Fidelity National Bank & Trust Co. v. Tootle-Campbell Dry Goods Co.

• Decision Date: 18 March 1922
• Citation: 238 S.W. 474,293 Mo. 194
• Parties: FIDELITY NATIONAL BANK AND TRUST COMPANY, Executor of Estate of GEORGE W. FULLER v. TOOTLE-CAMPBELL DRY GOODS COMPANY, Appellant
• Court: Missouri Supreme Court

238 S.W. 474

293 Mo. 194

FIDELITY NATIONAL BANK AND TRUST COMPANY, Executor of Estate of GEORGE W. FULLER v. TOOTLE-CAMPBELL DRY GOODS COMPANY, Appellant

Supreme Court of Missouri, Second Division

March 18, 1922

Appeal from Platte Circuit Court. -- Hon. Alonzo D. Burns, Judge.

Reversed and remanded.

Robert A. Brown, Richard L. Douglas and James H. Hull for appellant.

(1) The court below erred in giving plaintiff's Instruction 3. (a) The instrument sued on was signed by C. R. Bernard as secretary for the defendant. In that capacity he had no authority to sign said instrument or any other instrument obligating the company to pay money, other than checks and drafts, as provided by defendant's by-laws. Bank v Hogan, 47 Mo. 472; Sanders v. Chartrand, 158 Mo. 352; Fuller v. Tootle-Campbell D. G. Co., 189 Mo.App. 514. (b) Since Bernard, as secretary, was without authority to bind the defendant by the instrument executed by him, it devolved upon plaintiff to prove by the preponderance of the evidence that in the general course of defendant's business it had permitted the said Bernard to sign papers of a like or similar character, obligating the defendant to pay money other than checks or drafts, or to show that by reason of the provisions of the by-laws of the defendant or some act of its controlling officers, the said Bernard had been authorized to sign papers of a similar character. Scotland County Bank v. Hohn, 146 Mo.App. 699; Johnson v. Harley, 115 Mo.App. 513; Knoche v Whitman, 86 Mo.App. 568. (c) The instruction did not limit the jury to any particular facts or to any facts in determining whether Bernard had authority to sign the paper but it gave to the jury a roving commission to find without evidence or any particular character of evidence, that Bernard did have authority to sign the paper. It is error for an instruction to broaden the issues and to give the jury a roving commission. Lauff v. Carpet Co., 186 Mo.App. 186; Sparkman v. Railroad, 191 Mo.App. 463; Clark v. Motor Co., 177 Mo.App. 623. (2) The court below erred in giving plaintiff's Instruction 4. Tyler Estate v. Hoffman, 146 Mo.App. 510; McAlester v. Const. Co., 181 S.W. 60; Hackett v. Van Frank, 105 Mo.App. 384; Gregory v. Loose, 19 Wash. 599, 54 P. 33; 31 Cyc. p. 1218. (3) A party in order to avail himself of the apparent authority rule must show that he was aware of the course of conduct from which such apparent authority might be presumed. Paper Mfg. Co. v. Bank, 199 Ill. 151; Merchants Bank v. Nichols, 223 Ill. 45; Grant v. Humerick, 123 Iowa 571; Hastings Bank v. Bank, 56 Neb. 149; Gibson v. Trow, 105 Wis. 288. (4) He must also show that he relied on such course of conduct. Advertising Co. v. Wanamaker, 115 Mo.App. 270; Hackett v. Van Frank, 105 Mo.App. 396; Fulton v. Medicine Co., 145 Ala. 331; Rogers v. Peckham, 120 Cal. 238; Jackson Paper Mfg. Co. v. Bank, 119 Ill. 151; Hastings Bank v. Bank, 56 Neb. 149; Fike v. Otto, 76 Neb. 439. (5) It was not pretended that plaintiff actually knew of the course of conduct pursued by Bernard, or that he relied upon any such course of conduct.

Justin D. Bowersock and Robert B. Fizzell for respondent.

(1) Plaintiff's Instruction 3 was properly given. (a) It was not based on Bernard's official authority as secretary, but on his general authority as agent. (b) It did not broaden the issues or give the jury a "roving commission" on the question of authority. What constitutes authority was fully defined in plaintiff's Instruction 4 and in defendant's Instructions 5 and 6. (c) The language "in pursuance of a fraudulent conspiracy" is properly explained in plaintiff's Instruction 5. (d) The words "that the plaintiff was a party to such combination" were proper. Belt Ry. Co. v. Ry. Co., 118 Mo. 625; Waers v. Wiesberg, 152 Mo.App. 276. (2) Plaintiff's Instruction 4 was properly given. (a) It properly limited the implied or apparent authority of an agent arising from a course of business. Martin v. Webb, 110 U.S. 7. (b) It properly stated that plaintiff was not bound by defendant's by-laws without notice thereof. Smoot v. Life Assn., 138 Mo.App. 465; Rosenbaum v. Gilliam, 101 Mo.App. 135; State v. Overton, 24 N. J. L. 435; Hagerstown Brewing Co. v. Gates, 117 Md. 348; Am. Natl. Bk. v. Auto Co., 31 S.D. 524; 10 Cyc. 351. (c) Plaintiff was entitled to rely on authority vested in agent by the course of business. Rosenbaum v. Gilliam, 101 Mo.App. 126; Butler Co. v. Boatmen's Bk., 143 Mo. 13; Sparks v. Transfer Co., 104 Mo. 531. (d) The jury was properly limited to the general scope of the agent's authority. 3 Cook on Corporations, sec. 720, p. 2322. (3) The instructions should be considered as a whole. Minter v. Bradstreet Co., 174 Mo. 495; Norton v. Kramer, 180 Mo. 544. (4) Verdicts not set aside for defect in one instruction, if instructions as a whole correctly declare law. Chambers v. Chester, 172 Mo. 461.

OPINION

HIGBEE, J.

This suit was instituted by George W. Fuller on the following contract addressed to him:

"In consideration of the agreement of George W. Fuller and Mrs. S. S. Fuller releasing any lien or claim which they may have against any of the assets now owned by W. H. Fuller, amounting to approximately $ 28,500 and $ 22,500 respectively, and of their agreement not to demand payment of said claims from said W. H. Fuller or his estate until after all other existing creditors of said W. H. Fuller have been paid in full, we agree to purchase between now and January 1, 1913, the capital stock of the W. H. Fuller Dry Goods Company of McAlester, amounting to seven thousand dollars, which has been accepted by you in settlement of a note of like amount now owing by W. H. Fuller to the Fidelity Trust Company and endorsed by you, and will pay you for said stock at your request on January 1, 1913, the sum of seven thousand dollars plus 6% interest from January 1, 1913, less any amounts that may have been paid you as dividends on said stock.

"Tootle-Campbell Dry Goods Company,

"C. R. Bernard, Secretary."

The plaintiff having died since the appeal was taken, the cause has been revived in the name of his executor. For convenience we may speak of G. W. Fuller throughout this opinion as the plaintiff. The question is: Did Bernard have authority to execute this contract?

The petition was filed in the Circuit Court of Buchanan County on April 18, 1913. On the first trial, the verdict was for the defendant. This judgment was reversed on appeal for error in the admission of evidence. [Fuller v. Tootle-Campbell Dry Goods Co., 189 Mo.App. 514, 176 S.W. 1091.] Thereafter, on the application of the plaintiff, a change of venue was awarded to Platte County, and on the second trial a verdict was rendered for the plaintiff for the sum of $ 9130. Plaintiff remitted $ 117.50, and judgment was entered for $ 9012.50. The Court of Appeals transferred the case to this court because the sum involved exceeded $ 7500. The petition avers, in substance, that the defendant is a corporation doing business in the city of St. Joseph, Missouri; that prior to December 27, 1910, W. H. Fuller was engaged in general merchandising at McAlester, Oklahoma, and was indebted to the plaintiff in the sum of $ 28,500, to his wife in the sum of $ 22,500, to the defendant in the sum of about $ 30,000, and to various other creditors in various amounts; that he was also indebted to the Fidelity Trust Company on a note for $ 7,000 indorsed by plaintiff; that said Fuller was insolvent, and defendant, acting through its attorney, negotiated with said Fuller for the settlement of his debts, and that, on December 12, 1910, a contract was entered into between said Fuller, the defendant herein, the Bradley-Metcalf Company, the plaintiff herein, and his wife, Mrs. S. S. Fuller, by the terms of which it was agreed that the plaintiff and Mrs. Fuller would postpone the payment of the debts due them until after all other creditors of said W. H. Fuller had been paid in full; that said W. H. Fuller should cause to be incorporated under the laws of Oklahoma, the W. H. Fuller Dry Goods Company, with a capital stock of $ 40,000, consisting of 400 shares of $ 100 each, of which stock $ 28,000 should be assigned to the defendant in settlement of an equal amount of its claim against said Fuller, $ 2400 of said stock should be assigned to said Bradley-Metcalf Company in settlement of its demand, and $ 7,000 should be assigned to plaintiff in settlement of W. H. Fuller's note to the Fidelity Trust Company, which plaintiff agreed to have released; that the W. H. Fuller Dry Goods Company was accordingly incorporated, and the stock thereof was issued and assigned as above stipulated; that as a part of the transaction, the defendant executed the contract sued on and plaintiff paid the $ 7,000 note to the said Fidelity Trust Company; that plaintiff has kept and performed the terms of said contract of settlement, and prays judgment.

The second amended answer, which was verified, alleges that Bernard and the parties to the contracts mentioned in the petition, wrongfully conspired together to incorporate the business of W. H. Fuller and to relieve him from his personal obligations; that all said parties knew that, by their conspiracy, they had entailed a loss on defendant of more than $ 40,000; that the assets of the W. H. Fuller Dry Goods Company were worthless; that the contracts were signed by the parties thereto without the authority or consent of defendant, and that the contract sued on was conceived in fraud, without consideration and void.

At the time the Tootle-Campbell Dry Goods Company was organized in the year 1908, Bernard was employed as its secretary and credit man. He was instrumental in securing his friend Fuller, a merchant of McAlester, Oklahoma, as a customer of the...