Coleman v. Stocke

• Decision Date: 15 July 1911
• Citation: 159 Mo. App. 43,139 S.W. 216
• Parties: COLEMAN v. STOCKE.
• Court: Missouri Court of Appeals

139 S.W. 216

159 Mo. A. 43

COLEMAN v. STOCKE.

St. Louis Court of Appeals. Missouri.

July 15, 1911.

1. BANKRUPTCY (§ 303) — ACTION BY TRUSTEE — SUFFICIENCY OF EVIDENCE.

In an action by a trustee to compel an accounting for a bankrupt's money wrongfully appropriated in fraud of its creditors, evidence held to sustain a finding that certain funds of the bankrupt were used to pay the debts of its president in fraud of creditors.

2. BILLS AND NOTES (§ 341) — CHECKS — BONA FIDE HOLDERS.

One receiving the check of a corporation in payment of a personal debt of an officer is prima facie charged with notice that the officer is not authorized to use the corporate funds for such purpose, and hence is bound at his peril to inquire as to the truth of the situation.

3. BILLS AND NOTES (§ 525) — CHECKS — BONA FIDE PURCHASERS — BAD FAITH.

Evidence held to sustain a finding that defendant acted in bad faith in accepting a check from the president of a corporation, drawn on the corporate funds for his personal debt, in that he knew facts suggesting the defect in the officer's title to the funds.

Appeal from St. Louis Circuit Court; George H. Williams, Judge.

Suit by Frank B. Coleman, trustee in bankruptcy of Meier China & Glass Company, against Jacob Stocke, Jr. From a judgment for plaintiff, defendant appeals. Affirmed.

A. M. Frumberg and A. R. Russell, for appellant. Block & Sullivan, for respondent.

NORTONI, J.

This is a suit by the trustee of a bankrupt estate for an amount of money belonging to the bankrupt, which it is alleged defendant wrongfully appropriated to his use in fraud of the bankrupt's creditors. Plaintiff recovered, and defendant prosecutes the appeal. A jury was waived and the issue tried before the circuit court. No instructions or declarations of law were asked or given, and the only question with which we are concerned on appeal is the sufficiency of the evidence to support the finding for plaintiff.

It appears plaintiff is the trustee in bankruptcy of the estate of the Meier China & Glass Company, a corporation, which was adjudicated a bankrupt July 23, 1908, on a petition filed by the creditors of the corporation on June 15th of that year. One Fred C. Meier was president of the bankrupt corporation, and his brother, Alex R. Meier, was its secretary and treasurer. The evidence tends to prove that nearly two years prior to the proceedings in bankruptcy against the corporation Fred C. Meier, president of the company, personally borrowed $3,500 from defendant and executed his demand note therefor, which was signed as well by his brother, Alex R. Meier, as surety. There is an abundance of evidence in the record to the effect that this obligation was the personal debt of Fred C. Meier to defendant, and not that of the corporation at all, and, as before stated, the note was signed by both Fred C. and Alex R. Meier. It appears that on numerous occasions during the year and a half before the bankruptcy of the corporation, defendant urged the two Meiers to pay the note, and that they were unable to do so. The corporation was insolvent, but it suffered a loss by fire which resulted in the collection of about $28,000 on its policies of insurance, in the early part of June, 1908. This money was deposited in the National Bank of Commerce, in the city of St. Louis, and checked against by the corporation until about $16,000 remained on June 8, 1908. On that day, the Meiers informed plaintiff they were ready to settle his note. By arrangement, he met Mr. Alex R. Meier, the secretary and treasurer of the corporation, at the Planters' Hotel and delivered the $3,500 note to him, whereupon Mr. Meier gave plaintiff the corporation's check for $16,000 on the National Bank of Commerce, and instructed him to draw the money thereon and "pay us the difference between what we owe you in cash." This check was drawn against the funds of the corporation, deposited in the bank, and in the name of the corporation, by Alex R. Meier, its secretary and treasurer. The check, as before stated, was in the amount of $16,000 and payable to the order of cash. Defendant cashed the check and received $16,000 of the corporation money therefor, from which he deducted $3,500, the amount which Mr. Fred C. Meier owed him, and for which Alex R. Meier was security, and paid the remainder thereof, $12,500, to Alex R. Meier at the Planters' Hotel, where the parties met and had lunch together. So much appears from the admissions of defendant in proof, and it goes without...