Farmers State Bank of South Greenfield, Missouri v. The Title, Guaranty & Trust Company of Scranton, Pennsylvania

• Court: Kansas Court of Appeals
• Writing for the Court: BROADDUS, P. J.
• Citation: Farmers State Bank of South Greenfield, Missouri v. The Title, Guaranty & Trust Company of Scranton, Pennsylvania, 113 S.W. 1147, 133 Mo.App. 705 (Kan. App. 1908)
• Decision Date: 16 November 1908
• Parties: FARMERS STATE BANK OF SOUTH GREENFIELD, MISSOURI, Respondent, v. THE TITLE, GUARANTY & TRUST COMPANY OF SCRANTON, PENNSYLVANIA, Appellant

113 S.W. 1147

133 Mo.App. 705

FARMERS STATE BANK OF SOUTH GREENFIELD, MISSOURI, Respondent, v. THE TITLE, GUARANTY & TRUST COMPANY OF SCRANTON, PENNSYLVANIA, Appellant

Court of Appeals of Missouri, Kansas City

November 16, 1908

Appeal from Dade Circuit Court.--Hon. J. B. Johnson, Judge.

Judgment reversed.

Thos H. Sprinkle and S. A. Payne for appellant.

(1) Before there could be any liability under the bond it was necessary for the employer to introduce such proof as would convict the employee of the crime of embezzlement or larceny. Embezzlement and larceny are both terms of the criminal law and in no respect are they terms of contract law; their meaning therefore, is to be found in the criminal code. Reed v. Fidelity & Casualty Co., 189 Pa. St. 596; Guarantee Co. v. Bank, 100 F. 559; Mfg. Co. v U. S. F. & G. Co., 60 S.C. 128; N. K. Fairbank Co v. Bonding & Trust Co., 97 Mo.App. 205; Coal Co. v. Fidelity & Dep. Co., 94 F. 732; Boone on Law of Banking, sec. 132.

Edw. J. White and Edgar P. Mann for respondent.

(1) Wrongful appropriation of the funds of his employer, the bank, by the cashier in the manner shown by the evidence in this case, amounted to embezzlement. The funds were in his custody. They were taken and appropriated to his own use by the employee without the knowledge or consent of the bank. R. S. 1899, sec. 1912; State ex rel. v. Merkle, 189 Mo. 315; State v. Gregory, 170 Mo. 606; State v. Lentz, 184 Mo. 241; State v. Crosswhite, 130 Mo. 358. (2) It was not necessary in order to fix the liability of appellant upon the bond that respondent should produce in support of its claim thereunder proof such as would convict the cashier of the crime of larceny or embezzlement as defined by the laws of Missouri. Such a narrow construction of the provisions of the contract is not required by law, and was never contemplated by the parties to it. While larceny is a common law crime, yet in this State it is to a great extent statutory. Embezzlement is purely a statutory crime, but the terms larceny and embezzlement in the bond or policy sued on are used as generic terms to indicate the dishonest and fraudulent breach of any duty or obligation on the part of an employee to pay over to his employer or account to him for any money, the title to which is in the employer, that may in any manner come into the possession of the employee. Ice Co. v. Bonding & Trust Co., 75 S.W. 197. (3) As the policy sued on provides for a liability in case of a pecuniary loss resulting from fraud or dishonest conduct amounting to embezzlement or larceny, it was not essential to show larceny or embezzlement to recover in this case. Trust Co. v. Lee, 68 N.E. 485; Fairbanks Co. v. Bonding Co., 97 Mo.App. 205. (4) Embezzlement or larceny may be committed by overdraft. Guaranty Co. v. Trust Co., 80 F. 785.

OPINION

BROADDUS, P. J.

The plaintiff is an incorporated bank under the laws of this State, located in Greenfield, Dade county. On the 27th day of July, 1905, one H. C. Woolf was elected its cashier and entered upon the discharge of his duties as such on the 12th day of August following. Prior thereto, he applied to the defendant to make his bond to the plaintiff in the sum of $ 10,000. The application was in writing and signed by Woolf and E. H. Daughtry, a director of the bank. The defendant executed the bond applied for in consideration of a premium of thirty dollars paid by the bank and the same was delivered to its president, whereupon Woolf at once assumed the duties of cashier.

The principal condition of the bond reads as follows: "Now, therefore, This Bond Witnesseth, That for the consideration of the premises, the company shall during the term above mentioned, or any subsequent or renewal of such term, and subject to the conditions and provisions herein contained, at the expiration of three months next, after proof satisfactory to the company, as hereinafter mentioned, make good and reimburse to the said employer, such pecuniary loss as may be sustained by the employer by reason of the fraud or dishonesty of the said employee in connection with the duties of his office or position, amounting to embezzlement or larceny. . . ."

Prior to the time that Woolf became cashier, one Ed I. Myers was engaged in the produce business. He started with a capital of $ 250. Without the knowledge of the bank, Woolf became a partner of Myers, he having put into the concern the sum of $ 500, which made him two-thirds the owner of the business. The business was conducted under the name of Myers, Woolf being a silent partner. When the bank opened on the 12th day of August, Myers began with two accounts, one in the name of "Ed I. Myers, private," under which he carried his personal account, and the other in the name of "Ed I. Myers," under which was carried this partnership account of Myers and Woolf. These accounts were kept by Woolf as cashier.

It was shown that Woolf counseled and advised Myers in relation to these partnership affairs. On October 9, 1905, Myers made a draft for $ 1,500 on B. W. Redfern & Co., St. Louis, which was deposited to his credit and upon which he was allowed to check before any returns were received from the draft. On October 17th, Myers drew another draft on the St. Louis concern for $ 1,200, which was also deposited to his credit and upon which he was allowed to check before any returns from the same had been received. Both these drafts were endorsed, "No protest." The second draft was accepted by the drawee on October 19, 1905. Both were returned unpaid. The first was returned to and received by the bank on October 20, 1905, and the second on October 28 1905. On the return of the first draft for $ 1,500, Woolf, upon the assurance of Myers that there was some mistake about the matter, allowed Myers on October 26th to draw and deposit another draft on the same concern for $ 1,500 and canceled the first draft, crediting the same by the second one for that amount. On October 28th, Woolf allowed Myers to draw another draft for $ 1,200 to take the place of the former one for an equal amount, marking the first paid and crediting the same by the second, and allowed Myers to check upon the same. These last two drafts were also returned unpaid. On November 6, 1905, these transactions left Myers'...