Equitable Life Assur. Soc. v. National Bank of Commerce

• Decision Date: 16 July 1917
• Docket Number: No. 19458.,19458.
• Citation: 197 S.W. 115
• Parties: EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES v. NATIONAL BANK OF COMMERCE IN ST. LOUIS.
• Court: Missouri Supreme Court

197 S.W. 115

EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES v. NATIONAL BANK OF COMMERCE IN ST. LOUIS.

No. 19458.

Supreme Court of Missouri, Division No. 2.

July 16, 1917.

Rehearing Denied July 27, 1917.

Appeal from St. Louis Circuit Court; Daniel D. Fisher, Judge.

Action by the Equitable Life Assurance Society of the United States against the National Bank of Commerce in St. Louis. Judgment for defendant was affirmed by the St. Louis Court of Appeals (181 S. W. 1176), and the case was certified to the Supreme Court for determination; one of the judges of the Court of Appeals dissenting. Affirmed.

This is a suit to recover from the defendant bank, with which plaintiff kept a sufficient deposit, the sum of $2,500, alleged to have been paid out of said deposit, by said bank, on a forged indorsement of a fictitious payee, upon a check issued by the plaintiff on said bank. The answer, after admitting the incorporation of both the plaintiff and the defendant, denied each and every allegation of the plaintiff's petition. The answer then alleges three affirmative defenses, to wit: (1) That one J. W. Davies, mentioned in plaintiff's petition, was the agent of plaintiff, and that the acts and default of said J. W. Davies, in connection with the $2,500 check mentioned in the petition, were the acts and default of the plaintiff, and that the defendant is without liability in this action; (2) that the said check, drawn by plaintiff, was made payable to a fictitious person, and was so obtained by said J. W. Davies in pursuance of a design to defraud the plaintiff, and that said check was negotiated by said Davies in pursuance of said fraudulent design, and that the defendant paid the check in due course of business, without knowledge of said facts; (3) that said check was honored and paid by the defendant on the ____ day of March, 1907, and immediately thereafter returned to the plaintiff, and that the plaintiff, with full knowledge of said check, made no claim against defendant, on account thereof, until five years thereafter, by reason of which plaintiff's rights in this action are barred by its laches and neglect.

Trial was had, without a jury, before the circuit court of the city of St. Louis, resulting in a judgment for defendant, whereupon plaintiff appealed to the St. Louis Court of Appeals, which court affirmed the judgment. 181 S. W. 1176. One of the judges of that court deemed the decision therein to be contrary to the decisions of this court, and also of the Kansas City Court of Appeals, in cases mentioned, and the case was duly certified to this court for final determination. The testimony tends to establish the following facts (we quote first from appellant's brief):

"In the year 1906, J. W. Davies lived in Magnolia, Ark., and was soliciting life insurance for the plaintiff. In October of that year he, with one E. E. Munn, who lived at Willisville, Ark., Munn's wife, and one Ghomley, a nephew of the examining physician of the plaintiff company, conceived a scheme to defraud the Assurance Society. Davies prepared an application for insurance on the life of Samuel T. Wicker, a fictitious person. Davies signed Wicker's name to the application, and Ghomley forged the name of Dr. Waddell to the examiner's report. This was on October 23, 1906. On receipt of the application, the Equitable Society issued a policy for $2,500 on the life of Samuel T. Wicker, in which Mary J. Wicker, his supposed wife, was named as beneficiary.

"February 25, 1907, Davies forwarded to the company a claim for the insurance, purporting to be signed by Mary Jane Wicker, the supposed wife of Samuel T. Wicker. She, of course, was also a fictitious person, and her name was forged by Mrs. Munn. To this claim E. E. Munn, acting as notary public, attached his jurat to the effect that Mrs. Wicker had been sworn before him. Munn also did the same in regard to the supposed statement of the attending physician, as well as the undertaker, all of which was fraudulent. Next there was attached Davies' statement as agent concerning the death of Samuel T. Wicker, and Munn swore Davies to this. Mrs. Munn also forged the name, `Mary J. Wicker,' to the receipt for $2,500, dated March 6, 1907. When the claim was made, it was forwarded to the society's office, and March 6, 1907, the society made its check for $2,500, payable to the order of Mary J. Wicker. This check was forwarded to Davies.

"On receipt of the check, Munn's wife forged the name of Mary J. Wicker on the bank. Davies and Munn then went to the Farmers' Bank & Trust Company of Magnolia, and saw Mr. Runyan, the cashier. Davies was long and well known to Mr. Runyan, and he introduced Munn as Mrs. Wicker's son. He also showed the receipt to which Mrs. Munn had forged Mrs. Wicker's name, and told Mr. Runyan that Mrs. Wicker was sick and sent her son for the money. Relying upon Davies' representations, Runyan agreed to pay the $2,500 to Munn. After the conversation had taken place, it developed that the Farmers' Bank & Trust Company did not have on hand cash enough to spare the amount, so Mr. Runyan indorsed the name of the Farmers' Bank & Trust Company on the back of the check, and with Davies and Munn took the check to the Columbia County Bank, and that bank paid the cash to Munn. Mr. McNeill was the cashier of the Columbia County Bank, and the Columbia County Bank was the correspondent of the National Bank of Commerce, the defendant, at that time.

"Shortly after Runyan had taken Davies and Munn to the Columbia Bank, and, through Runyan's indorsing the Farmers' Bank's name on the check, obtained the money from it, Runyan's bookkeeper told him he thought $500 too much had been paid. Runyan said that, if that were so, it was McNeill's fault, as he had gotten the money and Runyan took his count, but, in order to protect McNeill, Runyan went to Davies' home, where he found the conspirators with the money spread out upon the bed, evidently for the purpose of dividing up the spoils. Runyan counted the money and found it correct. This circumstance did not seem to produce any suspicion in Runyan's mind. There was no explanation of why `Mrs. Wicker's' money, which should have been in her son's pocket, if the story had been true, was spread out on Davies' bed.

"The Columbia County Bank forwarded this check to the National Bank of Commerce, and it charged the amount against the account of the plaintiff. At that time the Equitable Society had on deposit with the National Bank of Commerce more than $5,000. After the check was charged to the account of the Equitable Society, it was returned to it by the bank March 30, 1907. About June 30, 1911, the forgery was discovered, and the society wrote to the bank, notifying it of the discovery, and asking that the society's account be credited with the amount. This the bank refused to do.

"C. W. McKay, attorney for the Farmers' Bank & Trust Company, testified that Davies was solvent in 1907, but did not testify what part of 1907 he was solvent, for he did not know the date he became insolvent. He further testified that Davies was insolvent in 1910, and was insolvent at the time of the trial. He further testified that Munn was insolvent in 1911, after the bank was notified of the forgery, but did not testify as to Munn's solvency or insolvency in 1907. There was no evidence on the part of the defendant as to solvency or insolvency of Mrs. Munn or of Ghomley. Both the Farmers' Bank & Trust Company and Columbia County Bank indorsed this check before it was delivered to the National Bank of Commerce, and their indorsements are genuine. Both the Columbia County Bank and the Farmers' Bank & Trust Company are perfectly solvent now.

"As stated above, the Equitable Society made a demand on the bank for...