Griffin v. National Bank of Commerce

• Citation: 246 S.W. 180
• Decision Date: 20 December 1922
• Docket Number: No. 22735.,22735.
• Parties: GRIFFIN et al. v. NATIONAL BANK OF COMMERCE IN ST. LOUIS.
• Court: United States State Supreme Court of Missouri

246 S.W. 180

GRIFFIN et al. v. NATIONAL BANK OF COMMERCE IN ST. LOUIS.

No. 22735.

Supreme Court of Missouri, in Banc.

December 20, 1922.

Rehearing Denied December 30, 1922.

Appeal from St. Louis Circuit Court; John W. Calhoun, Judge.

Action by Corinne K. Griffin and others against the National Bank of Commerce in St. Louis. Judgment for plaintiffs, and defendant appeals. Reversed and remanded, with directions.

Geo. L. Edwards, of St. Louis, for appellant.

Foster H. Brown and Fred Wislizenus, both of St. Louis, for respondents.

Statement.

WOODSON, C. J.

This case was first argued and submitted in Division No. 1 of this court, and assigned to one of our learned commissioners to write, which he did and reported his opinion to the court for adoption or rejection. It was rejected by the majority of the court, and the cause was transferred to court en banc, where it was again argued and submitted and assigned to the undersigned to write.

Upon an examination x find the commissioner has fully and fairly stated the facts of the case, and a therefore adopt the same as the statement of the facts, by this court, which are as follows:

This is a suit by the assignees of a depositor of the defendant bank to recover a balance of deposits claimed to be unpaid after demand. The controversy arose in connection with the drawing by plaintiffs' assignor, the Keller & Tamm Manufacturing Company, a corporation, of some 32 checks on defendant and payable to defendant's order. These checks were presented to defendant by one Scott, the secretary and treasurer of the company and on his direction the defendant issued cashier's checks payable to his order and delivered them to him. Scott deposited the checks so issued to him to his individual account and drew against them for his own uses.

The cause was referred by the circuit court to Hon. Rhodes E. Cave, with directions to hear and decide the whole issue The referee heard the evidence and in due time made report of the proceedings had be fore him. His report contains, among other things, a fair summary of the pleadings and a statement of the facts as found by him. They are as follows:

"Pleadings.

"The petition alleges that on August 30, 1913, the Keller & Tamm Manufacturing Company had on deposit with the defendant bank $8,790.12; that thereafter and up to October 12, 1917, it deposited with the defendant from time to time additional sums sufficient to make the total amount deposited $450,301.97; that out of this sum the defendant paid, at the wishes of the Keller & Tamm Manufacturing Company, $415,148.99, leaving a balance of $35,153.28, which defendant bad on deposit and which it had agreed to pay out to plaintiffs or its order; that on October 10, 1917, Keller & Tamm Manufacturing Company demanded payment of said sum, which was refused by the defendant, and that thereby the defendant became indebted to the Keller & Tamm Company in said sum; and that the Keller & Tamm Company has assigned to plaintiffs all of its rights against the defendant arising out of the aforesaid.

"The answer outside of formal admissions is first a general denial, and then it alleges:

"(a) That from August, 1913, to October 11, 1917, the Keller & Tamm Company was a corporation doing its banking business with the plaintiffs; that it had a capital of $200,000, owned mainly by the plaintiffs and their sister, Mrs. P. C. Scott and her husband, P. 0. Scott (a close family corporation); that the officers of the Keller & Tamm Company were the plaintiff Mrs. Erskine, president, Mr. Lohman, vice president, and Mr. Scott, secretary and treasurer; these were also all the directors; that during said time it was the custom of the Keller & Tamm Company to issue checks drawn on and payable to the defendant and to deliver such checks to Scott, its secretary and treasurer, for presentation to defendant and for Scott to direct defendant how to apply the moneys called for by such checks; that there was, during the said time, a general custom among all bankers in St. Louis and with this defendant, on the presentation of checks payable to the bank, if there were no contrary instructions from the depositor, to follow the directions of the officer of the depositor and to deliver the funds to such officer in cash, or cashier's cheek, or otherwise, as he might direct; that Keller & Tamm Manufacturing Company was not at any of the times in controversy indebted to the defendant, and had given defendant no contrary instructions; that in pursuance of said custom the Keller & Tamm Company drew 32 checks payable to the defendant and delivered them to Scott for presentation to the defendant; and that in pursuance of Scott's directions the defendant issued to Scott cashier's cheeks payable to the order of Scott; that if said 32 checks were converted by Scott, it was with the full knowledge and consent of plaintiffs, his sisters-in-law.

"(b) That, as shareholders and officers of said Keller & Tamm Manufacturing Company, the plaintiffs knew, or by exercise of due care could have known, when that company declared dividends and how and through whom it directed same paid.

"(c) That, if said 32 checks represented dividends to be paid to plaintiffs, as they knew it, or could have known it by due care, but they negligently failed to discover such facts or to recover the moneys from Scott, or to notify defendant so that it could recover them; that, if defendant had been so notified, it could have prevented the conversion by Scott of all except possibly the first check, and could have recovered all the money from Scott.

"(d) That during all of said time the plaintiffs and the Keller & Tamm Company knew that Scott was untrustworthy and had appropriated moneys of the Keller & Tamm Company, of which fact defendant was ignorant, and nevertheless retained him as secretary and treasurer, and held him out to defendant as worthy of confidence and trust.

"(e) That during all of said time the defendant monthly stated its account with the Keller & Tamm Company returning to that company all of its checks, including all of the 32 checks on which cashier's checks had been so issued to the order of Scott, and that each of said 32 checks showed on its face that a cashier's check had been issued therefor, and not New York Exchange, and that the Keller & Tamm Company knew, or by the exercise of due care could have known, on receipt of such monthly statements, that cashier's checks and not New York Exchange had been so issued, and that it was the duty of the Keller & Tamm Company to have notified the defendant that the issuance of cashier's checks was not desired and that, if so notified, defendant could have recovered from Scott all losses incurred and prevented future losses.

"(f) That on June 20, 1917, the defendant held 580 shares of stock of the Keller & Tamm Company of the value of $58,000 as collateral security against a specific loss to Scott and his wife actually existing and all contingent liability, including any liability of Scott to defendant on account of the conversion of the moneys represented by said 32 cheeks; that plaintiffs and the Keller & Tamm Company, to protect their rights and the rights of Scott and his wife, entered into a conspiracy to cheat and defraud defendant of its property, and in pursuance thereof, when they knew of Scott's conversion, and of its rights against Scott, and without informing defendant and fraudulently concealing the facts from defendant, they paid off Scott's loan of $3,500 and induced the defendant to surrender said 580 shares of Keller & Tamm Company's stock and its lien thereon; and further, in pursuance of said conspiracy, they had Scott transfer to the plaintiff Mrs. Erskine all of his other property.

"Findings of Facts.

"The evidence offered and the stipulation of facts filed discloses the following facts, material to a determination of the issues:

"The Keller & Tamm Manufacturing Company was a close family corporation, its capital of $200,000 with the exception of a few scattering shares held by Lohman, Mr. Tamm, and 75 shares held by P. C. Scott, being owned about one-third each by Mrs. Erskine and Mrs. Griffin, the plaintiffs, and Mrs. Scott, their sister. The officers off the company were Mrs Erskine, president, and Mr. Lohman, vice president, and P. C. Scott, brother-in-law of the plaintiffs, secretary and treasurer, and these were all of the directors. The plaintiffs never attended a meeting of the company—in fact, there seem to have been no meetings—and the plaintiffs paid no attention to the business whatever and the entire management of the company's affairs was left to Lohman and Scott at first and then to Lohman, Scott, and Lifka. Scott was at first the office manager and had charge of all the finances of the company and drew all cheeks, and no one ever checked him up. Lohman had charge of the factory, and Scott and Lohman—without any formal meetings of the directors, and usually at Scott's direction—declared dividends, at irregular periods, but in regular amounts, from time to time.

"The deposits of the company were at all times kept in the defendant bank.

"The plaintiffs lived in New York, and their dividends were at first sent to them in the form of company checks drawn on the defendant and payable to the plaintiffs, and then, the plaintiffs having requested it, the company adopted the system of drawing checks on the Bank of Commerce payable to the Sank of Commerce, and, on presenting these to the defendant, would obtain from the defendant New York Exchange payable to the plaintiffs and which was transmitted to the plaintiffs. The bank had no instructions relative to such checks except such instructions as were given it from time to time by the persons presenting the checks. This system had been in use, however, from 1908 with reference to Mrs. Griffin and from 1912 with reference to lies. Erskine, and this was with the knowledge of some of the employees of the defendant....