Federal Savings & Loan Ins. Corp. v. First Nat. Bank

• Decision Date: 17 January 1948
• Docket Number: No. 13510.,13510.
• Parties: FEDERAL SAVINGS & LOAN INS. CORPORATION v. FIRST NAT. BANK, LIBERTY, MO.
• Court: U.S. Court of Appeals — Eighth Circuit

164 F.2d 929 (1947)

FEDERAL SAVINGS & LOAN INS. CORPORATION v. FIRST NAT. BANK, LIBERTY, MO.

No. 13510.

Circuit Court of Appeals, Eighth Circuit.

December 26, 1947.

Rehearing Denied January 17, 1948.

Charles M. Miller, of Kansas City, Mo. (Ray E. Dougherty, of Washington, D. C., on the brief), for appellant.

William S. Hogsett, of Kansas City, Mo. (Martin E. Lawson and Francis G. Hale, both of Liberty, Mo., on the brief), for appellee.

Before GARDNER, THOMAS, and JOHNSEN, Circuit Judges.

GARDNER, Circuit Judge.

This was an action for money had and received, brought to recover $52,541.99 with interest. The complaint upon which the action was tried contains twenty-four counts, each alleging a cause of action for money had and received by means of a check drawn against the account of the Liberty Federal Savings and Loan Association, Liberty, Missouri, on the First National Bank, Liberty, Missouri. The Liberty Federal Savings and Loan Association on September 7, 1943, went into the hands of a conservator to conserve its assets pending further disposition of its affairs. Investigation disclosed irregularities in the conduct of the business of the Association and thereafter appellant Federal Savings and Loan Insurance Corporation made payment to the Association of an amount sufficient to restore it to a condition of solvency and took assignments from the Association of the claims here sued upon. It will be convenient to refer to the parties as they were designated in the trial court, or by their names.

At all times involved in this action Harold Wilson was president of the Loan Association and the checks involved were the checks of the Association signed either by Wilson as president or by the secretary of the Association and were all payable to the order of the First National Bank of Liberty, Missouri. On presentation to that bank they were credited to the account of Wilson. The defendant admitted that the checks were credited to Wilson's account in the bank but defended its action in so doing upon the grounds among others: (1) that Wilson had apparent authority to deal with the funds of the Association in the manner he employed; (2) that had the bank made inquiry of the Board of Directors of the Association, an examination of its records would have revealed credit balances in favor of Wilson in an amount equal to or greater than the checks, and hence, the Association suffered no loss. There were other contentions in the trial court which are urged here by the defendant but we think it will be unnecessary to consider them in detail.

The record is a very voluminous one, made up not only of a transcript of the oral testimony but of many exhibits. The trial court entered findings to the effect that the checks were all signed by Howard Wilson as president or by Aileen Chrisman as secretary of the Association and that these officers were respectively authorized to sign the checks and the Bank was so notified by the Association. The court specifically found that, "At the times in question Harold Wilson was president and chief managing officer of the Association, and the board of directors had delegated to him, and he at all times exercised, plenary authority in the management of its affairs. So far as the Bank was concerned, Harold Wilson had apparent authority from the Association to cash, or to deposit to his own credit in the Bank, checks of the Association drawn on the Bank and made payable to the Bank. Specifically, he had apparent authority from the Association to deal with the checks in question as he did deal with them."

The court also found that the Association suffered no loss by reason of the check transactions here involved; that none of the proceeds of any of the checks entered into or became any part of the Bank's assets; that had the Bank pursued inquiry with reasonable diligence it could not have discovered any misappropriation by Wilson of the proceeds of any check involved in this suit; that the Bank was not guilty of any negligence in any of the check transactions; that as to each check involved no claim has ever been made and no claim exists against the Association or its conservator or assignee on account of the disposition of the proceeds of such check and "the Association has not suffered or incurred any loss or liability on account of the disposition of the proceeds of such check." The court in its findings set out in detail that each check was shown on the books of the Association to have been charged against a credit balance which was sufficient to cover the check. The books and records of the Association were received in evidence.

Wilson carried three deposit accounts in the defendant Bank, one in his own name, one in the name of the Harold Wilson Insurance Agency, and one in the name of Home Owners Realty Corporation. Defendant knew that all money deposited in any of the three accounts went to Wilson. Between December 31, 1937 and July 19, 1943, the twenty-four checks here involved were drawn upon the account of the Loan Association in the defendant Bank, the checks being payable to the order of the Bank. On presentation they were deposited in one or the other of three above noted deposit accounts maintained by Wilson, and Wilson or Aileen Chrisman made up the deposit slips. It is admitted in the brief of plaintiff that it was not entitled to judgment on the checks set out in Counts XII, XXI and XXIV, aggregating $15,300.55, and that as to these counts the court properly denied its motion for judgment, and plaintiff's witness Rohlfs, an examiner for the Federal Home Loan Bank Administration testified that no loss was sustained by the Association on the check set out in Count XV, nor had it suffered any loss on the check set out in Count XIV.

It is earnestly contended by appellant that the case of Federal Savings & Loan Ins. Corp. v. Kearney Trust Company, 8 Cir., 151 F.2d 720, 722, is so similar in its facts as to be determinative of the present case in favor of plaintiff. In the Kearney case we held that the burden was upon the Kearney Trust Company, defendant in that action, "(a) to plead and prove as a defense payment at the direction of the Loan Association, or (b) that Wilson had authority to direct that the checks be credited to his account." We held that the defendant in that case had not met that burden. It is contended by the defendant in the instant case that it has met that burden. Certainly, if the findings of the court are sustained by substantial evidence, the judgment appealed from should be affirmed. These findings are presumptively correct and must be sustained unless clearly erroneous. Rule 52 (a), Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c; Dumas v. King, 8 Cir., 157 F.2d 463; Kincade v. Mikles, 8 Cir., 144 F.2d 784. We are not at liberty to substitute our judgment for that of the trial court and on appeal that view of the evidence must be taken which is most favorable to the prevailing party, and if, when so viewed, the findings are supported by substantial competent evidence they should be sustained.

As great reliance is placed upon the Kearney Trust Company case we should perhaps first note some of the features which we think distinguish that case from the case at bar. In that case there was no course of dealings between the Association and the Kearney Trust Company, and the Kearney Trust Company was payee of the checks and not the drawee as was the defendant in this case. In the Kearney case no evidence was offered showing what authority the Board had delegated to Wilson, nor indeed what authority he customarily exercised in the management of the Association and in the handling of its affairs. There was no evidence of Wilson's dealings with the Association as shareholder and borrower or that he received large sums of money from the Association for salary, insurance premiums, proceeds of loans and redemption of shares. Neither was there any evidence in the Kearney case that it acted in reliance upon annual audits by the federal examiners; indeed, the Kearney Trust Company rendered no statements of account to the Association and there was no evidence that it had ever dealt with the Association at any time upon any subject, or that...