Bankers' Utilities Co. v. Farmers' Bank of Union

• Decision Date: 08 January 1924
• Docket Number: No. 17982.,17982.
• Parties: BANKERS' UTILITIES CO. v. FARMERS' BANK OF UNION
• Court: Missouri Court of Appeals

258 S.W. 17

BANKERS' UTILITIES CO. v. FARMERS' BANK OF UNION

No. 17982.

St. Louis Court of Appeals. Missouri.

January 8, 1924.

Appeal from Circuit Court, Franklin County; R. A. Breuer, Judge.

"Not to be officially published."

Action by the Bankers' Utilities Company against the Farmers' Bank of Union. Judgment for defendant, and plaintiff appeals. Affirmed.

Herbert A. Krog, of Washington, Mo., for appellant.

Jesse M. Owen, of Union, for respondent.

DAUES, J.

This is an action on a contract for the purchase price of certain goods alleged to have been sold and delivered by plaintiff to defendant. At the close of plaintiff's case, the cause being tried before the court without a jury,. a declaration of law in the nature of a demurrer to the evidence was sustained. Judgment in favor of defendant followed, from which plaintiff brings this appeal.

The petition is in usual form. The answer, first, is a general denial; secondly, specifically denies defendant entered into the alleged written contract with plaintiff, The answer is verified.

It appears that on March 5, 1921, a representative of the plaintiff company came to the Farmers' Bank of Union, then doing business in Union, Franklin county, Mo., and procured from the cashier of said bank, J. L. Geiger, an order for 500 small portable boxes or savings banks; the total price being $612.30. The defendant at that time was in failing condition, and closed its doors on July 8, 1921. Geiger did not inform the board of directors about this purchase, or anything pertaining thereto, and it is in evidence that the board of directors had no notice of Geiger's action until after the bank failed in July. After the bank's failure, its liquidating agent promptly repudiated the action of Geiger, refused to accept the boxes, and offered to return same to plaintiff. The controversy as presented by the briefs is whether Geiger acted beyond the scope of his authority in the purchase of these goods, and accordingly whether the bank is bound on the contract.

It is in evidence that the board of directors of the bank, within a few days after the contract was made, met in regular business, and that Geiger made no report whatsoever of this contract, and although, the bank had regular monthly meetings up until July 8, 1921, the cashier never informed the board of any such purchase. The agent who took the order from Geiger resided in Kansas City, and came into Union a few hours before making the contract, and left immediately thereafter. He admittedly made no attempt to see any officer of the bank, but his dealings were entirely with the cashier.

The cashier testified that, when he was appointed cashier, there was "some talk" at the directors' meeting about him buying supplies, such as pens and ink, stationery, envelopes, checks, drafts, and deposit slips, "and such things as were used in the everyday business of the bank," including fuel, advertising, etc., all being such things as he would use "in the bank every day," but that no direct authority was ever given him about ordering savings banks. According to Geiger, the savings banks were to be sold for the bank at a profit to its customers at a price of $1 to $1.50 each. The proof is that the cashier himself declined to accept and sought to return the goods, even before the bank's directors learned of the purported contract. The savings banks, it seems, were delivered about May 31, 1921. On July 13, 1921, Geiger wrote the plaintiff that the goods had not been unpacked and would be returned to the plaintiff, defendant paying the freight, because the defendant bank had gone into consolidation with the Bank of Union. As already stated, the bank directors and the liquidating agent thereafter repudiated the action of Geiger as soon as such information reached them and declined to take the goods. The correspondence plaintiff had with the cashier after the order was given to plaintiff never reached the directors, and it is defendant's earnest insistence that such correspondence was clandestine.

It is contended by appellant that the cashier was the executive officer through whom all of the bank's business was conducted, and that the bank held him up to the public as such, and as having authority to act in accordance with the general custom practiced in the ordinary course of business in banking institutions, and that therefore the bank is liable, because the of the contract came within the cashier's implied authority. It is contended by respondent, on the other hand, that under the undisputed evidence the cashier was not Specially authorized by the hoard of directors to make this purchase, nor was this contract within the scope of his authority, and that the action was not in accordance with the general usage and course of the casher's business; that the plaintiff, doing business with the cashier, was bound to know at its peril to what extent such unusual power to buy 500 savings banks for resale to customers had been delegated to the cashier, and that plaintiff cannot hold the bank on this unauthorized contract as to which the bank did nothing to indicate that the authority to make same existed in the cashier. The lower court took the latter view, and we think correctly so, though the question is an exceedingly close one.

A consideration of the fundamentals of the law pertaining to the powers of bank cashiers will aid in the solution of this case. In 3 Ruling Case Law, p. 444, it is said:

"The cashier of a bank is its chief executive officer. Still he is but an agent of the bank, and his acts are governed by the general rules applicable to agents, and if he exceeds his authority his acts will not bind the bank."

In 7 Corpus Juris, 551, we find this fundamental proposition:

"A bank is not bound by acts which...