Farmers Savings Bank of West Plains v. American Trust Company of Warrensburg
| Decision Date | 20 May 1918 |
| Citation | 203 S.W. 674,199 Mo.App. 491 |
| Parties | FARMERS SAVINGS BANK OF WEST PLAINS, MISSOURI, Appellant, v. AMERICAN TRUST COMPANY OF WARRENSBURG, MISSOURI, Respondent |
| Court | Kansas Court of Appeals |
Appeal from Pettis Circuit Court.--Hon. H. B. Shain, Judge.
REVERSED AND REMANDED.
Judgment reversed and cause remanded.
H. D Green, Wm. Green, M. E. Morrow and George W. Barnett for appellant.
Nick M Bradley for respondent.
This is a suit on two checks drawn by one Burton on the defendant in favor of one Workman. The verdict and judgment was in favor of the defendant and plaintiff has appealed. The facts show that from January, 1915, to August, 1915, Burton and Workman were engaged in the cattle business at West Plains Missouri; that Workman was a depositor of the plaintiff, or the West Plains bank, and Burton a depositor of the defendant, or the Warrensburg bank; and that during that time what was described in the evidence as a "kite" was going on between Burton and Workman. For convenience plaintiff will be referred to as the West Plains bank and defendant as the Warrensburg bank.
The evidence shows that the West Plains bank had a correspondent in the city of St. Louis through which it made out of town collections and that the Warrensburg bank had a correspondent in Kansas City through which its out of town collections were made. The evidence shows that the "kiting" was carried on as follows: Workman and Burton desiring to obtain a credit in favor of the former in the West Plains bank, the latter would draw a check or checks on the Warrensburg bank in favor of Workman who would deposit it or them to his credit in the West Plains bank. It would take three or four days after the check was drawn for it to reach the Warrensburg bank for payment and in the meantime, in order to show a credit in the Warrensburg bank in favor of Burton sufficient to take care of Workman's check, Workman would draw a check or checks in favor of Burton on the West Plains bank. These latter checks would be deposited in the Warrensburg bank before Burton's check reached it. As before stated, this system of "kiting" had been in progress from January, 1915, to August, 1915, and during this time something like six hundred thousand ($ 600,000) dollars in checks had passed between the two banks.
It was the understanding between Burton and the Warrensburg bank that the former should not be permitted to overdraw his account, so Burton would give the Warrensburg bank checks on the West Plains bank signed by Workman with the amount left blank so that the Warrensburg bank might fill in the necessary amount to cover any of Burton's checks that came in. The secretary of the Warrensburg bank testified that he knew nothing of the financial standing of Workman but he knew that Burton, who was a resident of Warrensburg, had no property which could be reached by execution; that he had done business with Burton once before and that he had no capital then. Neither Burton nor Workman had any money in either of these banks except these "kited" or fraudulent checks.
During the latter part of July, on account of the enormous number of checks coming through the West Plains bank, its president began to suspect that there was a "kite" in existence between Burton and Workman. On August 1, the bank examiner came into the West Plains bank and told its president that there was a "kite" going on. On August 5th, Workman deposited the two checks sued upon in the West Plains bank, which were drawn on the Warrensburg bank and were signed by Burton; one in the sum of twenty-seven hundred, forty-eight and 50-100 ($ 2748.50) dollars and the other in the sum of forty-five hundred ($ 4500) dollars. The evidence is conflicting as to whether these checks were taken by the West Plains bank for collection or as a deposit to Workman's account. The West Plains bank, following its usual course, sent these checks to its St. Louis correspondent who in turn, on August 7th, forwarded the same to the Warrensburg bank. The checks were received by the president of the latter early on the morning of August 9, 1915. Upon receipt of these checks the president of the Warrensburg bank examined Burton's account and found that, on account of various checks of Workman that Burton had deposited and which were on their way to the West Plains bank for payment, Burton had an apparent credit sufficient to meet the amount of these checks, and the president of the Warrensburg bank marked these two checks "paid" and drew a draft for their amount upon its correspondent in Kansas City. Shortly thereafter the correspondent in St. Louis of the West Plains bank, at the request of the latter, called up the Warrensburg bank over the long distance telephone and asked it if these two checks had been paid and its president replied that they had. Within an hour or two thereafter, a bank examiner came into the Warrensburg bank and informed its president that he had been sent there to investigate a "kite" that had been going on between Burton and Workman. The president and secretary of the Warrensburg bank testified that this was the first they knew of any "kite" existing between said parties. After the president of the Warrensburg bank had talked to the bank examiner the former called up the West Plains bank and asked if it did not have some checks on the Warrensburg bank "that had been sent in transit" (meaning checks drawn by Workman in favor of Burton on the West Plains bank and deposited in the Warrensburg bank, upon which the apparent credit described in the Warrensburg bank was based.) The West Plains bank replied that it had the checks and would refuse to pay them, and the president of the Warrensburg bank then stated to the West Plains bank that it would refuse to pay the two checks involved in this suit and would notify the correspondent in St. Louis of the West Plains bank to this effect, which was done by long distance telephone. The correspondent of the West Plains bank was also notified that payment would be stopped upon the draft drawn on the Kansas City correspondent of the Warrensburg bank, which was done, and the word "paid" was erased from the two checks mentioned.
Plaintiff's first point is that the court should have given its instruction...
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