Exchange Bank v. Turner

Citation14 S.W.2d 425
Decision Date25 February 1929
Docket NumberNo. 27081.,27081.
PartiesEXCHANGE BANK OF NOVINGER v. BEN E. TURNER and AETNA CASUALTY & SURETY COMPANY, Appellants.
CourtUnited States State Supreme Court of Missouri

Appeal from Putnam Circuit Court. Hon. L.B. Woods, Judge.

AFFIRMED.

Ben Franklin & Son, Charles E. Murrell, Charles D. Stewart and H.H. Bristol for appellants.

(1) The demurrer to plaintiff's petition should have been sustained. The petition fails to state a cause of action against defendants or to show that plaintiff had any right to sue any person whatsoever. It ignores the legislative acts of the State and makes no pretense of taking property for the purpose of liquidation or for any other purpose. Citizens Trust Co. v. Tindle, 272 Mo. 681; Koch v. Trust Co., 181 S.W. 44; R.S. 1919, Art. 1, sec. 11701. (2) The court erred in refusing to give defendants' instruction in the nature of a demurrer, asked by defendants, at the conclusion of plaintiff's evidence. The statutory way of handling insolvent banks is exclusive and should be strictly followed. Koch v. Trust Co., 181 S.W. 44; Haight v. Stuart, 278 S.W. 1091; Sec. 11679, Laws 1923, p. 222; Secs. 11673, 11682, 11689, 11698, 11700, 11701, 11702, 11705, 11722-11725, R.S. 1919; Osagera v. Schaff, 293 Mo. 333; Stanton v. Thompson, 234 Mo. 7; Priest v. Capitain, 236 Mo. 446. (3) The filing of plaintiff's amended petition long after the case had been submitted on the evidence and all witnesses had been discharged, constituted prejudicial error against defendants, should not have been permitted and defendants' objection and motion to strike out the same should have been sustained. Weil v. Greene County, 269 Mo. 281; Swift v. Fire Ins. Co., 279 Mo. 606. (a) Plaintiff's amended petition predicates its right to recover on entirely different grounds from its original petition, in that it states plaintiff had "assumed the liabilities of the Union State Bank and had paid the same," thereby changing the cause from the right to sue on an assigned contract to that of a right to recover for money paid for the use and benefit of another, thus introducing two questions of fact not in the original petition, to-wit, that it had assumed the obligations of the Union State Bank and that it had paid the same, thus inviting defendants to prepare on one line of testimony and predicating its right of recovery upon another wholly different line. Groney v. Joyce, 154 Mo. 253; Carter v. Dilley, 167 Mo. 564; State ex rel. v. Reynolds, 277 Mo. 14; Rayl v. Golfinopulos, 233 S.W. 1069; Delaney v. Delaney, 245 S.W. 1075. Plaintiff's original petition states "it took over and became the owner of all the assets and property of the Union State Bank." The amended petition, so-called, states, in addition, that "it assumed its liabilities and has paid the same." The allegations cannot be supported by the same evidence, as two separate and distinct questions of fact are added by the alleged amendment. Defendants were denied the right to disprove either of said new allegations and the alleged amended petition was prejudicial to defendants' rights and should have been stricken out. Liese v. Meyer, 143 Mo. 547; Ross v. Mineral Co., 162 Mo. 317; St. Charles Bank v. Thompson, 284 Mo. 72; Jacobs v. Railway Co., 204 S.W. 954; Baker Co. v. Oklahoma Co., 242 S.W. 134. (4) The instrument of writing on its face purported to indemnify the Union State Bank in the sum of $10,000 upon condition that it should "sustain no loss by reason of any act or acts of larceny, embezzlement, fraud, dishonesty, forgery, theft, wrongful abstraction or willful misapplication of the funds of said bank committed by the said Ben E. Turner while employed in any position or at any location in the service of the bank." The petition states sixteen separate, distinct and complete alleged breaches in as many different counts or causes of action arising from about sixteen different sources of alleged delinquencies on the part of Turner. Some of these if proven would amount to embezzlement, some to theft, some to fraud, some to dishonesty, etc., and for various sums or amounts on the several counts and involving his dealings with substantially as many different parties, corporations and institutions. The finding and judgment of the court is for a lump sum, with interest, attorney fees and damage for vexatious refusal, and in general terms without ascertaining or deciding what sum was due on any particular or individual count of the petition. This was and is prejudicial error, as defendants have a right to know how much, if any, they are indebted to the Union State Bank upon each of the several counts. The judgment is wrong, and, in fact, is a void judgment and should be arrested. Boyce v. Christy, 47 Mo. 70; State ex rel. v. Peterson, 142 Mo. 526; Wells v. Adams, 88 Mo. App. 215. If the amount of any count or cause of action of the petition is not ascertained and decided, it is difficult to see how the sum total of all of the unknown quantities could make a definite fixed obligation or judgment. Flowers v. Smith, 214 Mo. 98; Christal v. Craig, 80 Mo. 367; Brownwell v. Railroad Co., 47 Mo. 239; Cramer v. Barmon, 193 Mo. 327; Bank v. Commission Co., 139 Mo. App. 110. (5) The admission of the alleged transcript of evidence of Ben E. Turner, given on a former occasion at a trial between other parties, constituted prejudicial error against defendants and was therefore error. The court erred in permitting plaintiff to prove conversations and admissions of Ben E. Turner with officers and directors of the Exchange Bank after October 15, 1921, the date the Union State Bank closed, and after the termination of the employment of said Ben E. Turner. Blair v. Perpetual Ins. Co., 10 Mo. 559; City of St. Louis v. Foster, 24 Mo. 146; State v. Bird, 22 Mo. 470; Root & Sons Music Co. v. Caldwell, 154 Iowa, 432.

Higbee & Mills, John M. Campbell and M.D. Campbell for respondent.

(1) Appellants answer and defend jointly. They say that the bond or policy sued upon requires notices of loss within ten days after discovery and formal proof of claim within ninety days thereafter, and that no such notice and claim was made. Immediately upon the directors becoming aware that Turner had breached the policy, they notified appellant company. Mr. Bristol, representing that company, went to the bank, examined its records, and ascertained there was liability on the policy for some of the items sued for. Mr. Bristol, both before and after the organization of the plaintiff bank, requested that a claim be not made up until auditors, then making an audit of the Union State Bank, had completed their work and made report, stating he would get a copy of that audit. The plaintiff bank thereafter and within ninety days did make up and forward its claim, to which no objection was made at any time. The receipt was acknowledged, the claim paper retained for a period of almost four months before a denial of liability, and that denial, if it can be construed as such, is unfair and in such form as to clearly show the defendant company was willing to grab at any straw that might aid in avoiding the terms of its undertaking. That denial merely states the claim paper was not sufficient to warrant payment of the amount demanded on behalf of the Union State Bank of Novinger. Demand had not been made on behalf of the Union State Bank, and no one knew that more fully than appellant company. The letter does not deny liability nor seek further information. The claim paper and the work and expense of its preparation had been made and incurred at the request of the defendant company, and was actually made and delivered within the time limited by the terms of the policy. After defendant company knew of the transfer to the plaintiff bank and examined the records of that transfer, it thereafter requested the claim be made up. The defense thus made is clearly disproven. Even if plaintiff had not strickly complied with the terms of the policy in the respect now under consideration, such failure was due to the request of defendants. Therefore they cannot complain. This defense as well as all others is made by defendants in one voice. (a) Moreover, the policy sued upon will be strickly construed against the defendants. There is no provision therein that a failure to give notice, or make proof of loss or that knowledge of the directors shall render the policy void. In the absence of such provision the bond will be enforced and not forfeited. Dezell v. Company, 176 Mo. 253; Shanebarg v. National, 263 S.W. 512. (b) Damages, attorneys fees and penalties may be recovered on the instrument sued upon. State v. Company, 215 S.W. 25. (2) Does plaintiff own the policy sued upon? The record is such that defendants are not in position to urge that question in this court. Attention is called to their answer in which the allegation is made that the policy contained certain provisions relative to notice and proof of loss; that it was the duty of plaintiff to give such notice and make such proof, and that "defendant states that plaintiff failed, neglected and refused to comply with the terms and provisions of said instrument of writing." That defendant company believed it would comply with the terms and provisions and "that the plaintiff accepted the written instrument, etc.," and that its failure to observe said provisions "on its part constitutes a fraud against the rights of the defendants herein." That plaintiff became aware of the wrongful acts complained of "and no notice was given to this defendant within ten days as agreed and specified in said bond, or within any time, and the same constitutes a fraud upon the defendant surety company." The policy does contain the provisions pleaded by defendants relative to notice and proof of loss. Defendants by pleading such provision and alleging it was the duty of plaintiff to observe them, and that "plaintiff accepted the written instrument" with said terms and provisions therein...

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