First Nat. Bank of Denver v. Manhattan Life Ins. Co.

• Decision Date: 13 February 1912
• Citation: 21 Colo.App. 256,120 P. 1112
• Parties: FIRST NAT. BANK OF DENVER v. MANHATTAN LIFE INS. CO.
• Court: Colorado Court of Appeals

120 P. 1112

21 Colo.App. 256

FIRST NAT. BANK OF DENVER v. MANHATTAN LIFE INS. CO.

Court of Appeals of Colorado

February 13, 1912

Appeal from District Court, City and County of Denver; Carlton M Bliss, Judge.

Action by the Manhattan Life Insurance Company against the First National Bank of Denver. Judgment for plaintiff, and defendant appeals. Affirmed.

See also, 20 Colo.App. 529, 80 P. 467.

Cunningham J., dissenting.

Gerald Hughes, for appellant.

William V. Hodges, for appellee.

KING J.

Appellee (hereinafter referred to as the "company") brought its action in the district court to recover from appellant (hereinafter referred to as the "bank") a sum of money which, in the complaint, the company alleges the bank had collected for it on account of certain renewal premium receipts and notes sent to the bank by the company for collection, and failed to remit or account for. The record shows with reasonable certainty that the money, which the company alleges that the bank had collected and failed or neglected to remit or account for, was in fact collected and retained by one Budlong. The right of the controversy depends upon the legal status of the said Budlong, whether in collecting the money he should be regarded as the agent of the bank, as the company contends, or the agent of the company, as the bank contends.

1. The case, after its first trial in the district court, was reviewed and decided by the Court of Appeals, January, 1905, and in the opinion then handed down a more extended and complete statement of the case than we now deem necessary will be found. Manhattan Life Insurance Company v. First National Bank, 20 Colo.App. 529, 80 P. 467. The evidence on the first trial in the district court does not materially or essentially differ from that at the last trial, and the judgment announced by the former Court of Appeals could not have been reached without having decided, expressly or by implication, most if not all of the questions presented for consideration on this appeal. That decision, therefore, has become the law of the case, and all matters therein clearly decided are res judicata, and will be so considered by this court in the further discussion of the case.

2. There is no material conflict in the evidence as to the facts; the apparent conflict arising from the conclusions of law drawn by the witnesses and testified to as facts. The relation of Budlong to the parties plaintiff and defendant must be determined from certain letters that passed between the company and the bank, and the company and Budlong, his acts which came to the knowledge of the parties, and the conduct of the parties themselves. Portions of those letters are hereinafter set out; the italics being our own.

September 24, 1897, the company sent to the bank for collection certain items, with the following letter: "Inclosed please find for collection the following October renewals, viz.: Total, $1,054.46. Mr. E.C. Budlong, Jr., our agent in Denver, will call on you and give you the addresses of the parties and other information you may require. All collections on account of these items and any other items that may be sent to you are to be credited to the account of the Manhattan Life Insurance Company and statement of the account is to be made to us monthly on the first of each month. Drafts on the accounts will be signed by three officers of the company whose signatures are attached. Items not paid when due may be held thirty days and payment accepted during that time provided the parties furnish a certificate of good health, blanks for which we inclose. When thirty days past due all unpaid items should be returned to us." Receipt of this letter with the items inclosed was formally acknowledged by the bank, and in addition thereto the bank, by Mr. Ross-Lewin, its cashier, wrote a letter asking concessions as to fees for collections made. This letter came into the hands of the vice president of the company, who made the notation thereon: "Turn over to some other bank J.L.H., V.P." And that letter with such notation was sent to Budlong, together with a letter from the company signed by its secretary, both of which letters were exhibited by Budlong to the bank; the letters (with the notation aforesaid) being as follows: Bank to company: "Denver, Colo., September, 28, 1897. Replying to yours of the 24th, with inclosures, we beg to advise you that we have acknowledged receipt of same under separate cover. We shall be very glad to handle not only your collections, but any other business you may entrust to us, but at the same time we are of the opinion that we should receive a just collection fee. We handle a great deal of this business for various insurance companies throughout the country and in all cases receive at least two per cent. on the total of collections made. Kindly advise us whether you are willing to make us that concession, and oblige." Notation: "Turn over to some other bank J.L.H., V.P." Company to Budlong: "October Eleventh, 97. We have your favor of the 7th inst. with check for $100, and herewith return your note for like amount. In regard to the other notes we would say that we prefer to collect them through the bank. We have a letter from the First National Bank in which they say they think they should have 2 per cent. for collecting the renewals. This we cannot afford to pay, and if the bank will not make these collections at their regular rate for collecting, please see what you can do with some other bank and report to us, when if satisfactory, we will change the account." No further correspondence passed between the bank and the company except letters transmitting other notes and receipts for collection which the company continued to send, and acknowledgments from the bank upon receipt of such items, until the company discovered the conditions which led to this litigation, to which reference will be made later.

November 20th Budlong wrote the insurance company as follows: "Denver, Colo., Nov. 20, 1897. Mr. J.L. Halsey, V.P., New York City--My Dear Sir: I have been endeavoring for several weeks to make arrangements with some one of the banks to handle our collections at a reasonable rate. I have had several good propositions but found that upon pressing matters at the First National a better arrangement could be made there than anywhere else, which I know will be more satisfactory to you as well as myself. With the understanding that all notices are to be sent from this office and that no expense or trouble will be given the bank in the matter, they have consented to handle the account without charge other than the regular clearing house charge of one-tenth of one per cent. for remittances in New York exchange. Under these circumstances and considering the fact that I have personally seen every policy holder who has paid a premium during the last thirty days, in addition to the expense of postage, etc., I trust you will have no objection to continue paying me 2 per cent. upon these items. If necessary I will of course stand the exchange charge. It seems to me it would be wise to send me a notice of every item or note sent to the bank in order that I may duly notify the parties. *** Trusting that all of the above matters will be satisfactory, I remain Yours respectfully, Edwin Budlong, Jr."

On the 24th of September the company had written to Budlong notifying him that it had sent October renewals to the bank, in the following language: "We have to-day forwarded the October renewals to the First National Bank for collection with instruction to place the amount to our credit and to pay only by draft upon this office. Please call on them and give them any assistance in your power." All items sent to the bank after the letter of September 24th were acknowledged by the bank as having been received by it for collection.

Before any of the correspondence hereinbefore stated had passed, Budlong had been the agent in Denver of the company; his power to collect being limited to first premiums on policies and such other matters as might be sent to him by the company for collection. Being in arrears on account of moneys received by him, Budlong was called to New York by the company, and his agency restricted and limited by taking from him the right to collect, and requiring him to turn over to the First National Bank for collection all items in his hands. Upon his return to Denver he delivered items to the bank amounting to something over $700, taking and forwarding to the company the following receipt: "Denver, Colo., Sept. 27, 1897. Received from Mr. Edwin C. Budlong, Jr., general agent, the following renewal receipts to be held for collection and credited to the account of the Manhattan Life Insurance Company of New York, subject to their draft only upon the signatures of the proper officers of the company to be filed with the bank. (List of items.) The First National Bank of Denver, per Haughwout, Teller." At the same time he deposited in the bank to the credit of the company, subject to its draft only, funds then in his possession which it seems he had theretofore carried in said bank in the name of the company but subject to his own check.

From the foregoing correspondence and the acts of the parties it would seem established beyond any room for difference of opinion that the bank was advised that the company had withdrawn from Budlong its confidence to the extent that it restricted his agency: (a) By taking from him the right to collect and transferring that right and obligation to the bank; and (b) by taking from Budlong and placing in the possession of the bank those receipts and notes without which Budlong would have been unable to make collection; (c) and thereby also taking from its former agent his...