Am. Nat'l Bank of Enid v. Crews

Decision Date12 May 1942
Docket NumberCase Number: 28650
Citation126 P.2d 733,191 Okla. 53,1942 OK 182
CourtOklahoma Supreme Court

¶0 1. PARTIES--LIMITATION OF ACTIONS--Allowing beneficiaries to be substituted for trustee as parties plaintiff was not error and amendment related back to commencement of action.

Under the provisions of section 251, O. S. 1931, 12 O.S.A. § 317, which provides for amendment of any pleading, process or proceeding, before or after judgment, it was not error for the trial court to allow parties to be substituted as parties plaintiff in place of a trustee, who had brought the action in their behalf, and such amendment relates back to the commencement of the original action.

2. LIMITATION OF ACTIONS--When statute begins to run in actions based on fraud.

In cases of fraud the statute of limitations begins to run only from the time of discovery of the fraud, or from such time as the defrauded party, by exercise of ordinary diligence, might have discovered such fraud.

3. SAME--Question when fraud was or should have been discovered, how determined.

The question as to when fraud is discovered, or with reasonable diligence could have been discovered, under the provisions of subdivision 3, sec. 101, O. S. 1931, 12 O. S. A. § 95, is one of fact to be determined from surrounding circumstances, relationship of the parties, and all facts of each particular case.

4. SAME--Action for conversion of bonds held in trust properly brought by beneficiaries within two years after discovery of misappropriation in which defendant aided and abetted.

Where plaintiffs were ignorant of the misapplication and misuse of trust funds belonging to them, and had no reason to suspect they were being defrauded, and the defendant aided and abetted in the misappropriation, the statute of limitations did not begin to run in favor of defendant, where an action for conversion of the bonds held in trust was brought within two years after the fraud was discovered.

5. TRUSTS--Action for conversion of bonds held in trust brought by beneficiaries against one who joined in misappropriation of bonds by trustee--Defenses held untanable.

Where defendant was dealing with one known to be a trustee of bonds, and not only misapplied such bonds and proceeds thereof at the direction of the trustee, but actually joined in the misapplication and misappropriation of such bonds, and converted bonds to its own use, defendant cannot escape liability for such wrongful acts upon the ground that the bonds were bearer bonds, negotiable by delivery, and that it handled the bonds solely as directed by the trustee, who had apparent authority and control over the bonds.

6. APPEAL AND ERROR--Insufficiency of single assignment of error directed at refusal of all requested instructions.

No error is presented by a single assignment of error directed at the refusal of all requested instructions, where any one of the requested instructions is erroneous.

Appeal from District Court, Garfield County; O.C. Wybrant, Judge.

Action by Ralph Crews and others against the American National Bank of Enid to recover for conversion of United States bonds, treasury notes, and certificates. Judgment for plaintiffs, and defendant appeals. Affirmed.

McKeever, Stewart & McKeever, Roy Elam, and Simons, McKnight, Simons, Mitchell & McKnight, all of Enid for plaintiff in error.

Christy Russell, of Mattoon, Ill., A. F. Moss and H. R. Young, both of Tulsa, and M. F. Priebe, of Enid, for defendants in error.

CORN, V. C. J.

¶1 This is an appeal from a judgment rendered by the district court of Garfield county, in an action to recover for conversion of United States bonds, treasury notes, and treasury certificates.

¶2 The action is based upon a multitude of transactions carried out over the period of years between June, 1922, and October, 1930. The Crews heirs, plaintiffs, owned certain valuable oil producing lands, concerning which litigation was pending during all this time. The parties, desiring that the production and development should be carried on, entered into a contract regarding the property, which ultimately provided the basis for the present action.

¶3 This contract was executed between the Crews heirs and the Garber Refining Company, and in its behalf was executed by G. J. Taft, president, who was also vice president of the Farmers State Bank of Garber and active manager of the bank. The Crews Estate Oil and Gas Producers represented the Crews heirs and children who were the owners of the oil property above referred to.

¶4 Under the terms of this contract, the oil produced from this land was to be sold to the Garber Refining Company, the money received therefor to be deposited in the Farmers State Bank, the usual royalty being paid plaintiffs. This contract further provided that the proceeds from the 7/8ths, or working interest, less necessary operation and development expenses, was to be deposited in the Farmers State Bank, in what was to be known as the "Crews Estate Oil and Gas Producers Escrow Account," to be paid over when the litigation concerning the property should be finally settled.

¶5 This contract further provided:

"6. It is further understood and agreed that the Farmers State Bank is hereby directed to invest the unused portion of said seven-eighths (7/8) of said purchase price so deposited with it and not used for development purposes in the best bonds and obligations of the United States of America which it is able to obtain at the best obtainable purchase price, and said bonds are to be held in escrow in lieu of said moneythat upon the maturing of the interest thereon, the same is to be immediately paid to the party of the first part."

¶6 The Farmers State Bank of Garber was under the active management of G. J. Taft, vice president, who was also the president of the Garber Refining Company, and it appears from the record that Taft also had other interests. The contract above mentioned was executed in behalf of the bank by Taft, and he also executed same as president of the refinery. Upon execution of this contract the Garber bank commenced receiving money which was paid for the oil produced, and thereafter began an extensive program of bond buying in behalf of its clients, the Crews heirs, the plaintiffs herein.

¶7 This program was carried on for approximately eight years, during which time it involved a multitude of transactions, the total value of which reached well over one-half million dollars.

¶8 Under the plan, as carried out by the Garber bank, negotiable United States bonds and securities, payable to bearer, were purchased for the Crews account, being paid for out of the funds of the Crews Estate Oil and Gas Producers Escrow Account, under the terms of the contract of June 13, 1922. From time to time certain of these bonds would mature, and upon maturity would be sold upon the bank's order, and the proceeds paid either directly to the Garber bank, or as directed by the bank to be paid. At various times during this period the Garber bank furnished plaintiffs with statements showing the bonds purchased, and that same were being kept safely, thus the plaintiffs never had reason to believe their account was not being properly handled.

¶9 The bonds purchased with plaintiffs' money were acquired from various sources. Of the entire amount of $534,000 of bonds purchased, $269,000 of these bonds are shown either to have passed through, or to have been handled by, the American National Bank of Enid, defendant herein.

¶10 In 1930 the litigation between the Crews heirs and others, which formed the basis for the contract in question, terminated, and a compromise was being effected. A settlement between the Farmers State Bank and these plaintiffs was in order, and G. J. Taft was called upon for a statement and settlement of this escrow account. In one manner or another this was delayed for about one week. The compromise was effected and Taft was informed that his statement of the account would have to be forthcoming. Taft disappeared and was later found, fatally wounded by gunshot, and soon died.

¶11 Shortly after Taft was found, fatally wounded, one B. A. Garber and Don Taft, a relative of G. J. Taft, called upon Ralph Crews, trustee for plaintiffs at that time, informed him of Taft's condition, and at that time executed a certain memorandum agreement which will be discussed later.

¶12 Thereupon investigation instigated by plaintiffs disclosed that of the large sum of money received under the escrow contract, only a very small portion of the entire amount was on hand, either in cash or bonds, the remainder having been embezzled. Thereafter these plaintiffs filed this action, alleging that the defendant was guilty of, or had aided and abetted, the conversion and embezzlement of the bonds and money representing the proceeds of such bonds.

¶13 The trial of the cause to a jury resulted in a verdict for plaintiffs in the sum of $249,000, the amount sued for.

¶14 Twenty-two assignments of error are asserted as grounds for reversal of this judgment, although numerous of these are directed at the refusal of the trial court to grant certain requested instructions, and others at some of those given. However, we shall confine our discussion to settlement of the issues we believe to be decisive on the matter on appeal.

¶15 The entire appeal is really presented on the basis of three general propositions: First, that the action is barred by the statute of limitations. Second, that the court erred in giving certain requested instructions and in refusing to give certain requested instructions. Third, various assignments of error based entirely upon the claim that the evidence was insufficient to justify the judgment of the trial court.

¶16 Of the $534,000 of bonds purchased for the escrow account, the record shows that $514,000 was actually embezzled or dissipated. However, this action is for recovery against defendant only as to that part thereof...

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