaintiff was entitled to recover the full amount of his notes and interest at ten per cent attorneys' fees. Under this instruction all the allegations of fraud are eliminated and become wholly immaterial. The plaintiff's measure of damages under the law relative to the facts was not the amount of his notes, interest and attorneys' fees, and the bank could not have been held liable. (5) Plaintiff's instruction 14 is clearly erroneous because it told the jury if they found for the plaintiff to assess his damages for the full face of the notes, together with ten per cent interest from maturity and to that add an attorneys' fee of ten per cent. Bank v. Lyons, 220 Mo. 538; Bank v. Bank, 244 Mo. 554; Lack v. Brecht, 166 Mo. 242; Corder v. O'Neill, 176 Mo. 401; Whistler v. Bragg, 31 Mo. 124; Snead v. Hughes, 14 Ga. 542; Boston National Bank v. Armour, 6 N.Y.S. 714; Roley v. Walker, 161 Ill.App. 646; S. Covington & R. R. Co. v. Jess, 34 F. 628. It seems plain that the plaintiff, suing on the theory that the contract was induced by fraud and alleging that he tendered back what he received and ended the contract, cannot at the same time recover a judgment under the contract as though the contract were yet in full force. This being a suit, not on the notes, but for fraud and deceit in the sale of the notes, the plaintiff does not recover on the notes and therefore is not entitled to attorneys' fees. The contract for the sale of the notes in question was made in this State and therefore governed by the laws of this State and not by the laws of Oklahoma. Walling v. Cushman, 130 N.E. 175; Heidelburger v. Heidelburger, 155 N.Y.S. 993; Spies v. National City Bank, 174 N.Y. 222; National Bank v. Kellogg, 183 N.Y. 91.
S.W. Bates and W. R. Robertson for respondent.
(1) The defendant having answered in this case, all such objections as that there is joined in the petition causes of action that should not be united, and that causes are commingled, are waived. Dorrance v. Dorrance, 257 Mo. 317, 325; Mulholland v. Rapp, 50 Mo. 42; Stone v Perkins, 217 Mo. 586, 604; Gardner v. Robertson, 208 Mo. 605; Jordan v. Transit Co., 202 Mo. 418; McQuade v. Suburban Ry. Co., 200 Mo. 150, 155. (2) This case having reached this court without any objection to the petition, or to the introduction of testimony, we are relieved of any needed discussion of intricacies in pleading, which serve more as pitfalls than as aids to a just administration of the law. It is enough, under our system, that such facts appear as justify a judgment the one way or the other. Ackerman v. Greene, 195 Mo. 124, 143. (3) In the consideration of plaintiff's petition, after it has reached this stage, if, by a most liberal construction, its essential allegations may be got at by inference, it must be upheld. East St. Louis Ice & Cold Storage Co. v. Kuhlmann, 238 Mo. 685, 702. (4) Where the petition occupies an indeterminate middle ground, so as to enable the plaintiff to go to the jury on either one of two theories, it is the duty of the court to construe it according to either theory developed by the testimony. Henry Gaus & Son Mfg. Co. v. Magee, 42 Mo.App. 307, 314. (5) "A failure of proof within the meaning of our decisions occurs when the petition or answer is unproven in their entire scope or meaning." ...
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