First Nat. Bank of Colorado Springs v. Holt

• Decision Date: 03 February 1942
• Docket Number: No. 25900.,25900.
• Citation: 158 S.W.2d 229
• Parties: FIRST NAT. BANK OF COLORADO SPRINGS v. HOLT, Commissioner of Finance.
• Court: Missouri Court of Appeals

158 S.W.2d 229

FIRST NAT. BANK OF COLORADO SPRINGS v. HOLT, Commissioner of Finance.

No. 25900.

St. Louis Court of Appeals. Missouri.

February 3, 1942.

Appeal from Circuit Court, St. Louis County; Peter T. Barrett, Judge.

"Not to be reported in State Reports."

Action by First National Bank of Colorado Springs against R. W. Holt, Commissioner of Finance of the State of Missouri, as liquidator of the defunct Bank of Eureka, to recover out of the assets of the defunct bank for certain losses sustained as a result of an alleged conspiracy to defraud. Judgment for defendant, and plaintiff appeals.

Affirmed.

Fordyce, White, Mayne, Williams & Hartman, William H. McBratney, and Joseph R. Long, all of St. Louis (Haney & Jackson and John T. Haney, all of Colorado Springs, Colo., of counsel), for appellant.

Raleigh McCormick and Gus O. Nations, both of St. Louis, for respondent.

BENNICK, Commissioner.

This is an action by which plaintiff, the First National Bank of Colorado Springs, seeks to recover out of the assets of the defunct Bank of Eureka for certain losses it sustained by reason of what it alleges was a conspiracy to defraud it on the part of Harry E. Williams, B. O. McReynolds, and J. F. Mackey, the latter being the cashier and executive vice-president of the defunct bank at the time the losses were incurred. The defendant is R. W. Holt, Commissioner of Finance of the State of Missouri, who, according to the allegations contained in the body of the petition, is sued in his capacity as liquidator of the defunct bank.

The petition, which was in two counts, alleged that Williams, McReynolds, and Mackey had previously agreed and conspired between and among themselves to the end of fraudulently inducing plaintiff bank and other Colorado banks to extend credit to Williams; that in the accomplishment of their purpose, Williams sought credit from plaintiff bank in Colorado, which thereupon made inquiry of the Bank of Eureka about Williams' financial standing and general responsibility; that in response to such inquiry, Mackey, acting on behalf of the Bank of Eureka, represented that Williams was responsible, industrious, and honest, and paid his obligations promptly; that such representation was false and untrue, and known by Mackey so to be; that upon the faith of such representation, plaintiff bank extended credit to Williams, and also to McReynolds upon checks deposited by him in plaintiff bank which were endorsed by Williams; that in pursuance of their conspiracy, Williams and McReynolds began the practice of transferring funds from one bank to another in order to meet checks cashed at plaintiff bank, but drawn upon the Bank of Eureka, in which, at the time of cashing the checks, they had insufficient funds on deposit to cover the same; and that as a result of such practice, and the subsequent failure of the Bank of Eureka as a consequence of it, certain checks drawn by Williams and McReynolds on the Bank of Eureka were not honored to the loss of plaintiff bank.

In Count 1 of the petition, which proceeded upon the theory of a loss sustained by plaintiff bank because of the fraudulent representation of Mackey, judgment was sought in the sum of $6,794.90, while in Count 2, which embraced the same transactions as set forth in Count 1, recovery was sought in the sum of $6,376, which sum defendant was alleged to be holding for the use and benefit of plaintiff bank.

Aside from admitting his status as liquidator of the defunct bank, defendant's answer was a general denial, coupled with a plea of the special statute of limitations (§ 7928, R.S.Mo.1939, Mo.St.Ann. § 5333, p. 7557).

A jury was waived and the case tried before the court alone, resulting in the entry of a judgment in favor of defendant, from which plaintiff's appeal to this court has followed in the usual course.

According to the evidence, the conspiracy was formed and carried out in connection with a mining venture in which Williams, McReynolds, and Mackey were all interested in the State of Colorado. Mackey did concededly make the false representation to plaintiff bank regarding Williams' credit, though whether he made the same as an agent of the bank or as an integral part of the conspiracy in which he was personally a participant was a question much disputed in the case. Following the closing of the Bank of Eureka, Williams and Mackey were indicted upon the charge of using the mails to defraud, and, upon a trial in the United States District Court, were convicted and sentenced to terms in the federal penitentiary. It appears that McReynolds had meanwhile died, and so escaped the prosecution to which his fellow conspirators were subjected.

At the termination of the trial below, the learned trial court filed findings of fact and conclusions of law by which it determined that neither the Bank of Eureka, nor the commissioner of finance as its liquidator, were chargeable with any representation made by Mackey for his own purposes and in the prosecution of his own personal enterprise when not authorized by the bank or related to or connected with its business; and further, that in any event the alleged claim of plaintiff bank was...