Clifford Banking Co. v. Donovan Commission Co.
| Decision Date | 30 March 1906 |
| Citation | 94 S.W. 527,195 Mo. 262 |
| Parties | CLIFFORD BANKING COMPANY v. DONOVAN COMMISSION COMPANY, Appellant |
| Court | Missouri Supreme Court |
Appeal from St. Louis City Circuit Court. -- Hon. H. D. Wood, Judge.
Affirmed.
Chester H. Krum and McDermott & Crigler for appellant.
(1) Appellant, as well as the putative assignor of the respondent, was innocent in the premises. Where one of two who are innocent must suffer, the loss must fall on him who afforded the opportunity for the wrong. Had not the original bank been remiss and grossly negligent, the loss would not have occurred. Bank v. Armstrong, 62 Mo. 67; Neuhoff v. O'Reilly, 93 Mo. 164. (2) The bank checks were negotiable instruments, if instruments at all and appellant was a purchaser for value, without notice. Famous Co. v. Crosswhite, 124 Mo. 34; Building & Loan Assn. v. Bank, 126 Mo. 87. (3) Upon the assumption that the checks were forgeries, appellant did not obtain on them moneys of the respondent. The relation of debtor and creditor existed between the original bank and the Merchants-Laclede National Bank. The original and every subsequent deposit is, in strict legal effect, a loan by the depositor to the bank. Payments to the customer, on his checks, are payments pro tanto of the loan. It was the moneys of the last-named bank which appellant received. (4) The petition proceeds upon the hypothesis that McQueen forged and converted to his own use the checks which appellant bought. There was no property in the original bank in the forgeries and there was no property of the bank which the employee could convert. The drawee which paid the forged check was liable to the original bank. The attempted assignment to the new bank by the directors of the original bank passed nothing, because there was nothing to pass. (5) The so-called trustees, who were directors of the original bank, were without authority to transfer assets of the bank in dissolution to a new bank in payment of its capital. A bank should be wound up by the State. The trustees of a dissolved corporation have no authority to turn over its assets to a new corporation as its capital. The assignment of assets was equivalent to a general voluntary assignment and void under the statute. R. S. 1899, secs. 976, 1305, 1306. (6) The accounts and memoranda between the original bank and the Merchants-Laclede Bank were incompetent evidence and should have been excluded. Investment Co. v. Vette, 142 Mo 560; Banking House v. Darr, 130 Mo. 660; State v. Levy, 90 Mo.App. 643, 168 Mo. 581.
Thomas B. Harlan and Perry Post Taylor for respondent.
(1) McQueen's acts with reference to the drafts constituted forgery. State v. Kroeger, 47 Mo. 552. (2) (a) The drafts, as signed in blank, were the property of respondent's assignor and were made of value to appellant by the wrongful and criminal acts of McQueen in filling them out as to dates and amounts and making them purport to be payable to appellant's order and then wrongfully and without authority delivering them to appellant. These wrongful acts did not vest the title to the drafts in appellant and, as appellant received the proceeds thereof, to the loss of respondent's assignor, appellant, in the absence of an affirmative showing on its part that it was a bona-fide holder, for value, is liable to respondent for money had and received. Keim v. Vette, 167 Mo. 399; Johnson-Brinkman Co. v. Bank, 116 Mo. 558; Richardson v. Drug Co., 92 Mo.App. 515; Kitchen v. Commission Co., 105 Mo.App. 463; Famous Co. v. Crosswhite, 124 Mo. 34; Koch v. Branch, 44 Mo. 542; Considine v. Beers, 1 Abb. Ct. App. Dec. (N.Y.) 333; Talbot v. Bank, 1 Hill (N.Y.) 295; Mason v. Waite, 17 Mass. 563; Wilson v. Turner, 168 Ill. 403; Leete v. Mill & Mining Co., 88 F. 964; 2 Ency. Pl. & Pr., p. 1016. (b) If the appellant was a bona-fide holder for value, it was peculiarly within its power to show that. Since it did not even attempt to make such a showing, it must be presumed that it did not occupy that relationship to the drafts, the proceeds of which it is attempting to enjoy at the expense of respondent and its assignor. Hence, in this action, it should be compelled to make restitution of the funds it illegally enjoys to respondent who has been wrongfully deprived of their use. Authorities supra. (3) This is an action for money had and received. It is like a bill in equity. If, therefore, the case having been tried before the court without the intervention of a jury, it appears from all the evidence that appellant received, as the proceeds of certain drafts wrongfully taken from respondent, certain money, in truth and in fact rightfully belonging to respondent, then, in equity and good conscience, appellant should make restitution. Richardson v. Drug Co., 92 Mo.App. 520; Talbot v. Bank, 1 Hill (N.Y.) 295; 2 Ency. Pl. & Pr., p. 1016; Mason v. Waite, 17 Mass. 563; Wilson v. Turner, 168 Ill. 403; Magoffin v. Muldrow, 12 Mo. 512; White v. Bank, 64 N.Y. 319; Davis v. Krum, 12 Mo.App. 286. (4) When it was once established that the drafts were obtained by the perpetration of a fraud, of a crime, the burden of proof shifted to appellant to show that it was an innocent purchaser and for value. Famous Co. v. Crosswhite, 124 Mo. 39; Keim v. Vette, 167 Mo. 399. (5) The petition does not allege or even infer that appellant bought the drafts; on the contrary, it alleges that appellant gave no value whatever for them. While there may have been "no property in the forgeries" as such, yet the original bank did have a property in the original drafts signed in blank, by the forgery whereof and their unlawful delivery to appellant, the latter was enabled to procure money to the loss of the owner of these drafts signed in blank. By these actions a claim arose in favor of the original bank against appellant, which claim was assignable. Doering v. Kenamore, 86 Mo. 591; Snyder v. Railroad, 86 Mo. 620. (6) This assignment cannot be collaterally attacked by appellant. 4 Cyc. Law & Proc., p. 210. A voluntary assignment for the benefit of creditors provides for the return of the surplus, if any shall exist, to the assignor. There was no such provision here. It was an absolute and unconditional transfer. 4 Cyc. Law & Proc., p. 120. (7) The evidence shows that appellant had knowledge of McQueen's wrongful acts. The drafts were drawn not on any funds of McQueen, but on the funds of the bank by drafts made payable to appellant. Appellant had no account with respondent's assignor, had no funds on deposit with it, bought no exchange from it but accepted the drafts and placed them to the individual credit of McQueen, gave him nothing of value for them and even undertook to shield McQueen by complying with his request to have all checks that it (appellant), might have occasion to send McQueen "made by cashier or draft." With such notice or knowledge on the part of appellant of the ownership and rights of the bank in the drafts or the proceeds thereof, there can be no doubt of the obligation of appellant to make restitution of the sums obtained by it on said drafts. Kitchens v. Commission Co., 105 Mo.App. 469. (8) The relation of appellant to these drafts and the proceeds thereof constituted appellant trustee of a constructive trust of which respondent's assignor was the beneficiary, and appellant upon refusal to make restitution was liable in an action for money had and received. 1 Perry on Trusts (Ed. 1899), sec. 211; 3 Pomeroy's Equity Jur. (3 Ed.), secs. 1044, 1047, 1051, 1053; York v. Bank, 105 Mo.App. 138; Clark v. Bank, 57 Mo.App. 285; Deal v. Bank, 79 Mo.App. 269. (9) The judgment was manifestly for the right party and should therefore be affirmed. Cass County v. Bank, 157 Mo. 133; Redman v. Adams, 165 Mo. 71.
This is a suit for money had and received. Defendant stood below on plaintiff's case. Both parties are domestic corporations -- the one, a banking company with a small capital in Clarksville, a village in Pike county; the other, domiciled in St. Louis as a commission concern. Plaintiff is the successor of a banking corporation of the same name, which did business in the same village, whose charter expired by limitation, and whose affairs are in process of liquidation at the hands of its last board of directors as trustees; and plaintiff sues in the capacity of such successor and by virtue of being the owner by assignment of the claim in suit, an asset of the old bank. The pleadings are unquestioned and, hence, need not be set forth, further than to say that the answer is a general denial, and the petition, by formal averments, sets forth the incorporation of the old, as well as of the new bank, and of defendant company, the expiration of the old bank's charter by limitation and that its affairs are in the hands of trustees for settlement, the assignment to plaintiff of the claim in suit, the demand upon defendant, the refusal to pay, and then, as the gist of the cause of action, complains as follows:
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