Fidelity & Deposit Co. v. Grand Nat. Bank of St. Louis

• Citation: 69 F.2d 177
• Decision Date: 10 February 1934
• Docket Number: No. 9775.,9775.
• Parties: FIDELITY & DEPOSIT CO. OF MARYLAND v. GRAND NAT. BANK OF ST. LOUIS.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

69 F.2d 177 (1934)

FIDELITY & DEPOSIT CO. OF MARYLAND v. GRAND NAT. BANK OF ST. LOUIS.

No. 9775.

Circuit Court of Appeals, Eighth Circuit.

February 10, 1934.

Henry Davis, of St. Louis, Mo. (Bryan, Williams, Cave & McPheeters, of St. Louis, Mo., on the brief), for appellant.

Courtney S. Goodman, of St. Louis, Mo. (Charles G. Revelle, of St. Louis, Mo., on the brief), for appellee.

Before GARDNER, WOODROUGH, and BOOTH, Circuit Judges.

GARDNER, Circuit Judge.

The appellant, as plaintiff, brought this action to recover from the appellee the sum of $81,014.36, under the provisions of a policy of robbery insurance. The parties will be referred to as they were designated in the lower court.

The defendant, pleading various special matters in defense, pleaded a counterclaim in the sum of $10,325.91, and also a counterclaim in the sum of $3,600 for alleged loss or shortage of cash by a teller. Plaintiff put in issue the allegations contained in the counterclaims by reply, and asked judgment as prayed in its complaint.

Plaintiff is engaged in the business of executing surety bonds and robbery insurance, while defendant, at the times mentioned in the pleadings, was a national banking association in St. Louis, Mo.

On May 25, 1930, robbers entered defendant's bank and forcibly took from persons in charge $46,895.82 in cash, negotiable bonds of the face value of $236,950, and corporate stock certificates of a par value of $45,070; these last-named certificates having been pledged to the bank as security for loans. Bonds belonging to customers of the bank, which had been placed in safety deposit boxes in the bank, of the par value of $587,050, were also taken by the robbers. At the time of the robbery defendant held two Bankers' Blanket bonds, or insurance policies, which had been issued by plaintiff, by the terms of which plaintiff agreed to indemnify defendant in an amount not to exceed $125,000 and in an amount not to exceed $25,000, respectively, against direct loss of any money or securities through robbery. These two insurance policies covered the loss of the cash and bonds and the stocks pledged to the bank, but did not cover the bonds of the customers of the bank of the par value of $587,050, deposited in safety deposit boxes in the bank. Plaintiff paid to defendant on account of its liability resulting from such robbery the sum of $125,000.

Each of the policies provided that in case of recovery, whether made by the insured or the insurer, from any source other than insurance or security, the net amount, less the actual cost and expense of making the recovery, should be applied to reimburse the insured in full for the loss, and the excess, if any, should be paid to the insurer. It is on this provision of the policy that plaintiff seeks recovery in this action.

Subsequent to the settlement of the liability, in December, 1930, Emmett Myers, manager and resident vice president of plaintiff, had a conversation with a Mr. Foristel, a St. Louis lawyer, with reference to a possible recovery of the stolen securities. In this conversation Foristel told Myers that he had information that the bonds were in possession of a man who would return them to the bank for a valuable consideration. This was reported to the president of the bank, as shown by the testimony of Mr. Myers, who testified that: "I reported that to Mr. Mays, and after various negotiations with him he agreed to pay $140,000.00 for the return of the bonds, and did pay that. I discussed the matter with him on more than one occasion. The approximate date when he agreed to pay a consideration of $140,000.00 for a return of the securities was January 15, 1931."

On January 19, 1931, the defendant bank, by its attorneys, submitted two letters to Myers. In one it agreed to pay $65,000 "upon delivery to it" of certain of the securities. In the other it agreed to pay $75,000 for the remainder of the securities. Mr. Mays, referring to the agreement, testified as follows: "After be returned from Europe Mr. Myers came out there and said that he was in touch with the underworld and that he could get the bonds back for $200,000. I asked him what about it and he agreed with me that it was too much. He went back to see if they would do any better. He came back later and probably made a half dozen trips until we finally agreed that we would give them $140,000.00."

There was other testimony concerning the transaction, but the above-quoted evidence fairly reflects the agreement so far as the issues involved in this case are concerned.

On February 20, 1931, Myers paid an agent of the robbers the $140,000 and received the stolen bonds, which were turned over to defendant. It is the claim of the plaintiff that following the recovery of the bonds it was entitled to be repaid all that it had paid to the defendant, except the cash amounting to $46,895.82, and the $159.82 which the defendant had paid for duplicate stock certificates, totaling $47,055.64, and that it should recover the difference, or $77,944.36. This claim is based upon the provisions of its insurance contract, on the theory that it had paid for the loss of property subsequently recovered by the insured.

The defendant's counterclaim alleged that the two policies provided that in the event of recovery of stolen property, the net amount of the recovery should be repaid to plaintiff, less the actual cost and expense of making recovery, and that it paid for the recovery of the bonds which had been pledged to it, the sum of $40,356.44. It also pleaded a counterclaim for $3,600 for an alleged loss or shortage of cash by a teller. In view of the disposition made of the case by the trial court, this last noted counterclaim is the only one that need be referred to. On this counterclaim the lower court held that the evidence failed to show a loss for which plaintiff was liable. The other counterclaims, as well as plaintiff's cause of action, were dismissed by the lower court because it was of the opinion that the evidence showed a contract against public policy, having for its purpose the concealment of a crime, and hence the parties were left where they had placed themselves.

In determining whether the contract in question contravenes the public policy of Missouri, the laws and judicial decisions of that state, as well as the applicable principles of common law are to be consulted. Whether a contract is against public policy does not depend solely upon any local statute or usage, and the national courts exercise concurrent jurisdiction with those of the state, but will give the decisions of the state in which the contract was executed and is to be carried out the weight of persuasive authority. Liverpool & Great Western Steam Co. v. Phenix Ins. Co., 129 U. S. 397, 9 S. Ct. 469, 32 L. Ed. 788; Bucher v. Cheshire R. R. Co., 125 U. S. 555, 8 S. Ct. 974, 31 L. Ed. 795; Hartford Fire Ins. Co. v. Chicago, etc., R. Co., 175 U. S. 91, 20 S. Ct. 33, 44 L. Ed. 84; Black & White T. & T. Co. v. Brown & Yellow T. & T. Co., 276 U. S. 518, 48 S. Ct. 404, 72 L. Ed. 681, 57 A. L. R. 426; Twin City Pipe Line Co. v. Harding Glass Co., 283 U. S. 353, 51 S. Ct. 476, 75 L. Ed. 1112, 83 A. L. R. 1168; Northwestern Mutual Life Ins, Co. v. Johnson, 254 U. S. 96, 41 S. Ct. 47, 65 L. Ed. 155.

An agreement to stifle a prosecution, suppress evidence, compound an offense, or conceal a crime which has been committed is void because it is contrary to public policy. Section 3894, Revised Statutes of Missouri 1929 (Mo. St. Ann. § 3894, p. 2746); In re Lawrence (C. C. A. 2) 166 F. 239; Rutherford v. Elliott (C. C. A. 6) 23 F.(2d) 250; Small v. Lowrey, 166 Mo. App. 108, 148 S. W. 132; Ridenbaugh v. Young, 145 Mo. 274, 46 S. W. 959; Ogden v. Ford, 179 Cal. 243, 176 P. 165; Case v. Smith, 107 Mich. 416, 65 N. W. 279, 31 L. R. A. 282, 61 Am. St. Rep. 341; Jones v. Henderson, 189 Ky. 412, 225 S. W. 34, 20 A. L. R. 1471; Aycock v. Gill, 183 N. C. 271, 111 S. E. 342, 24 A. L. R. 1449; Citizens' Nat. Bank v. Polski, 122 Neb. 658, 241 N. W. 110; Josephs v. Briant, 108 Ark. 171, 157 S. W. 136; Goodrum v. Merchants' & Planters' Bank, 102 Ark. 326, 144 S. W. 198, Ann. Cas. 1914A, 511; Haines & Lyman v. Lewis, 54 Iowa, 301, 6 N. W. 495, 37 Am. Rep. 202; Friend v. Miller, 52 Kan. 139, 34 P. 397, 39, Am. St. Rep. 340; Young v. Thomsom, 14 Colo. App. 294, 59 P. 1030; Roy v. Harney Peak Tin Mining, etc., Co., 21 S. D. 140, 110 N. W. 106, 9 L. R. A. (N. S.) 529, 130 Am. St. Rep. 706.

Section 3894, Revised Statutes of Missouri 1929 (Mo. St. Ann. § 3894, p. 2746), reads as follows: "Compounding felonies. — Every person having a knowledge of the actual commission of any offense punishable by death, or by imprisonment in the penitentiary, who shall take any money or property of another, or any gratuity or reward, or any promise, undertaking or engagement therefor, upon agreement or understanding, express or implied, to compound or conceal such crime, or to abstain from any prosecution therefor, or withhold any evidence thereof, shall, upon conviction, be punished by imprisonment in the penitentiary for a term not exceeding five years."

The lower court based its decision largely upon this statute, which we think is not broader than the common law principles applicable. It is observed in passing, however, that this statute covers only a case where a person shall take money or property of another, or a gratuity or reward, while in the instant case, there is no claim that the plaintiff or the defendant took or received, or had any agreement for taking or receiving, any money or property "of another." The property for which they were negotiating was property in which they at least had a special property, and in which they were representing its owners. The defendant was either the owner or the bailee of the stolen bonds. It had a right to their possession, and the property was not the property of the robbers; hence, securing the return of this property was not a...