Lovelace v. Suter

• Decision Date: 01 April 1902
• Citation: 67 S.W. 737,93 Mo. App. 429
• Parties: LOVELACE v. SUTER et al.
• Court: Missouri Court of Appeals

67 S.W. 737

93 Mo. A. 429

LOVELACE v. SUTER et al.

Court of Appeals of St. Louis, Missouri.

April 1, 1902.

DECEIT—ACTION FOR DAMAGES—EVIDENCE—SUFFICIENCY.

A bank's customer having advised with the cashier about investments, he offered her by letter a certain bond, stating, "We are satisfied that they are A No. 1." Subsequently he wrote that the company had called in its bonds, but he could get her a bond in another company that was just as good. The bond was purchased, and afterwards proved an insecure investment. Such customer left the matter with the cashier to determine. The bank had invested largely in the bonds, and such cashier believed them to be a safe investment, and it did not appear that he gave a dishonest opinion. Held insufficient to sustain an action for deceit against the bank.

Appeal from circuit court, Marion county; David H. Eby, Judge.

Action by Annie A. Lovelace against Thomas J. Suter and others. There was a judgment for defendants, and plaintiff appeals. Affirmed.

By this action appellant seeks to recover damages from 15 parties impleaded as defendants on the ground that they were members of a copartnership engaged in the banking business at the time of the occurrences stated in the petition. The Marion County Savings Bank was incorporated on the 19th day of December, 1867, under a charter of the state of Missouri, which expired by legal limitation 20 years from that day; but this fact seems to have been overlooked by the stockholders and officers of the bank, and the business continued in the name of the corporation as if it were still in existence until September, 1898, when the expiration of the charter was detected, a new charter procured, and the business continued under the same name. John W. Russell has been cashier of the bank from its organization to the present time except during a few months prior to the year 1899. Appellant was for many years a customer of the bank in a small way, keeping an account there, and likewise depositing her notes and securities in the bank for safekeeping, the bank collecting the interest and principal as they fell due, and depositing the same to her credit. She seems to have had great confidence in the institution, and particularly in its cashier, advising with him about investments, and acting on his advice. She did so at least in some instances. The basis of the present controversy was the sale to appellant by the bank of a $1,000 bond of the Paris Gas & Electric Light Company of Paris, Tex., in 1889, and certain alleged false and fraudulent representations made to her by Russell to induce the sale; he knowing at the time, it is charged, that said bond was worthless. The allegations of the petition in respect to the representations had perhaps better be stated: "That at the time of said sale said agent and cashier, Russell, claimed to have and did have great skill and long experience in dealing in all kinds of negotiable and nonnegotiable paper and commercial paper of all kinds, which fact was then and there known to this plaintiff; and at the time of said sale this plaintiff was without experience or skill in dealing in such paper, which fact was then and there well known to said cashier and agent. That at the time of said sale said bond was wholly worthless, and of no value whatever, which fact was then and there well known to said agent and cashier of defendants and unknown to plaintiff. That the said maker of said bond was at the time of said sale insolvent, which said insolvency was then and there well known to said agent and cashier and unknown to this plaintiff. That long prior to and up to the time of said sale this plaintiff was a regular customer and depositor of said bank, and at the time of said sale this plaintiff had on deposit in said bank the sum of one thousand dollars. That on or about the 2d day of February, 1888, the said Russell, as such agent, stated to this plaintiff that the bonds of the Nevada, Missouri, Gas Company were free of taxation, and that he (the said Russell) was satisfied that said last-mentioned bonds were A No. 1, and that at the time of the sale aforesaid said Russell, as such agent, stated to this plaintiff that the said Nevada, Missouri, Gas Company had called in its bonds, and that said cashier and agent, acting for and in behalf of said defendants, and knowing the confidence reposed in his skill and experience as aforesaid by the plaintiff, and intending to deceive and defraud this plaintiff out of her said sum of one thousand dollars, at the time of said sale advised this plaintiff to purchase said bond, and then and there, in order to induce the plaintiff to purchase said bond, fraudulently and falsely stated to this plaintiff that said bond was just as good as the said Nevada, Missouri, Gas Company's said bonds. That the said Russell, as such agent, at the time of said sale meant by said false and fraudulent statement that said bond so purchased by the plaintiff was a first-class security, and was then and there worth the said sum of one thousand dollars; and the plaintiff at the time of said purchase understood said Russell to mean by said false statement that said bond so purchased by her was a first-class security, and was then and there worth the said sum of one thousand dollars." It is further charged that said bond was absolutely worthless; that the maker thereof was and still is insolvent. The answer was a general denial and a plea of the five and ten years' statutes of limitations. A replication was filed, which averred that the facts constituting the fraud as alleged in the petition were unknown to the plaintiff until the 1st day of October, 1899,—within ten years next before the perpetration of the fraud, and within five years next before the institution of this suit,—and that during the whole of the time from the sale of the bond until the date last aforesaid the defendants, through their bank and cashier, were the agents of the plaintiff for the purpose of caring for and keeping the bond and collecting the interest thereon; that during all that time the defendants, through their said agent and cashier, concealed the facts constituting the fraud from the plaintiff, and from the 1st day of August, 1894, to the 1st day of October, 1899, concealed the fact that the maker of the bond was paying no interest thereon, representing to the plaintiff that the interest was being paid regularly, and, to further deceive her, making payment of the interest to her regularly themselves. The particular bond which is charged in the petition to have been fraudulently sold to the appellant was one of an issue of fifty of $1,000 each, executed by the said Paris Gas & Electric Light Company on the 1st day of June, 1888, due 20 years thereafter, bearing semiannual interest coupons of $35 each, payable on the 1st days of June and December of each year, and secured by a deed of trust on the property of the said company. Those bonds were sold in April, 1889, to M. M. Noel, a broker of St. Louis, for $44,000. The evidence is conflicting as to the solvency of said gas and light company at that time, with a preponderance, perhaps, in favor of its solvency; but there was testimony for the jury on that issue if the main charge of false representations was made out, and, having so concluded, we feel it is unnecessary to incumber the statement with copious extracts from the testimony relating thereto. While said company may have been insolvent if pressed, the testimony shows that it enjoyed a good reputation, as did its officers; was considered solvent at home and abroad; and neither Russell nor any one else could have learned it was insolvent, if that was the case, without a searching examination of its affairs. The company seems to have progressively lost money, and in 1892 it consolidated with another corporation, known as the Paris Railway Company, by the purchase of the latter's property, a new corporation being formed under the name of the Paris Electric Light & Railway Company, which took over the assets of the constituent companies. In 1894 the last-named company reconveyed to the railway company the property which had formerly belonged to it, and thereafter, in July, it issued 100 bonds of $1,000 each, payable in 20 years, drawing 6 per cent. semiannual interest on the 1st days of July and January of each year, and secured by a deed of trust on all the gas and electric light company's property; that is to say, on all the property except the railway, which had been, as stated, reconveyed to the railway company. Said electric light and railway company exchanged $50,000 of said last issue of bonds for the $50,000 of bonds issued by the gas and electric light company in 1888, one of which was held by the appellant, the holders of the old bonds being given no option whether they would accept cash or new bonds for the old ones. Russell, cashier of the Marion County Savings Bank, exchanged the bond owned by the appellant for one of the new issue, she says without her knowledge or consent; which statement Russell does not definitely contradict, saying he thought she knew of it, but he may have sent it in a hurry, without notifying her of the fact. Interest was paid by the Paris Electric Light & Railway Company on the bonds issued in July, 1894, including the one held by the appellant, until January, 1897; but thereafter no further interest was paid. It is true, as charged in the reply, that the Marion County Savings Bank, acting by its cashier, Russell, regularly credited the appellant's account with interest on her bond,...