Harper v. Merchants' & Planters' Nat. Bank, 4471.

• Decision Date: 01 February 1934
• Docket Number: No. 4471.,4471.
• Citation: 68 S.W.2d 351
• Parties: HARPER v. MERCHANTS' & PLANTERS' NAT. BANK OF MT. VERNON et al.
• Court: Texas Court of Appeals

68 S.W.2d 351

HARPER v. MERCHANTS' & PLANTERS' NAT. BANK OF MT. VERNON et al.

No. 4471.

Court of Civil Appeals of Texas. Texarkana.

February 1, 1934.

Rehearing Denied February 8, 1934.

Error from District Court, Franklin County; R. J. Williams, Judge.

Suit by J. T. Harper, guardian, against the Merchants' & Planters' National Bank of Mt. Vernon and another, wherein named defendant filed cross-action against the Ætna Casualty & Surety Company. Judgment adverse to plaintiff, and plaintiff brings error.

Reversed and rendered.

The plaintiff, as guardian of the estate of Bryant W. Thurston, a person of unsound mind, brought the suit against the Merchants' & Planters' National Bank of Mt. Vernon, a banking corporation under the laws of the United States and engaged in

banking business in Mt. Vernon, Tex., and Mrs. M. E. Moore, administratrix of the estate of W. J. Moore, deceased, to recover the value of two United States Liberty bonds of the denomination of $1,000 each, which, as alleged, had been placed with the bank for safe-keeping and redelivery on demand therefor, and without lawful right had been appropriated or converted to the use and benefit of the bank. The bank specially answered, in substance, that: The bank never did have title to or possession or custody of the bonds, but in fact, without the knowledge or consent of any officer or authorized person of the bank, the plaintiff guardian delivered and placed the bonds in the custody of W. J. Moore in his individual capacity purely, and not as cashier or agent of the bank; that, if the bonds were ever converted, the conversion was by W. J. Moore in furtherance of his own benefit and not in the performance of any duty he owed the bank; that the plaintiff guardian, with full knowledge of the facts, consented and encouraged W. J. Moore to make a sale of the bonds to the Liberty State Bank; that the defendant bank, without notice of the title of the guardian or the interest therein of the lunatic, purchased the bonds and paid a valuable consideration therefor out of the assets of the bank; that the bank used the utmost care and caution in selecting Mr. Moore as cashier, believing him efficient and careful in the work of his employment; estoppel against the guardian. The bank further, by way of cross-action, impleaded the Ætna Casualty & Surety Company, a corporation, and sought recovery on its fidelity bond for W. J. Moore as cashier wherein it agreed to pay the bank for such loss of money or other personal property for which the bank is responsible, which the bank may sustain "through the fraud, dishonesty, forgery, theft, embezzlement, wrongful abstraction, misapplication or misappropriation, or any other dishonest or criminal act or omission of or by any of the employees listed in the schedule forming part of this bond directly or in connivance with others while such employee holds any position at any location in the service of the employer during the period commencing upon the date each employee is listed hereunder and continuing in amounts scheduled until the termination of this insurance." The bond was in the amount of $5,000. The surety company made substantially the same answer as made by the defendant bank. The case was tried before the court without a jury, and judgment was entered denying the plaintiff guardian a recovery against the bank, but awarding him a recovery against the defendant administratrix. The plaintiff has appealed from the judgment.

The facts are substantially as are here set forth. The Merchants' & Planters' National Bank of Mt. Vernon was a duly chartered national bank, doing a general banking business. J. T. Harper was the president of the bank for the ten years to January 1, 1930, at which date he retired as president, and a new president was elected and qualified. W. J. Moore was the cashier and a member of the board of directors for several years to December 1, 1930, at which date he resigned as cashier and as a director, and a new cashier was elected and qualified. Mr. W. J. Moore died in August, 1931, and Mrs. Nannie Moore, his wife, was appointed administratrix of his estate.

In 1927 J. T. Harper was appointed and duly qualified as guardian of the estate of Bryant W. Thurston, a late soldier, who had become of unsound mind. The money of the estate was placed on general deposit in the bank in the name of J. T. Harper, as guardian. In the year 1928, J. T. Harper, as guardian, had on general deposit in the bank the sum of $4,000 belonging to the estate. In the view and purpose of investing the ward's money in interest-bearing bonds, J. T. Harper instructed W. J. Moore to purchase for the estate United States Liberty bonds to the amount of $2,500. Mr. W. J. Moore complied with the request, and purchased in the open market, and not from the bank, three unregistered United States Liberty bonds, two for $1,000 each and one for $500. Mr. Moore notified Mr. Harper of the purchase of the bonds, and Mr. Harper then gave the bank his check as guardian for the purchase money of the bonds, and the check was paid. It appears by necessary inference, if not affirmatively proven, that W. J. Moore, in the purchase of the bonds, was acting in the capacity of cashier of the bank, and not individually. Mr. Harper testified, and there is no evidence to the contrary:

"Q. Did you buy them (the bonds) in person? A. No, sir. The bank bought them for me and I paid them for them.

"Q. Who bought the bonds for you? A. The bank bought them for me.

"Q. When you decided you wanted the bonds you went to Mr. W. J. Moore and told him to purchase some Liberty Bonds for the estate? A. Yes, sir.

"Q. When they came in you went to him and gave him a check to pay them? A. Yes, sir.

"Q. When were those bonds bought? A. I paid for them on January 9, 1929.

"Q. You were president of the bank at the time the bonds were bought and remained president for a year after that? A. Yes, sir."

It appears that the guardian left the bonds in the bank for safe-keeping. It is inferable that the bank, acting through Mr. W. J. Moore, the cashier, placed and kept the bonds in its safety vault. Mr. Harper testified affirmatively:

"Q. Where were they (the bonds) kept after you bought them? A. In the bank there.

"Q. How did you know they were there? A. Because I saw them on the several occasions when I clipped the coupons.

"Q. Did you get them from the safe yourself? A. No, sir. Mr. Moore would get them.

"Q. Do you remember when it was the last coupon you clipped? A. I believe it was the latter part of 1929.

"Q. Were the coupons payable semi-annually or annually? A. Semi-annually.

"Q. Did you clip them after that? A. No, sir. That was the last time I saw the bonds.

"Q. Have you ever made demand on the bank for the bonds or their value? A. Yes, sir, through an attorney.

"Q. Have they ever delivered the bonds to you or paid you for them? A. No, sir.

"Q. Did you deliver those bonds to Mr. Moore or did you leave them in the bank for safe keeping? A. I left them in the bank for safe keeping.

"Q. They were not kept in Mr. Moore's private box? A. No, sir. * * *

"Q. Now where were those securities (referring to road and school bonds) before you left Mt. Vernon (in May, 1930)? A. Well, I had a private box and they might have been in that.

"Q. Where was that? A. In the vault of the Merchants & Planters National Bank.

"Q. Were those Liberty Bonds in your private box? A. No, sir."

In this connection it was proven that the bank did not "maintain a safety deposit vault and rent boxes for money," but did have and maintain a "customers' vault" in which its customers were allowed, "upon special request" and without charge for its use, to keep safety boxes. The cashier of the bank, succeeding W. J. Moore, testified:

"Q. Is there any record in the bank or were there any records on the books of the Merchants & Planters Bank of any Liberty Bonds being deposited with that bank for the Thurston estate? A. No, sir. I never saw any record of it.

"Q. If there had been any record of that kind in the bank would you or not have discovered it? A. Well, probably I would, but it is not any absolute certainty that I would. Some of them (its officers) might have kept a little memo book of bonds, but I have never seen them.

"Q. Did you find any copy of any certificate of deposit issued for any Liberty Bonds? A. No, sir."

It appears that at some time in the early fall of 1930 Mr. Harper wrote Mr. W. J. Moore, the cashier of the bank, requesting that the three Liberty bonds be forwarded to him at Dallas, where he had moved and made his residence. Mr. Moore forwarded the bond for $500, but did not send the other two bonds, stating that they would be forwarded at a later time. Mr. Harper claims that he never got the other bonds, and hence this suit.

It was shown by the records of the bank that on November 13, 1930, W. J. Moore, in order to protect an overdraft caused by charging to his account two checks of Mrs. Seay each in the sum of $600, placed one of the $1,000 Liberty bonds belonging to the guardianship among the assets of the bank, and at the same time gave his personal account at the bank credit for $1,000. And on November 18, 1930, W. J. Moore placed the other $1,000 Liberty bond belonging to the guardianship among the assets of the bank, and he took $1,000 in cash out of the assets of the bank. It appears that W. J. Moore placed the bonds in the note case of the bank with a memorandum of even date in his own handwriting upon "a little yellow slip attached to each bond," that the bond was "subject to be redeemed on payment of four and a quarter per cent by May 1st." J. T. Harper did not, in point of fact, know of, or acquiesce in, the use made of the bonds by W. J. Moore, cashier, at the time W. J. Moore misappropriated them and passed them into the assets of the bank with the right of redemption. No other person or officer of the bank had anything to do with or knew about the...