Ludwig v. Montana Bank & Trust Co.

• Court: Montana Supreme Court
• Writing for the Court: MORRIS, Justice. JOHNSON, Chief Justice. ARNOLD, Justice.
• Citation: Ludwig v. Montana Bank & Trust Co., 109 Mont. 477, 98 P.2d 377 (Mont. 1939)
• Decision Date: 30 December 1939
• Docket Number: 7924.
• Parties: LUDWIG v. MONTANA BANK & TRUST CO.

98 P.2d 377

109 Mont. 477

LUDWIG v. MONTANA BANK & TRUST CO.

No. 7924.

Supreme Court of Montana

December 30, 1939

Rehearing Denied Feb. 5, 1940.

Appeal from District Court, Eighth District, Cascade County; H. H Ewing, Judge.

Action by Ella W. Ludwig against the Montana Bank & Trust Company, a banking corporation, for alleged conversion of checks payable to plaintiff, and deposited in defendant's bank without plaintiff's knowledge or consent and without being indorsed by plaintiff. From a judgment for the defendant, the plaintiff appeals.

Affirmed.

ANGSTMAN and ERICKSON, JJ., dissenting.

H Norskog, of Great Falls, for appellant.

G. G Harris, of Great Falls, for respondent.

MORRIS Justice.

The complaint in this action alleges the corporate existence of the defendant as a banking concern at the City of Great Falls; plaintiff's ownership of two checks in which she was named as payee aggregating $26,700, drawn on the First National Bank of Great Falls; the deposit of the checks in the defendant bank; the conversion thereof by the defendant to plaintiff's damage in the sum above mentioned; admits that, prior to the commencement of this action, restitution was made of the sum of $15,555.52 at one time and of the further sum of $1,640 at another time; also prior to the commencement of this action and subsequent to the sums mentioned being restored, plaintiff made demand upon the defendant for the sum alleged converted in the amount of $9,504.48, which demand was refused; further alleges that the checks were deposited in defendant bank without plaintiff's knowledge or consent, and that the checks were made payable to plaintiff and were not endorsed by her.

The defendant, after notice thereof, moved the court to substitute Lillian Ludwig Hutchison, the daughter of the plaintiff, in place of the defendant bank or in the alternative to bring the daughter in as a party to the action, alleging that the cause could not otherwise be tried on the merits. Defendant's motion was supported by the affidavit of the cashier of the bank alleging facts in defense and reasons for such substitution which will later appear. The court, on its own motion, gave the defendant ten days further to plead to the complaint and combined in its order for such additional time the condition that if the court should finally determine another defendant should be substituted for the defendant bank the action would be dismissed as to the bank. Counsel for plaintiff filed an affidavit setting forth that Lillian Ludwig Hutchison was a resident of the state of California, was not, at the time, within the state of Montana, nor had any property in this state. The motion for substitution was thereupon denied.

The answer is in the nature of a general denial; admits, however, the receipt for deposit of the two checks and the collection of the amounts named therein from the drawee bank, the First National Bank of Great Falls, and, by way of affirmative defense, alleges that the amount of the checks was credited to the joint account of the plaintiff and her daughter, Lillian, and checked out by one or the other of the two, according to the provisions of their joint account agreement; admits the demand of plaintiff and its refusal; that the checks were deposited by the daughter, one of the two parties authorized to draw against the joint account, admits the checks were not endorsed by plaintiff, but alleges a custom exists amongst banks in Great Falls to the effect that when a check is presented by one other than the payee for deposit to the credit of the payee, and it is not endorsed by the payee, a rubber stamp is used by the bank and the words, "Credit account of payee--endorsement guaranteed," are stamped on the back of the check, and that such a stamp was used on the checks involved here, and the full amount credited to the joint account of the plaintiff and her daughter; that plaintiff herself drew checks against the joint account, and in addition that plaintiff accepted from the daughter in restitution a large portion of the $25,000 withdrawn from the joint account by the daughter and which plaintiff now complains was converted by the defendant to its own use; that the plaintiff by her acts ratified the acts of the daughter in making the deposit in the joint account in that the plaintiff approved on a number of occasions withdrawals of funds from the joint account on checks signed by the daughter only, and further by holding the daughter out as one upon whom she depended to look after and handle her business affairs; that the plaintiff and her daughter did, on May 28, 1937, call at the banking office of the defendant, contacted Mr. Fousek, the cashier, advised him that the plaintiff was arranging to have her deceased husband's estate settled; that she intended to dispose of her interest in the estate in Great Falls, turn the management of her affairs over to the daughter, go to California to live and take a rest; that she was depressed and tired and desired to avoid the trouble and worry of handling her business affairs; that she had no bank account and desired to open one; that she had confidence in the daughter and wished to arrange for a bank account so that the daughter could draw checks against the account without bothering the plaintiff, and also in order that if anything happened to her, the daughter would have access to the money so deposited. According to Mr. Fousek's testimony, he fully explained how a joint account could be opened by which the plaintiff and the daughter, Lillian Ludwig Hutchison, or either of them could make deposits to the account and draw checks against it without the cooperation of the other. The plaintiff and the daughter were then taken to the teller's window by Mr. Fousek and introduced to the teller where the initial deposit of $250 was made and a passbook prepared and delivered to the depositors. At the same time a signature card, which contains the joint contract of the parties, was shown and explained to both the plaintiff and the daughter, signed by both and returned to the teller and thereafter placed in the files of the bank. There is practically no conflict as to the facts. The controversy arises over the legal effect of certain acts of the parties and their agents.

Plaintiff's motion to strike certain portions of the answer was denied. The affirmative parts of the answer were denied by the reply. The action came on for hearing before the court sitting without a jury, a jury having been expressly waived by both parties in open court.

When plaintiff's case in chief was in and plaintiff had rested, the defendant moved for a non-suit, which the court denied. When all the evidence was in and both parties rested, the court made an order overruling all objections to the introduction of evidence made during the trial and upon which the court had reserved its ruling at the time, directed that briefs be submitted, and, in due course, found all the issues "in favor of the defendant and against the plaintiff" and allowed costs to the defendant. Judgment was entered accordingly, and from such judgment the plaintiff appeals.

Twenty-four assignments of error are specified. We deem it unnecessary to set these assignments out in detail or to consider them separately. As we view the matter, the ultimate question to be determined is whether or not the defendant violated any legal obligation due the plaintiff by the defendant in paying to the daughter $25,000 out of the joint account on a check against that account signed by the daughter only. In arriving at the solution of the controversy we proceed in accordance with the established rule of law often reiterated in this jurisdiction that the judgment of the trial judge will be presumed to be correct (Smith v. Collis, 42 Mont. 350, 112 P. 1070, Ann.Cas.1912A, 1158), "and every legitimate inference will be drawn from the evidence to support this presumption." Langston v. Currie, 95 Mont. 57, 26 P.2d 160, 165, and cases cited.

As a background to the controversy, these facts are set out: H. W. Ludwig, Sr., died intestate May 25, 1937. He was survived by his wife the plaintiff, a daughter Lillian Ludwig Hutchison, and two sons by a former wife who were associated with him in the garage business in the City of Great Falls. It appears that H. W. Ludwig, Sr., and the two sons H. W., Jr., and Ernest E., each owned a one-third interest in two garages--The Ludwig Garage and the Ludwig Motor Company. The senior Ludwig had been ill for several months and the daughter, residing at Los Angeles, California, had come on at the urgent request of the plaintiff to be with her during the father's illness.

On the death of Mr. Ludwig, Mrs. Hutchison at the instance of the plaintiff, phoned Mr. Hutchison to come to Great Falls by plane at once to assist the two women in settling the business affairs of the deceased husband and father. Hutchison demurred at first and advised that the plaintiff obtain the services of a competent attorney to look after her interests in the estate. He was urged to come and assured that he would be more than compensated for any loss he sustained by being absent from his place of business. Mr. Hutchison finally consented and arrived in Great Falls by plane June 2nd, 1937. Soon after his arrival the plaintiff, Hutchison, and Lillian Ludwig Hutchison went to the office of Church and Jardine where the following power of attorney was prepared and delivered to Hutchison:

"Know All Men by These Presents:

That I Ella Ludwig, of the City of Great Falls, Montana, have made, constituted and appointed and do hereby make, constitute and appoint Juan C. Hutchison, of Hollywood, California, my true and lawful attorney for me, and in my name and on my behalf, to receive and...