Citizens Bank of Senath v. Johnson

• Decision Date: 10 January 1938
• Docket Number: No. 5729.,5729.
• Court: Missouri Court of Appeals
• Parties: CITIZENS BANK OF SENATH v. JOHNSON et al.

112 S.W.2d 916

CITIZENS BANK OF SENATH v. JOHNSON et al.

No. 5729.

Springfield Court of Appeals. Missouri.

January 10, 1938.

Rehearing Denied February 8, 1938.

Appeal from Circuit Court, Scott County; Frank Kelly, Judge.

"Not to be published in State Reports."

Action by the Citizens Bank of Senath, by O. H. Moberly, Commissioner of Finance of the State of Missouri, against Myrtle E. Johnson and the Fidelity & Deposit Company of Maryland, on a fidelity bond. The action was dismissed as to the first-named defendant; judgment for the last-named defendant; and plaintiff appeals.

Affirmed.

McKay & McKay and Hal H. McHaney, all of Kennett, for appellant.

Ward & Reeves, of Caruthersville, for respondents.

FULBRIGHT, Judge.

This is an action upon a fidelity bond issued by the defendant Fidelity & Deposit Company of Maryland, to the Citizens Bank of Senath, indemnifying the bank against loss caused by larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, wilful misapplication, or other act of fraud or dishonesty on the part of Myrtle E. Johnson as employee of said bank. The suit was filed in the circuit court of Dunklin county and was for $5,000, the penalty expressed in the bond. Change of venue was granted to the circuit court of Scott county, where the case was tried November 18, 1935. After all the evidence was in, the plaintiff dismissed as to Myrtle E. Johnson, and the cause was submitted to a jury, which returned a verdict in favor of the Fidelity & Deposit Company of Maryland. Motion for a new trial was overruled, and plaintiff appealed to this court.

There are seven different items sued for in the petition amounting to the total sum of $12,309.70, the loss occurring to the bank by reason of the alleged wrongdoing of the bookkeeper, Myrtle E. Johnson. The first item is in the sum of $2,467.24 alleged to have been embezzled or misappropriated on February 22, 1930. The next item is for $3,518.51 alleged to have been lost to the bank on April 7, 1932. The next four items are for drafts drawn at the request of the assistant cashier, D. G. Doherty, to W. E. Richmond & Co.; the first being for $750, dated October 15, 1932, the next being for $573.95, dated October 21, 1932, the next being for $2,975, dated November 4, 1932, and the last of these drafts being for $525, dated December 24, 1932. The last item sued for is in the sum of $1,500, being a check dated September 19, 1932, drawn by the assistant cashier, D. G. Doherty, in the name of O. O. Oxley, and which was charged to the account of Consolidated School District No. 8. This check was drawn payable to W. E. Richmond & Co.

The joint answer of defendants admitted the formal allegations in the petition, but denied all other allegations, and alleged that defendant Myrtle E. Johnson was under the direct supervision of Will Hutchins, cashier, and D. G. Doherty, assistant cashier, of said bank, and that all of her acts had been done at their direction without guilty knowledge on her part, and without her receiving any part of the funds lost by the bank.

The record discloses that the alleged defalcation in the sum of $2,467.24 occurred on February 22, 1930. The bond sued on is dated April 16, 1930, approximately two months after the alleged defalcation. Defendants objected to the introduction of testimony on this item, whereupon plaintiff asked for permission to amend its petition which was denied by the court, to which action plaintiff duly excepted. This item passed out of the case as no question relative to the correctness of the court's ruling is urged on this appeal.

The second item amounting to $3,518.51, as shown by the testimony, represents a shortage in the bank accounts of E. Baker and A. L. Davidson. The true account of Baker showed a balance due him by the bank on May 11, 1932, in the sum of $8,906.73. The true account of A. L. Davidson, ex officio collector, on said date, showed a balance due him in the sum of $13,401.74. Two fake sheets, the evidence discloses, were found in the bank after it closed, one styled "A. L. Davidson, Coll," and the other "A. L. Davidson, Ex Off," on which sheets the respective balances shown as owing by the bank on May 11, 1932, were $11,073 and $7,716.96, and on the same date the "A. L. Davidson Coll" sheet showed a deposit of $8,906.73. The balance shown by the fake sheets amounted to $18,789.96, or $3,518.51 less than the aggregate balances due by the bank to Davidson and E. Baker as shown by their true accounts. The fake sheet styled "A. L. Davidson, Ex Off," showed a charge against such account on April 7, 1932, in the sum of $3,518.51. At the top of this fake sheet was written "Take out" in the handwriting of Myrtle E. Johnson. These fake sheets were found after the closing of the bank by Joe Smith, an accountant, in a filing cabinet of the bank.

Smith testified, in substance, that the way he found this item was by reconstructing certain figures in connection with the account of A. L. Davidson, collector, and A. L. Davidson, ex officio, and E. Baker. Other testimony showed that Doherty, assistant cashier of the bank, had instructed the bookkeeper, Myrtle E. Johnson, to take out one of the Davidson accounts, and that upon this suggestion she did so. Miss Johnson testified that she did not know who made up the items on the Davidson account; that she did not; that Doherty did considerable work at nights and that she found the sheets during the posting of the books; that the Davidson account was charged with the debit slip of $3,518.51 at the request of Doherty; and that he instructed her to lay it away. She thereafter made a notation on the sheet to take it out of the file. The testimony further showed that an adding machine tape, dated November 22, 1932, was found, and, after the total deposits of the bank were listed, deductions were made thereon amounting to $10,114.43. The tabulation was made by Miss Johnson, and it was necessary to make the deduction in order to make the books kept by Miss Johnson balance with the daily statements kept by Delmar Doherty, assistant cashier.

The next four items represent four drafts; No. 6676 in the sum of $750; No. 6717 in the sum of $573.95; No. 6829 in the sum of $2,975; and No. 7082 in the sum of $525. The evidence discloses that all of these drafts were drawn by the bookkeeper, Miss Johnson, in the usual course of business, just as other drafts were drawn; that the bookkeeper did not collect for drafts drawn by her for the bank, but that she drew them in the usual course of business at the request of her superiors, Cashier Hutchins or Assistant Cashier Doherty from whom she received all her orders.

The seventh item, in the amount of $1,500, is represented by a check dated September 14, 1932, drawn by the Assistant Cashier Doherty in the name of O. O. Oxley, which was charged to the account of Consolidated School District No. 8. The check was drawn payable to W. E. Richmond & Co. The evidence tends to show that Doherty handled the account of O. O. Oxley and that he drew this check for $1,500 and mailed it to W. E. Richmond & Co. of Memphis, Tenn. Miss Johnson testified that she did not make the debit against the account of the Consolidated School District No. 8; that she was under the impression that it was in Doherty's handwriting; that the first knowledge she had about such check was shortly after the bank closed, and had no knowledge that any such check had been issued and paid by the bank; that occasionally the cashier or assistant cashier would do some posting of the books. There was also some testimony of Mr. Ford, prosecuting attorney, Dunklin county, relative to admissions and statements made by Miss Johnson to him, among other things, that she stated that when the $1,500 check was cashed Doherty instructed her to charge it to some school district. George W. Krone testified that after the bank examiner had taken charge of the bank he asked Miss Johnson why she had not told him or some one of the directors of Doherty's defalcation, and that she replied she was afraid she would lose her job. These statements were denied by Miss Johnson.

Witness Smith, testified, in part, that while the bank was closed he went to examine it. "When the Prosecuting Attorney and I were there, we were not at her house, we were at the bank when we had this conversation with her. * * * Nobody tried to hide these papers (fake sheets) from me. * * * She hesitated at times in telling us what she knew. When we would pick out something here and something over there she would take a little time to study about it. * * * The Prosecuting Attorney and I asked her so many questions she went to crying. The Prosecuting Attorney was down there to see what it was all about. He was not a bank examiner, but the bank examiner was there. * * * Miss Johnson did not say she put some of these sheets in the depositor's register before the examiner came; she said Delmar had her put some sheets in there and take some out along about that date. She did not say that she knew there was anything wrong about it. * * * She said he brought some sheets and told her to put them in and take some others out, and she did it." Referring to the drafts, Smith testified: "She said Delmar would tell her to write them and she would just write them and she would write the drafts when her superiors told her to. I know O. O. Oxley. This O. O. Oxley check for $1,500.00 is not in Myrtle Johnson's handwriting. It is in Delmar Doherty's handwriting."

The testimony tended to show that Miss Johnson never had any banking experience except with the Citizens Bank of Senath; that she first began work as a stenographer in September, 1927. Later, in 1928, she returned to her home in Springfield, Mo., and worked for Judge John H. Bradley, one of the judges of the Springfield Court of Appeals. In the same year, she was again employed by the Citizens Bank of Senath as a bookkeeper. She stated that she had...