Brede Decorating, Inc. v. Jefferson Bank & Trust Co.

• Decision Date: 10 April 1961
• Docket Number: No. 48197,No. 2,48197,2
• Citation: 345 S.W.2d 156
• Parties: BREDE DECORATING, INC., Respondent, v. JEFFERSON BANK AND TRUST COMPANY, a corporation, Appellant
• Court: Missouri Supreme Court

Page 156

345 S.W.2d 156

BREDE DECORATING, INC., Respondent, v. JEFFERSON BANK AND TRUST COMPANY, a corporation, Appellant.

No. 48197.

Supreme Court of Missouri, Division No. 2.

April 10, 1961.

Herbert E. Barnard, Henry C. Bryan, Jr., James E. McDaniel, McDonald, Barnard, Wright & Timm, John W. Mueller, St. Louis, for Jefferson Bank and Trust Co., defendant-appellant.

Robert S. Allen, Lewis, Rice, Tucker, Allen & Chubb, St. Louis, for respondent.

EAGER, Judge.

This is a suit for the conversion of sixteen checks in the aggregate amount of $18,359.80. After a verdict for the defendant, the trial court entered judgment for plaintiff pursuant to its after-trial motions and, in the alternative, sustained its motion for a new trial. On this appeal defendant asks that the original verdict and judgment be reinstated or, in the alternative, that it have a new trial.

Plaintiff, Brede Decorating, Inc., a Missouri corporation, was engaged in the 'convention decorating business'; this, as we understand, involved the furnishing of decorations, booths, etc. for semi-public events, such as homes shows, conventions and commercial displays, and also street decorations for the Christmas season. We may occasionally refer to the corporate plaintiff as 'Brede.' Prior to January 1952, it had operated as a partnership; in that month it was incorporated. Its officers were William S. Brede, President; John L. Reibold, Vice-President; M. M. Curtis, Secretary, and James W. Egan, Treasurer. Its office was in the City of St. Louis and Egan was in charge of the business as its general manager. The other officers all lived in Minnesota where they operated another corporation with a similar name and business. Egan was supposed to make reports to Brede at least monthly, with the assistance of an outside accountant, but apparently these were not always made. Each of the officers owned a one-fourth stock interest. During the period involved here Richard J. Siviur was connected with the St. Louis operation, first as an employee and later as a salesman on commission; his status at certain times appears to have been somewhat hazy. Some of his actions are specifically involved in the issues here. In January 1952, Egan opened an account for the corporation at defendant bank, Brede's office being located nearby. At that time he furnished a signature card, with the signatures of all four officers listed thereon, and a corporate resolution or certificate of authority which will be recited in some detail later. No subsequent change was made in the card or the resolution. This corporate bank account remained active until September or October 1953, when the last entry was made and all money withdrawn. At about that time the Brede office was moved and a new corporate account was opened at The Plaza Bank, the location of which was apparently more convenient. Defendant was never given any specific notice of the closing of the corporate account or of any revocation of Egan's authority as an officer. Under Brede's resolution, he had authority to draw checks and, to a controversial extent, to endorse. Some corporate checks had been deposited to Brede's account at defendant bank, bearing simply a rubber stamp of the corporate name on the back, i. e., 'Brede Decorating, Inc.'; Egan testified that such a stamp was used regularly for deposits, but that all checks were deposited and none cashed. When the account was opened at The Plaza Bank, a new stamp was procured constituting a restrictive endorsement for deposit only to the corporate account. In November 1954, (more than a year after the corporate account was changed), a new account was opened at defendant bank by Egan and Siviur under the fictitious name of 'Acme Williams Decorating Co.'; this continued until December 1955, when all funds had been withdrawn. Withdrawals from that account required the signatures of both Egan and Siviur. While there is some discussion as to whether this was actually a partnership or not, it makes little difference here, for it certainly was a personal account of Egan and Siviur. Acme-Williams had no office, no books or records except a check book, no business cards, and no employees. Its address was listed at the bank as Siviur's apartment. In October 1955, Egan and Siviur terminated all connection with plaintiff. As shown on Egan's reports, the company had been operating at a substantial loss, and had borrowed approximately $18,000 at Egan's suggestion. When he resigned in October 1955, the other three officers bought his stock for a consideration of $12,500. In the general disarrangement of affairs, Siviur simply left, unheralded and more or less unnoticed.

During the period from January 6, 1955, to October 20, 1955, sixteen checks payable to Brede Decorating, Inc., were deposited in defendant bank to the credit of the Acme-Willaims Decorating Company account. Substantially all of these, when presented, bore on their backs the rubber stamped name 'Brede Decorating, Inc.' and below this the words 'Acme-Williams Dec Co' (or some slight variation) written or printed in ink; none bore any individual's name or signature. Two bore only the Brede stamp; on one the Acme-Williams name was apparently typed with a restriction for deposit in that account. It is for these sixteen checks that plaintiff seeks to hold defendant. At least ten of the checks, including most of the larger ones, were issued in payment of invoices sent out to customers on the regular Brede invoice form. Egan and Siviur testified by deposition; neither of them recalled or explained a number of these checks; they testified that a few, including four checks on two large jobs, were for transactions which Siviur had 'sold,' promoted and handled personally, reimbursing Brede for any materials or labor it furnished. We find it unnecessary to go into the details of this. Egan identified his writing appearing in the Acme-Williams name on only one of the sixteen checks, and he testified that he made out that deposit slip; Siviur more or less identified his writing of the Acme-Williams name on various others. Neither testified by whom the Brede rubber stamp had been affixed on any check. It was not specifically shown who actually made any deposit; Siviur testified that he generally made the deposits. He also testified that he 'discussed' virtually all of the checks with Egan; to what purpose and with what result is not shown. It was shown that four checks totaling $3,102.24 were drawn on the Acme-Williams account from January to July 1955, payable to Brede, and that these were deposited in Brede's Plaza account. In entering judgment for $15,257.45 (exclusive of interest) the trial court offset the total of these four checks against the total of the sixteen alleged to have been converted. Prior to the purchase of Egan's stock, Brede sent a certified public accountant to St. Louis to check the books and records; he worked with Egan and made a report, but it is not specifically shown that there were available to him any records which would have indicated the handling of these sixteen checks, or the payment of those accounts. Beginning early in 1956, Brede discovered the misapplication of these checks, which, of course, was after Egan left the company. It is clear that no officer of plaintiff, except Egan, knew at any time that checks payable to Brede were being deposited in any other account.

While we do not attach much legal significance to any individual views affecting defendant's liability, we note that Mr. Poertner, Vice-President of defendant, testified that it was 'unusual' to accept a corporate check for deposit in another account, and that, if cash had been requested, an individual signature would have been required. He also thought, however, that these endorsements might be sufficient for negotiation, especially if the bank knew the individual. Defendant did not question the handling of these checks at any time, and it made no inquiry concerning the matter. The bank's officers did not know Siviur and did not rely on any presumed authority which he might have had.

We have reserved any discussion of the plaeding until the basic facts were stated. The petition, in essence, alleged that defendant had credited plaintiff's checks (setting them out) to the Acme-Williams account of plaintiff's employees without proper endorsement, and had permitted the proceeds to be withdrawn and misappropriated; and that, by reason of such acts of asserted dominion and wrongful control without authority, plaintiff had lost the amount of such checks, defendant had collected the checks, and that it was guilty of conversion. The answer, after sundry denials, alleged (with somewhat more elaboration) that Egan had authority to sign and endorse checks and other negotiable instruments and that defendant had been authorized to pay checks when signed or endorsed by him, without inquiry; and that plaintiff was estopped. Such further facts as may be necessary will be referred to in the course of the opinion.

No question has been raised here concerning the from of this action. Many cases of this general nature have been sustained as actions for conversion, while others have been sustained as actions for money had and received. In this opinion, we shall not attempt to follow the points and subpoints of the parties, as such. In substance, they argue pro and con the supposed authority of Egan, acting personally or through Siviur, to do what was done; this, from the varying standpoints of actual authority, implied authority, apparent authority and estoppel. Defendant suggests here that it was entitled to a driected verdict. We note at the outset that the Uniform Fiduciaries Law was enacted in Missouri in 1959, Section 456.240 et seq. RSMo 1959, V.A.M.S., long after these occurrences took place. These statutes have not been mentioned by the parties, since the act is not applicable here. The reason we call attention to it is that it might well...