Farmers' Bank of Deepwater v. Ogden
| Decision Date | 14 May 1915 |
| Docket Number | No. 11101.,11101. |
| Citation | 182 S.W. 501 |
| Parties | FARMERS' BANK OF DEEPWATER v. OGDEN et al. |
| Court | Missouri Court of Appeals |
Appeal from Circuit Court, Henry County.
Action by the Farmers' Bank of Deepwater against John Ogden and others. From a judgment for plaintiff, the defendant Globe Surety Company appeals. Affirmed.
Haff, Meservey, German & Michaels, of Kansas City, for appellant. Parks & Son and W. E. Owen, all of Clinton, for respondent.
Plaintiff is a banking institution, and defendant a surety company issuing contracts of surety insurance indemnity to banks against loss through the failure of its officers "to well and faithfully perform the duties" pertaining to their respective offices. The present case arises out of a bond given by John Ogden, plaintiff's president, with defendant as surety. The judgment in the trial court was for the plaintiff.
The specific undertaking for which defendant stands as surety is —
"to make good and hold the employer [plaintiff] harmless for any loss occasioned through the dishonesty of said employé, or through any act of his done or omitted, in bad faith, through negligence or without authority, until all his accounts with the employer have been fully settled and satisfied, occurring at any time after," etc.
The bond is executed upon 14 conditions. The first and fourth, being those here involved, are as follows:
etc.
Ogden came to Deepwater, the scene of the transactions resulting in this litigation, from another part of the state, where, in his youth, he had a criminal history unknown in his new location. He was a man of good habits and amiable manners. He was a church member, and took much interest in the betterment of conditions materially and socially, and had been elected mayor of the town. He so impressed himself upon the community that he took leading position in its affairs with general consent, approbation, and confidence. After several years' residence there, in which he prospered socially and financially, he organized the plaintiff bank and became its president. In that position he proved too weak for the tempting opportunities for wrongdoing, and soon began the career which wrecked the bank and again made him an inmate of the penitentiary.
The first count in the petition is based upon a transaction by which Ogden, acting as plaintiff's president, on November 11, 1912, obtained a credit card of the People's National Bank of Clinton, a correspondent of plaintiff, for $1,498.80, "for the use of A. J. Tally." The People's Bank gave the card to Ogden, as president of plaintiff bank, and he surreptitiously erased Tally's name on the card and inserted his own, and then deposited it with the assistant cashier of the plaintiff bank, and appropriated the proceeds to his own use. Defendant denies liability on two grounds: One, that plaintiff learned of Ogden's having committed a forgery in what is called the O'Hare note and failed to notify defendant as required in the first and fourth conditions, just quoted; and, second, that Ogden was not acting as plaintiff's agent in the Tally transaction.
The bond as originally executed took effect the 31st of August, 1911, to continue in force for one year. When it expired it was renewed for another term, expiring in August, 1913. The following incident came to the knowledge of plaintiff's officers in October, 1912: Some time in December, 1911, Ogden forged a note for $1,800, payable to plaintiff bank, purporting to be executed by George O'Hare. He negotiated this note to the Lowry City Bank, indorsing it with his own name as president of plaintiff bank, and also himself signing or indorsing the name of the plaintiff's cashier thereon. A circumstance not connected with any suspicion of the note caused the Lowry City Bank to ask that it be paid, and to that end its cashier spoke to plaintiff's cashier about it one evening while the latter was at a neighbor's house, and the latter denied having indorsed the note. It was then shown to him, and he looked at the indorsement only. He saw Ogden had indorsed it as president of the bank, and that his indorsement as cashier was not his signature, but was in Ogden's handwriting. He then handed it back to the Lowry Bank's cashier saying that he would see Ogden about it next morning. In a few days Ogden paid the note to the Lowry Bank, and thus it became a closed incident so far as that bank was concerned.
It afterwards developed that O'Hare's name as maker was also forged, but this was not known at the time we are referring to. Plaintiff's cashier, having thus become possessed of knowledge of Ogden having signed his name to the indorsement without authority, did not notify defendant, but he did speak of it to the vice president and to one of the directors, and neither of these notified defendant. The latter therefore insists that it is not liable on the Tally transaction under that part of the fourth condition above quoted, which requires notice when the employer becomes possessed of knowledge of "any act, fact, or information tending to indicate that the employé is or may be unreliable, deceitful, dishonest, or unworthy of confidence," and it asked, and the trial court refused, an instruction to that effect. The court took plaintiff's view that Ogden's act in signing the cashier's name did not come within the terms of the condition, unless it was a forgery, and that there was room for the conclusion by plaintiff's officers that Ogden had not intended to commit that crime. Adopting this view, the court made a jury question of it by an instruction to the effect that information these officers had must be such as would lead a reasonably prudent person, under the same or similar circumstances and surroundings, to believe that Ogden was unreliable, deceitful, dishonest, and unworthy of confidence.
Justification for this view is said to be found in testimony given by these officers and others that Ogden was thought to be a man of high character; that he had everybody's confidence; that he was a man of great egotism and self-assertion, who made himself the head and front of every transaction with which he was connected; and that these officers attributed the act of signing the name of the cashier of a bank of which he was president boldly, without attempt at disguising handwriting, to such characteristic. Besides, the cashier of plaintiff bank, as we have said, had no knowledge or suspicion that the O'Hare note was a forgery. He knew that Ogden had sold a farm to O'Hare and had taken a note for part of purchase money, and it never occurred to him that Ogden was doing anything more than assuming a right as president of the bank to indorse it with the cashier's name along with his own. He knew him as a prosperous man living in the "finest home" in the town, and loaned him $500 of his own money the Monday following this information. The director testified that:
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