Jackson v. National Bank of Topeka
| Decision Date | 25 September 1937 |
| Docket Number | 33413. |
| Citation | 71 P.2d 1057,146 Kan. 424 |
| Parties | JACKSON et al. v. NATIONAL BANK OF TOPEKA. [*] |
| Court | Kansas Supreme Court |
Syllabus by the Court.
In action by bond brokers against bank for deceit, amended petition was not demurrable on ground of misjoinder of causes of action or on ground that it did not sufficiently state a cause of action, where petition alleged that bank knowingly sold forged or purported municipal bonds to third persons who used them as security to obtain advances from bond brokers who thereby sustained loss.
In an action for deceit, the amended petition examined, and held that it was not demurrable on the ground of misjoinder of causes of action, and held, also that it sufficiently stated a cause of action.
Appeal from District Court, Shawnee County, Division No. 2; Paul H Heinz, Judge.
Action at law for deceit by William C. Jackson and others, partners doing business as Jackson Bros., Boesel & Co., against the National Bank of Topeka. From a judgment sustaining defendant's demurrer to plaintiffs' second amended petition, the plaintiffs appeal.
Reversed.
Robert Stone, James A. McClure, Robert L. Webb, Beryl R. Johnson, and Ralph W. Oman, all of Topeka, and Walter Bachrach and Arthur Magid, both of Chicago, Ill., for appellants.
Thomas F. Doran, Clayton E. Kline, Harry W. Colmery, M. F. Cosgrove, James E. Smith, E. H. Hatcher, and Frank McFarland, all of Topeka, for appellee.
This was an action at law for deceit. Defendant's demurrer to plaintiffs' second amended petition was sustained by the trial court, and plaintiffs appeal.
This litigation arises out of the far-flung financial frauds and forgeries of the Finneys. The amended petition, setting up four separate counts and covering forty-nine pages, may be summarized as follows:
The plaintiffs are members of a copartnership engaged in the business of stockbrokers and commission merchants with their principal offices in New York City. Branch offices are maintained in Chicago, Ill., Kansas City, Mo., and elsewhere. The defendant, National Bank of Topeka, is a corporation engaged in the banking business in the city of Topeka, Kan.
Ronald Finney, with offices at Topeka and Emporia, was engaged in the business of buying, selling, and trafficking in municipal bonds and negotiable securities. For several years prior to and until on or about the 28th day of July, 1933, he was engaged in financial transactions with defendant bank. He was a depositor of funds, and from time to time a borrower of large sums of money from defendant bank.
Warren W. Finney, the father of Ronald Finney, was president of the Fidelity State & Savings Bank of Emporia, and a director of the Farmers State Bank of Neosho Falls. He was actively engaged in buying, selling, and trafficking in municipal bonds and negotiable securities, and prior to July 28, 1933, was engaged in financial transactions with the defendant bank.
The petition alleges: "That prior to and during all the times complained of herein, the defendant bank knew that said Ronald Finney and Warren W. Finney had been for years under distrust by the banking departments, both of the United States and of the State of Kansas, and said bank lacked confidence in the honesty and integrity of said Ronald Finney and Warren W. Finney to the extent that on and after March 15, 1933, it was exerting every possible effort to cause the removal of all commercial paper, securities and bonds which said Ronald Finney and Warren W. Finney had placed in said bank in connection with their transactions with said bank, and knew that said Ronald Finney and said Warren W. Finney were not worthy of trust and confidence."
The origin and nature of plaintiffs' dealings with Ronald Finney is thus stated: "On April 27, 1933, Ronald Finney opened an account with the plaintiffs for the purpose of having plaintiffs, as brokers and agents for him, purchase, sell and otherwise deal in various commodities, stocks, bonds, and securities and in connection with said account advance to him and for his account large sums of money; that said Ronald Finney thereafter carried on large and numerous transactions with plaintiffs in his said account with them, and in connection with such dealings and as an incident thereto, Ronald Finney borrowed from the plaintiffs, and the plaintiffs advanced to Ronald Finney and for his account, large sums of money from time to time, and on account of his transactions with the plaintiffs Ronald Finney became indebted to plaintiffs in large sums of money upon an open and general account; that for the purpose of securing said account and indebtedness and to procure credit and the advancement from time to time of moneys from plaintiffs, and to induce the extension of credits thereon and procure without delay the advancement of moneys upon said account, Ronald Finney did from time to time deliver to and deposit with plaintiffs various instruments purporting to be the bonds or obligations of various municipal subdivisions of the State of Kansas, negotiable by delivery, which instruments are hereinafter described, and the plaintiffs advanced various sums of money, as hereinafter stated, upon the purported bonds delivered by said Ronald Finney as security therefor."
It appears that the account of plaintiffs with Ronald Finney began on April 27, 1933, and ended on July 27, 1933. The following statement shows the bonds delivered by Ronald Finney to the plaintiffs, and the advances made to Finney, and sets forth the respective dates of such transactions:
| Advances to Finney | Bonds Received From Finney | ||
| May 29, | $25,000.00 | May 29, | $ 30,000.00 |
| May 29, | 5,000.00 | ||
| June 2, | 10,000.00 | ||
| June 6, | 10,000.00 | ||
| June 9, | 261.48 | ||
| June 12, | 10,000.00 | ||
| June 28, | 11,000.00 | ||
| June 29, | 10,000.00 | ||
| July 5, | 3,500.00 | ||
| July 7, | 12,000.00 | July 7, | 35,000.00 |
| July 7, | 25,000.00 | ||
| July 11, | 30,000.00 | July 11, | 60,000.00 |
| July 17, | 7,000.00 | ||
| July 17, | 9,000.00 | ||
| July 20, | 5,000.00 | ||
| July 21, | 30,000.00 | July 21, | 276,200.00 |
| July 22, | 15,000.00 | ||
| July 22, | 85,000.00 | ||
| July 27, | 50,000.00 |
It is alleged that all of the bonds delivered by Ronald Finney to the plaintiffs were forged, spurious, and counterfeit, except certain bonds of the face value of $48,700, which were genuine.
The controversy involves four separate blocks of bonds--one block of $29,000; one block of $151,600; one block of $208,500; and one block of $25,000. All of the bonds here in question deposited with the plaintiffs were delivered to the plaintiffs by Ronald Finney except the block of bonds of the face value of $25,000, which were delivered by Ronald Finney to the defendant bank; and thereafter on July 7, 1933, upon the direction of Ronald Finney, these bonds were delivered to the plaintiffs by the defendant bank. The legal questions arising on this block of $25,000 of bonds are entirely separate and distinct from the legal questions concerning the three blocks of bonds first noted. Bearing this distinction in mind, the allegations in the petition concerning the first three blocks of bonds will be stated, and thereafter the alleged cause of action as to the block of bonds of the face value of $25,000 will be considered.
In the first block of bonds of $30,000 delivered to the plaintiffs, one bond of $1,000 is conceded to be genuine. As to the other bonds in that block aggregating $29,000, it was alleged: "That prior to May 29, 1933, the defendant bank was the owner and in possession of certain bonds of the purported face value of $29,000,--that the bonds were forged, spurious and counterfeit and of no value whatsoever,--all of which the Finneys knew and all of which the defendant bank then and there well knew."
It was further alleged:
"That prior to May 29, 1933, National Bank of Topeka sold and delivered said purported bonds to Warren W. Finney and Ronald Finney; that at the time of said sale and delivery of the said purported bonds, Warren W. Finney and Ronald Finney intended and planned, and the National Bank of Topeka knew that they intended and planned, to deliver, transfer and negotiate said forged, spurious and counterfeit bonds to innocent purchasers for value, and to place said forged, spurious and counterfeit bonds into the channels of commerce, and to obtain money from such persons as would lend or advance money on the supposed security of said purported bonds in the belief that they were genuine and valid,
by falsely and fraudulently representing to them that they were genuine and valid legal obligations of the respective municipal subdivisions of the State of Kansas by which on their face they were purported to have been issued, and by concealing from such intended innocent purchasers for value the fact that all of said purported bonds were forged, spurious and counterfeit, and of no value whatsoever.
"That on or about May 29, 1933, said Ronald Finney delivered to the plaintiffs said purported bonds of the purported face value of $29,000; that for the purpose of inducing the plaintiffs to advance money to and for the account of said Ronald Finney on the supposed security of said purported bonds of the purported face value of $29,000, said Ronald Finney then and there, orally and by offer and delivery thereof, falsely and fraudulently represented to the plaintiffs that said purported bonds had been issued by and evidenced valid and subsisting legal obligations of, the City of Kansas City, Kansas; that together with said...
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Kansas City Terminal Ry. Co. v. Kansas City
...was redundant and should have been stricken, and in support quotation is made from a dissenting opinion in Jackson v. National Bank of Topeka, 146 Kan. 424, 448, 71 P.2d 1057. Although set forth in considerable detail, other argument is that by their allegations the appellants seek to subst......