Kegan v. Park Bank of St. Joseph
| Decision Date | 03 July 1928 |
| Docket Number | 26229 |
| Citation | 8 S.W.2d 858,320 Mo. 623 |
| Parties | Thomas J. Kegan, Appellant, v. Park Bank of St. Joseph |
| Court | Missouri Supreme Court |
Rehearing Granted, Reported at 320 Mo. 623 at 654.
Appeal from Buchanan Circuit Court; Hon. L. A. Vories Judge.
Reversed and remanded (with directions).
Randolph & Randolph for appellant.
(1) The bank is liable for wrongful acts and conversion by an assistant cashier. Gillette v. Citizens' Nat Bank, 104 N.E. 775; Goshorn v. People's Nat. Bank, 69 N.E. 185; Williams v. People's Bank, 124 S.E. 125; Grenada Bank v. Moore, 95 So. 449; Hall v. Conaway, 252 S.W. 1105; Johnston-Fife Hat Co. v. National Bank, 44 P. 192. (2) It is not necessary to first pay off or tender the debt for which collateral is pledged in order to maintain an action for the conversion of the collateral. Richardson v. Ashby, 132 Mo. 238; Oriental Bank v. Western Bank & Trust Co., 143 S.W. 1176; Edward Mullen v. Quinlin & Co., 195 N.Y. 109; 6 L. R. A. (N. S.) 299, 24 L. R. A. (N. S.) 511, for extensive note and collection of authorities. (3) The bank was not a gratuitous bailee of plaintiff's box. The business given the bank by a customer is sufficient consideration to create mutuality for the keeping of the box of securities. Grenada Bank v. Moore, 95 So. 449. (4) The private books, ledgers, etc., of the corporation are not binding on a stranger to the transactions, and it is error to permit witnesses to testify therefrom. 22 C. J. 892-898; Cape Girardeau v. Kimmel, 58 Mo. 83; Chesapeake Ry. Co. v. Deepwater Ry. Co., 50 S.E. 890; Harrison v. Remington Paper Co., 140 F. 385. (5) The burden of proof did not remain with plaintiff throughout the case. It shifted to defendant when plaintiff showed the bailment and demand and refusal to deliver. It was not necessary to prove that the bank wrongfully appropriated the securities. Nashville Ry. Co. v. Walley, 147 Ala. 697; 38 Cyc. 2078.
Culver, Phillips & Voorhees for respondent.
(1) The burden was upon the plaintiff to prove his case and that burden never shifted. The burden of evidence shifts, but the burden of proof never does. Griffith v. Casualty Co., 299 Mo. 444; Downs v. Horton, 287 Mo. 432; Berger v. Storage Co., 136 Mo.App. 36; Mason v. Geist, 263 S.W. 237. (2) The mere fact that appellant was a customer of the bank and deposited his funds with the bank did not constitute a consideration for keeping the appellant's box or make the bailment a bailment for hire and not a gratuitous bailment for the plaintiff's accommodation. Merchants' Nat. Bank v. Guilmartin, 15 S. E. (Ga.) 833; 7 C. J. 463, note 17b; Foster v. Bank, 17 Mass. 504; Giblin v. McMullen, L. R. 2 P. C. 317. (3) The Missouri cases follow the English rule, announced in Donald v. Suckling, 1 L. R. Q. B. 584 and other English cases, that, where a pledgee wrongfully converts the property pledged, the pledgor cannot sue the pledgee for the conversion without first paying or tendering the amount of the debt. Schaff v. Fries, 90 Mo.App. 111; Glenn v. Hunt, 120 Mo. 330; Reardon v. Patterson, 47 P. 956. (a) The rule is different where the pledgee demands payment of his debt. In such circumstances, he must be ready and willing to return to the pledgor the collateral left with him as security. If he has placed it beyond his power to do so, justice requires that he permit the pledgor to offset its value. But the obligations are mutual. If the pledgor asks to recover the value of the collateral, he must pay or tender the debt. He cannot have the value of the collateral and leave his debt unpaid. Richardson v. Ashby, 132 Mo. 247. (b) But no court holds that, where a pledgee wrongfully converts the property pledged and the value of the debt exceeds the value of the property converted, the pledgor may recover the value of the property pledged without first paying or tendering the amount of the debt. In the case at bar, it was admitted that the debt of John Kegan, for which the Moore note, the Swope note and the Nelson note were pledged as collateral, amounted to $ 14,693.41; whereas the value of the three collateral notes alleged to have been converted by the bank amounted only to $ 7805. As the debt admittedly exceeded the value of the property converted, there could be no recovery. (4) A bank is not liable for the loss of a box containing securities left with it for safe-keeping without compensation, resulting from a theft committed by an assistant cashier, unless the bank at the time had reason to know or believe that the assistant cashier was dishonest or untrustworthy and kept him in its employ. Rays v. Bank of Kentucky, 10 Bush. (Ky.) 344; Foster v. Bank, 17 Mass. 478; Scott v. Bank, 72 Pa. St. 471; Sherwood v. Bank, 109 N.W. 9; Merchants Nat. Bank v. Guilmartin, 15 S. E. (Ga.) 831; 3 R. C. L., 262-264, secs. 189-190; Smith v. Banking Co., 55 A. (N. J.) 248; Comp v. Bank, 94 Pa. 409; Giblin v. McMullen, L. R. 2 P. C. App. 318. (5) The books, records and deposit slips of the defendant bank received in evidence were properly received in evidence. Anchor Milling Co. v. Walsh, 109 Mo. 277; Smith v. Beatie, 57 Mo. 281; Robinson v. Smith, 111 Mo. 205; Knapp v. Trust Co., 197 Mo. 640; Morrow v. Railroad, 140 Mo.App. 216; Gardner v. Gas & Electric Co., 154 Mo.App. 676.
Ellison, C. Lindsay and Seddon, CC., concur.
This is a suit in trover for $ 47,830.22 for the alleged conversion of certain securities. From a judgment on the verdict for defendant the plaintiff appeals. The respondent is a banking corporation at St. Joseph organized and operating under the laws of Missouri. Of the amount sued for $ 4575.22 represents interest earned up to the date of demand. The face value of the securities was $ 43,255. They consisted of securities to the value of $ 35,250 which are alleged to have been taken from appellant's strong box while gratuitously held in the care and keeping of the respondent bank, $ 200 in Liberty Bonds which were similarly in the custody of the bank in its own vault, and $ 7805 in mortgage notes which were up with the bank as collateral to secure the indebtedness of the appellant's brother. These misappropriations, if and insofar as committed, all appear to be chargeable to a defaulting assistant cashier of the bank, who had been discharged and invoked his constitutional exemption against testifying.
The errors assigned arise out of the giving of fourteen instructions for defendant, the refusal of eight instructions requested by plaintiff and the modification of another, and the admission of evidence. Underlying them are three legal questions to which counsel for the respective litigants have especially addressed themselves:
(1) Were the books of the bank, its ledgers, note registers, etc., properly admissible in evidence against the plaintiff, a stranger to the transactions shown, and did the court rightly permit the bank's officers to testify therefrom, or were they hearsay evidence and self-serving?
(2) As to the securities in the strong box and the Liberty Bonds in the vault, was the bank a gratuitous bailee, because it made no charge for its service in keeping them, or did the fact that the appellant favored the bank with his general banking business make the latter a bailee for hire, in such sense that it is liable for the theft of the securities by the assistant cashier, though without knowledge of his dishonesty and having no reasonable ground for suspicion?
(3) As to the notes up for collateral, was it necessary for the appellant to pay off or tender the amount of his brother's debt, for which they were pledged, in order to maintain his action for the conversion thereof; and does the fact that the brother's indebtedness remained unpaid at the time of the trial, in an amount exceeding the value of the pledged notes, defeat the appellant's right to recover therefor?
The record of nearly 1000 pages is hard to follow. Witnesses testifying from the many books and papers, introduced often, referred to items and notations thereon as "this" and "that," and in more than a few instances the documents mentioned are not preserved in the record. The statement of facts will be shortened as much as possible, but it will necessarily be long.
The appellant, Thomas J. Kegan, had been a customer of the respondent Park Bank for about fourteen years. For some eight or ten years he had kept his papers in a tin box in the money vault of the bank. The box had two keys, but these also were left at the bank, accessible to its officers, and on one occasion, the evidence indicates, the box was left unlocked. It was purchased by the appellant on the advice of a bank officer and was not furnished by the bank. Some fifty or sixty other customers kept similar boxes there. It was an accommodation extended to them by the bank for which no charge was made, and the cashier of the bank testified it was not contingent on their being regular bank customers.
The assistant cashier was James F. Reardon. He had been in the bank's service nearly twenty years. He owned eleven shares of the capital stock of $ 50,000 and was also a director. He did some work at the tellers' windows, waited on customers, exercised a supervisory control over the books, made loans, set the time lock on the money safe at night, carried a key to the bank and knew the combination of the tumbler lock on the vault door. He was an active officer. Up to the summer of 1923 he held the confidence and esteem of the public and of his fellow officers and employees. About the middle of August he came under suspicion and was given an enforced vacation while the other bank officers made an investigation. It was found he had been guilty of irregularities and defalcations.
For several years prior to this denouement the appellant, Tom Kegan, and his brother...
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