Ellerbee v. The National Exchange Bank of Kansas City
| Decision Date | 08 February 1892 |
| Parties | Ellerbe, Superintendent of Insurance, v. The National Exchange Bank of Kansas City, Appellant |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. R. H. Field, Judge.
Affirmed.
McDougal & Sebree and Elijah Robinson for appellant.
(1) Warden acted under the authority and with the knowledge of the company, and without the knowledge or authority of the bank. The former should be bound, the latter not. He could not and did not bind the bank. Ins. Co. v. Hope, etc Co., 8 Mo.App. 408; McDonald v. Wagner, 5 Mo.App. 56; See v. Smith, 84 Mo. 304; Morawetz on Corporations, sec. 528; N. Y., etc., Co. v. Ins Co., 14 N.Y. 85; Wardell v. Railroad, 103 U.S 651. But by adopting his acts the company is bound. Morawetz on Corporations, sec. 548, et seq. (2) Warden assumed to act for both company and bank -- the former knew it, the latter did not. The bank did nothing by which it could be estopped. That doctrine does not apply, unless the party to be estopped is affirmatively shown to have influenced the conduct of the other party by something said or done. Eitelgeorge v. Ins. Ass'n, 69 Mo. 52; Spurlock v. Sproule, 72 Mo. 503; Rogers v. Marsh, 73 Mo. 64; Acton v. Dooley, 74 Mo. 63; Blodgett v. Perry, 97 Mo. 263. (3) The first and second instructions given for plaintiff should have been refused, and the sixth, seventh and eighth asked by defendant should have been given. Wilson v. Bank, 7 A. (Pa.) 145; De Kay v. Hackensack, 11 Stew. (N. J. E.) 158; Brewing Co. v. W. G. & Q. Co., 37 Mo.App. 145; Johnson v. Shortridge, 93 Mo. 227, 232. (4) Ratification is the confirmation of an act which was unauthorized, and possessed no validity without being thus confirmed. Story on Agency, secs. 250, 251; Bouvier; Webster. (5) The bank had no power to grant original authority to Warden to do the acts in question. All the powers of national banks here involved are, subject to law, to discount and negotiate promissory notes and loan money. R. S. U.S. sec. 5136. This express grant excludes all others. Bank v. Dearing, 91 U.S. 29; Wiley v. Bank, 47 Vt. 546; Weckler v. Bank, 14 Am. L. Reg. (N. S.) (Md.) 609; Mathews v. Skinker, 62 Mo. 329, and cases cited. (6) The notes were not discounted, nor negotiated; nor was money loaned. It was an attempt to loan the bank's credit, and this it had no power to do. Seligman v. Bank, 3 Hughes, 647, 651. Discounting commercial paper is taking the interest in advance. Fletcher v. Bank, 8 Wheat. 350. (7) National banks are restricted, have not the rights of natural persons, and all acts in excess of the powers expressly granted are void. Bank v. Johnson, 104 U.S. 271; Bank v. Servier, 14 F. 662. (8) For the reason that the bank had no power to grant authority originally, it had no power to ratify the unauthorized acts in question. Com. v. Railroad, 50 Ind. 112; Boynton v. Lynn, 124 Mass. 197; Morse on Banks & Banking [3 Ed.] sec. 101, p. 212; Express Co. v. Trego, 35 Md. 417; Kelly v. Railroad, 141 Mass. 496; 1 American & English Encyclopedia of Law, 434, and cases cited, note 1; Ashbury, etc., Co. v. Riche, 7 H. of L. (L. R.) 653, 672. (9) Had the bank attempted to ratify Warden's acts, it must have adopted them as a whole. 1 American & English Encyclopedia of Law, 434, and cases cited, note 5. And this it could not do, for the additional reasons that such acts were unlawful as well as against public policy. Shisler v. Vandike, 92 Pa. St. 447; Wiley v. Bank, 47 Vt. 546; Green's Brice's Ultra Vires, 550, notes. In so loaning the bank's credit, appropriating its assets, making false entries, and entering into the contracts named, the then officers of the bank violated the law. Their acts were against sound morality, injurious to the public, in violation of the restrictions placed on the bank, and if sanctioned would encourage them to evade the laws, and for these reasons such acts were void, because against public policy, and could not be ratified. Stanton v. Allen, 5 Denio, 434; Greenhood on Public Policy, 3, and cases cited, note 1; 541, 2; Shenk v. Philips, 6 Brad. (Ill.) 612, 619. (10) If the acts complained of could have been ratified, then they were not, for the reason that before one can avail himself of this doctrine he must allege and prove that the other, with full knowledge of all material facts, adopted the act of his agent. Norton v. Ball, 43 Mo. 113; Clark v. Lynn, 7 Nev. 75; Pacific, etc., Co. v. Railroad, 7 Saw. 61; Whitford v. Monroe, 17 Md. 135; Moore v. Patterson, 28 Pa. St. 505. There can be no assent without knowledge. Bank v. Drake, 29 Kan. 231; Baldwin v. Burrows, 49 N.Y. 211; Windsor v. Bank, 18 Mo.App. 675. (11) The bank did not become liable to the company by accepting from the note makers the balance due. Green's Brice's Ultra Vires, 714, 717, 721.
Huff & Hereford and Pratt, Ferry & Hagerman for respondent.
(1) If, upon the pleadings and undisputed facts, the judgment is for the right party, it is the duty of this court to affirm, even though the court below placed the recovery upon a different ground, and even though there were errors intervening on the trial. This, of course, is the result of the provisions of the statute, sections 2100, 2303, 2304. The proposition as put has been expressly stated frequently. Fitzgerald v. Barker, 96 Mo. 661; Kelley v. Railroad, 88 Mo. 534; Orth v. Dorschlein, 32 Mo. 366, 368; Garesche v. Deane, 40 Mo. 168. (2) Defendant is in no position to complain of the submission of this case, because the case was sent to the jury on the very theory upon which they tried the case. (3) This case can be affirmed either by the doctrine of estoppel or the application of the rule that, whenever one of two innocent persons must suffer through the wrong of a third, the loss must fall upon him who has put it in the power of the third person to do the wrong. (4) The case can be affirmed upon the doctrine of election sometimes called "quasi estoppel." There are numerous cases in this state holding that if an agent does an unauthorized act, and the principal accepts any benefit therefrom, he is bound thereby. The effect in law is that the whole transaction is adopted, even though the party protests that he is not adopting it. Norton v. Bull, 43 Mo. 113; Carson v. Cummings, 69 Mo. 325; Neff v. Redmon, 76 Mo. 195; Davis v. Krum, 12 Mo.App. 279. (5) The transactions should be upheld on the ground of ratification. Assuming that Warden's individual contracts were concealed, we have already seen that the relation of principal and agent existed between the bank and Warden; no rule is better settled in this state than that the acceptance of any benefit from the unauthorized act of the agent binds the principal. Ruggles v. Washington Co., 3 Mo. 496; Norton v. Bull, 43 Mo. 113; Carson v. Cummings, 69 Mo. 325, 331; Neff v. Redmon, 76 Mo. 195; State ex rel. v. Harrington, 100 Mo. 170; Davis v. Krum, 12 Mo.App. 279; Hammerslough v. Cheatham, 84 Mo. 13, 19. We may state the rule in still stronger terms. It is not material that the agent committed frauds or made misrepresentations. The principal cannot be permitted to enjoy the fruits of the bargain without adopting all the instrumentalities employed by the agent in bringing the transaction to a consummation, and "the fruits of the bargain" are enjoyed as long as the benefits of the deal are retained. Menkens v. Watson, 27 Mo. 163; State ex rel. v. Harrington, 100 Mo. 170; Elwell v. Chamberlain, 31 N.Y. 611; Busch v. Wilcox, 82 Mich. 315; Morse v. Ryan, 26 Wis. 356; Mundorf v. Wickersham, 63 Pa. St. 87; Shoninger v. Peabody, 57 Conn. 42, and cases cited; Seago v. Martin, 6 Heisk. 308. We realize and recognize the rule that a ratification to be binding must be made with full knowledge of all the material facts, but we submit that where the principal accepts, retains and refuses to give up the benefits of the transaction, then, in such case, the law presumes that it was either done with full knowledge, or else that the principal made all the investigation he desired. Norton v. Bull, 43 Mo. 113; Busch v. Wilcox, 82 Mich. 315; Meehan v. Foreste, 52 N.Y. 277; 1 Wait's Actions & Defenses, 234.
OPINION
The Midland Accident Insurance Company of Kansas City was incorporated under the insurance laws of Missouri on the twenty-sixth of January, 1889, with a capital stock of $ 125,000. At that time the defendant duly incorporated under the laws of the United States was doing a general banking business in the City of Kansas, Thomas T. Crittenden being its president and James S. Warden its cashier, and both members of its board of directors. They were also stockholders and officers in the insurance company, Crittenden being a director and president, and Warden a director thereof.
Among the subscriptions to the capital stock of the insurance company were the following: Charles D. Lucas, $ 5,000; L. F. McCoy, $ 5,000; Daniel Bullard, $ 5,000; Thomas H. Edwards, $ 2,500; George E. Ford, $ 7,500.
In order to raise the money to pay for their stock, each of these subscribers executed a negotiable promissory note for the amount by him subscribed, dated January 26, 1889, payable to himself six months after date at the Exchange National Bank of Kansas City, Missouri, with interest after date at ten per cent. annually until paid, and having indorsed the same these notes were afterwards taken to the bank, passed through the books of the bank as discounted paper by the officers thereof, and the amount of the face of the notes aggregating $ 25,000, placed to the credit of the insurance company, as cash, on the books of the bank, of which credit the secretary of the insurance company was advised; paid up capital stock of the insurance company was...
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