Parker State Bank v. Pennington

• Decision Date: 14 November 1925
• Docket Number: 6995.,No. 6994,6994
• Citation: 9 F.2d 966
• Parties: PARKER STATE BANK v. PENNINGTON. HOOD et al. v. SAME.
• Court: U.S. Court of Appeals — Eighth Circuit

9 F.2d 966 (1925)

PARKER STATE BANK v. PENNINGTON.

HOOD et al. v. SAME.

Nos. 6994, 6995.

Circuit Court of Appeals, Eighth Circuit.

November 14, 1925.

Horace N. Hawkins, of Denver, Colo. (L. W. Cunningham, of Colorado Springs, Colo., on the brief), for plaintiffs in error.

A. X. Erickson, of Denver, Colo., for defendant in error.

Before LEWIS and KENYON, Circuit Judges, and MUNGER, District Judge.

MUNGER, District Judge.

Charles B. Ames, by his agent, entered into a written contract with the defendant in error on November 3, 1919, to sell to the latter a tract of land in Colorado. By the terms of the contract the purchase price was $70,000, of which $2,000 was recited as then paid, $2,000 more was to be paid on or before November 18, 1919, and $6,750 was to be paid on or before March 15, 1920. The remainder was to be evidenced by five promissory notes, executed by the purchaser to the vendor, secured by a deed of trust on the land, executed by the purchaser to a designated trustee for the use of the vendor. The principal of the first of these notes was $6,750, due on or before April 1, 1920, and the other notes were payable at later dates. The portion of the contract which is the chief subject of controversy in this proceeding reads as follows:

"Title to the above-described real estate to be a merchantable title, and a good and sufficient warranty deed to be executed and delivered by Charles B. Ames to Harley L. Pennington, or or before the 15th day of March, A. D. 1920; abstract of title to the above-described premises to be delivered to Harley L. Pennington on or before the 10th day of November, A. D. 1919, for the purpose of examination; the said abstract to be returned on or before the 1st day of December, A. D. 1919.

"Provided that the payment of two thousand dollars ($2,000.00) is made on or before the 18th day of November, A. D. 1919, and the payment of six thousand seven hundred and fifty dollars ($6,750.00) is made on or before the 15th day of March, A. D. 1920, and the above-described notes and deed of trust are made and delivered to the said Charles B. Ames; but in the event the above payments are not made, and the said notes and deed of trust are not executed and delivered, then in that event the payments already made shall be forfeited and held by the said Charles B. Ames as liquidated damages; and in the event the said Charles B. Ames refuses to deliver a good and sufficient warranty deed on the payments of the above sums and delivery of the above-mentioned notes and deed of trust, then the said Charles B. Ames shall repay to said Harley L. Pennington the amounts already paid, and an amount equal thereto by way of liquidated damages. And it is further agreed that, in the event the said Charles B. Ames is unable to deliver a merchantable title on the payments of the above sums and delivery of notes and deed of trust, the said payments shall be made and the said notes and deed of trust shall be executed and delivered to the Parker State Bank, Parker, Colorado, to be held by them in escrow until a good and sufficient warranty deed shall be executed and abstract of title delivered showing a merchantable title, not later than the 15th day of September, 1920."

The complaint of the plaintiff alleged that at the date of this contract Charles B. Ames was the president, Harold A. Senter the vice-president, and Fred B. Hood the cashier, of the Parker State Bank, and that Senter later became president of the bank. It also alleged the making of this contract, and that the plaintiff had delivered to the Parker State Bank the sums of money required to be paid to entitle the plaintiff to a deed and to an abstract showing a merchantable title, and had performed all things required by the contract to be done by him on or before March 15, 1920. The complaint then recited that Ames was unable, and failed, to deliver a merchanable title on March 15, 1920, and an abstract as provided in the contract, and alleged that "said moneys then and there became money and things in escrow, and were so received and held" by the defendants pending the delivery by Ames of a sufficient deed and an abstract showing merchantable title, not later than September 15, 1920, and that the defendants converted the money to their own use "by taking it from said escrow," although a sufficient deed and an abstract showing merchantable title was never delivered to the plaintiff, and that the defendants have not paid the money to the plaintiff after demand had been made. It is further alleged that "defendants perpetrated said unlawful act by taking the deed theretofore delivered into escrow" by Ames and placing it of record, and by placing of record the deed of trust mentioned in the contract. Following these allegations, it is alleged that the defendants Hood and Senter "were guilty of fraud and other unlawful conduct in connection with the things complained of," and that plaintiff ought to have execution against the bodies of these defendants, and that the defendants in doing and in connection with the things complained of, were guilty of such fraud and unlawful conduct as should entitle the plaintiff to punitive damages in the sum of $48,750. The prayer was for a judgment for $16,250 actual damages, and for $48,750 punitive damages, and for execution against the bodies of Senter and Hood. The allegations as to fraud and liability for punitive damages were stricken from the complaint on the motion of the defendants.

By the answers the defendants made a general denial, but admitted and alleged that the plaintiff had paid to the bank "under the terms and provisions of the contract set out in plaintiff's amended complaint, on the dates and in the amounts as follows, to wit: November 4, 1919, $2,000; November 17, 1919, $2,000; March 15, 1920, $6,750; June 19, 1920, $3,500; June 25, 1920, $1,929.23" — the last two payments being made on the promissory notes. They alleged that $10,750 of this money had been paid by the bank to Ames on April 8, 1920, and $5,429.23 on May 12, 1921. They admitted that plaintiff had performed all things required by the contract to be done up to March 15, 1920. As an affirmative defense, it was alleged that the plaintiff had waived the delivery of the evidence of merchantable title by September 15, 1920, had accepted a deed to the lands, executed in March and recorded in April, 1920, and had accepted abstracts of title and also the title to the lands in April, 1921.

The plaintiff's reply denied that any waiver had been made or that he had accepted the abstracts or title. The case was tried to a jury upon these pleadings and the evidence submitted by plaintiff and defendants, and a verdict was returned for the plaintiff against the bank, Senter, and Hood. The trial proceeded upon the theory that the complaint stated a cause of action in the nature of trover for conversion of the money paid by the plaintiff and was submitted to the jury by instructions based upon that theory. The court instructed the jury that the action was not an action upon the contract, but was an action for the conversion of money. It appeared, from the evidence, that the plaintiff had paid the payments November 4, November 17, and March 15, by checks drawn against a bank in Nebraska, and payable to the Parker State Bank. The evidence does not show any directions given to the bank by the plaintiff to hold these checks or the money derived from them in any special manner. The bank carried the account on its books in a special account, which it called the "Miscellaneous Account," until it was paid to Ames. Mr. Senter and Mr. Hood acted as the bank's officers in making this payment by the bank to Mr. Ames. It is because of these acts in making the payments to Mr. Ames that the jury found them jointly liable with the bank to the plaintiff, upon the theory submitted by the instructions of the court, that they thereby aided in the conversion of the money.

1. Assignments of error present the question whether the defendants' motions in arrest of judgment were properly overruled. The motions challenged the sufficiency of the complaint and of the pleadings to sustain the judgment. In support of this contention it is claimed that the complaint attempted to state a cause of action for the conversion of the money paid by the plaintiff to the bank, and that such an action cannot be maintained, unless the specific money, the identical coin, bills, or checks deposited by the plaintiff, were to be held and returned to the depositor. The contract did not provide for the holding by the bank of the identical money or checks paid to it by the plaintiff. It provided that the "payments" were to be made to the bank, "to be held by them in escrow" until an event should have occurred. The complaint avers that the plaintiff delivered the "sums of money" required to be paid by the contract, but does not allege that the very thing delivered was to be returned. It is not claimed by the defendant in error that the obligation of the contract, or the charge made in the complaint, required the bank to hold the particular things received and to return them to the plaintiff, nor could such a construction be maintained. When the nature of the business conducted by banks is considered, and the usual mode in which they receive and care for money, checks, or drafts received, it is obvious, that in the absence of instructions, money received will ordinarily be mingled with the other money in the bank, and that checks and drafts will be presented for payment, and the money so received will also be placed with the other money in the bank. The fact that separate accounts are kept of the funds received for special purposes does not show a duty of a bank to keep in distinct parcels the identical money or checks received for such special purposes. It is also obvious that the bank should not ordinarily keep the original checks or drafts, drawn on other banks, without presentment...