Gate City Building and Loan Association v. National Bank of Commerce

• Decision Date: 22 December 1894
• Citation: 28 S.W. 633,126 Mo. 82
• Parties: Gate City Building and Loan Association, Appellant, v. National Bank of Commerce
• Court: Missouri Supreme Court

28 S.W. 633

126 Mo. 82

Gate City Building and Loan Association, Appellant, v. National Bank of Commerce

Supreme Court of Missouri, First Division

December 22, 1894

Appeal from Jackson Circuit Court. -- Hon. J. W. Henry, Judge.

Affirmed.

""C. S. Owsley and ""Lathrop, Morrow, Fox & Moore for appellant.

(1) If defendant claims any benefit from the fact that plaintiff's by-laws gave its secretary power to receive money, still the same by-laws required him to pay it to the treasurer. Defendant, however, can not claim the benefit of any by-law unless it shows that it had knowledge of such by-law, and relied thereon in its dealings with secretary Harris. This is not claimed, and the evidence is absolutely silent on any knowledge of defendant of plaintiff's by-laws. ""Flint v. Pierce, 99 Mass. 70. (2) If this be not the rule, but on the other hand, defendant could have the benefit of any actual authority, if it existed still it must prove such actual authority. ""Wilson v. Railroad, 120 N.Y. 153. (3) A person dealing with an officer of a corporation whose duties are regulated by the by-laws, is chargeable with notice of such officer's authority, and of the limitations and restrictions upon it contained in the by-laws. Officers of a corporation are special, not general, agents, and have no authority except within the limits prescribed by the constitution and by-laws. ""Frink v. Roe, 70 Cal. 297; ""Rice v Peninsular Club, 4 Am. and Eng. Corp. Cases, 251 ""Wild v. Bank, 3 Mason, 505; ""State v. Bank, 6 Sm. & M. 218; ""Risley v. Railroad, 1 Hun, 202; ""Earnest v. Nicholls, L. R. 6 H. L. Cas. 419; ""Smith v. Hull Glass Co., 11 C. B. 926; ""Durand Organ, etc., Co. v. Bowman, 44 Am. and Eng. Corp. Cas. 664; ""Hotchin v. Kent, 8 Mich. 529; ""Adriance v. Roome, 52 Barb. (N. Y.) 410; ""Dabney v. Stevens, 40 How. Pr. (N. Y.) 345. (4) It was defendant's duty to have inquired into the authority of defendant's secretary Harris. ""Hurley v. Watson, 36 N.W. 729; ""Bodenham v. Hoskyns, 2 De Gex. M. & G. 905; ""Dabney v. Stevens, 40 How. Pr. 341; ""Dabney v. Stevens, 52 Barb. 399; ""Fawcett v. New Haven Organ Co., 47 Conn. 226; ""McCullough v. Moss, 5 Denio, 575; ""Robinson v. Anderson, 106 Ind. (152) 156. (5) All presumption as to ownership in the check in question when presented for deposit at defendant bank was against ownership in Harris, and the bank should not have placed the proceeds to his credit. ""Bank v. Hammett, 50 N. Y. (158) 159; ""Bodenham v. Hoskyns, 2 De Gex. M. & G. 905.

""Elijah Robinson for respondent.

(1) The demurrer to the evidence was properly sustained. (2) The indorsement of checks by one having no authority to indorse the same is a nullity. In contemplation of law such indorsement, unless subsequently ratified, has no more validity than if it was a rank forgery. In such case the legal obligation resting on the drawee is not discharged, but it will be liable for the money, notwithstanding the prior payment. Harris was plaintiff's agent, with authority to collect the money on all demands due it, and the defendant bank was not required to see to the proper application of the money by him collected. The by-laws conferred authority on Harris, the secretary, to indorse the check and collect the money thereon, and it is entirely immaterial whether the plaintiff knew of the existence of the by-law conferring this authority. ""Wilson v. Railroad, 120 N.Y. 153; ""Cowing v. Altman, 71 N.Y. 442; ""Williams v. Mitchell, 17 Mass. 101.

OPINION

Brace, J.

This is an appeal from a judgment in favor of the defendant in the Jackson county circuit court.

The plaintiff is a building and loan association organized under the laws of this state, of which, at the time of the transaction in question, E. E. Richardson was president, Benjamin Holmes, treasurer, and George L. Harris, secretary. In June, 1887, the association made a loan to Richardson of $ 4,000 evidenced by his bond, and secured by a deed of trust on some property in Kansas City. In June, 1888, Richardson concluded to pay off this loan, and made an arrangement with Judge Brumback for that purpose, who, on the nineteenth of June, 1888, drew his own check of that date for $ 3,676.74, the balance due thereon, "on Armour Bros. Banking Company," payable to "Gate City Building and Loan Association" and delivered the same to the said Harris in payment thereof, who indorsed said check "Gate City B. & L. Ass'n, by George L. Harris, secretary;" and on the next day presented the same to the defendant bank, in which was then being kept an account in the name of said association as also an individual account in the name of said Harris, for deposit on his personal account. Thereupon the check was credited to Harris on his individual account and collected by the bank, through the clearing house, of Armour Bros. Banking Company, on the twenty-first of June, 1888. Afterward the proceeds thus placed to the credit of Harris on his personal account were checked out by him on his individual checks, for what purposes does not appear, except that on the same day of the deposit there was deposited to the credit of the association on its account the sum of $ 590.33, the exact amount of one of his checks on that day charged to him on his individual account.

On the same day the check was given by Brumback the following written statement was made upon the face of the bond of Richardson: "Received, June 19, 1888, payment in full by E. E. Richardson, per J. Brumback, $ 3,676.74. Geo. L. Harris, Secretary." And the deed of trust was satisfied of record by a deed of quitclaim executed by the vice-president of the association in pursuance of a special order of the board of directors.

Harris the secretary, was the active manager of the association, and, under its by-laws, the custodian of its bonds, notes, mortgages and other securities, the keeper of its accounts with its officers and members and those having dealings with the association, whose duty it was "to receive all moneys and pay the same over to the treasurer," and "at all meetings of the board of directors furnish a statement of the financial condition of the association, and give a detailed statement thereof at each annual meeting and make a semiannual report for publication in January and July of each year." The treasurer was the custodian of the money of the association, whose duty it was "to receive from the secretary all money paid into the association," to "pay all orders issued by the board of directors, signed by the president and countersigned by the secretary," and to keep his accounts "open at all times to the inspection of the...