Martin v. First Nat. Bank in St. Louis

• Decision Date: 11 April 1949
• Docket Number: 40858
• Citation: 219 S.W.2d 312,358 Mo. 1199
• Parties: William W. Martin, William S. Bedal and George F. Hardie, Trustees, Respondents, v. First National Bank in St. Louis, a Corporation, Appellant
• Court: Missouri Supreme Court

219 S.W.2d 312

358 Mo. 1199

William W. Martin, William S. Bedal and George F. Hardie, Trustees, Respondents, v. First National Bank in St. Louis, a Corporation, Appellant

No. 40858

Supreme Court of Missouri

April 11, 1949

Appeal from Circuit Court of City of St. Louis; Hon. William B Flynn, Judge.

Reversed and remanded.

Thomas S. McPheeters and Bryan, Cave, McPheeters & McRoberts for appellant.

(1) When Martin as Chairman and Humphrey as Secretary of the Committe signed a number of checks in blank and left them easily accessible to others who might be tempted to fill them in wrongfully they were guilty of such negligence as to prevent a recovery by respondents unless the Bank was itself guilty of negligence. Kuraner v. Columbia Natl Bank, 230 Mo.App. 358, 90 S.W.2d 465; S.S. Allen Grocery Co. v. Bank of Buchanan Co., 192 Mo.App. 476 182 S.W. 777; Clifford Banking Co. v. Donovan Comm Co., 195 Mo. 262, 94 S.W. 527; Griffin v. Natl. Bank of Commerce, 246 S.W. 180; Trust Co. v. Conklin, 119 N.Y.S. 367; Snodgrass v. Sweetser, 44 N.E. 648; Putnam v. Sullivan, 4 Mass. 45. (2) When appellant issued the Cashier's Checks in exchange for the respondents' checks payable to appellant, unless the Bank had notice that the Committee's funds were being misappropriated it was entitled to rely upon Torrence's apparent authority, if the jury found that Torrence had such apparent authority and that appellant was not negligent. 2 C.J.S., Sec. 96, p. 1208; Haubelt Bros. v. Rea & Page Mill Co., 77 Mo.App. 672; Johnson v. Hurley, 115 Mo. 513, 22 S.W. 492. (3) When the monthly statements bearing the notation, "Please examine at once. If no error is reported within ten days the account will be considered correct", were delivered by appellant to respondents, accompanied by the cancelled checks paid during the previous month, it was respondents' duty to make such examination which would immediately have disclosed Torrence's misappropriations and their failure to do so created an account stated. Leather Manufacturers' Bank v. Morgan, 117 U.S. 96; Annotation at 15 A.L.R. 162; Annotation at 67 A.L.R. 1124; Annotation at 103 A.L.R. 1148; 9th C.J.S. 745; 7 Am. Jur. 368; Dameron v. Harris, 281 Mo. 247, 219 S.W. 954; Steinberg v. Merchants' Bank, 334 Mo. 297, 67 S.W.2d 68. (4) And the fact that Torrence who was guilty of the misappropriations was also the man who checked the statements and cancelled checks is no defense here when the evidence conclusively showed that the Committee allowed him to keep their records and reconcile their bank statements and cancelled checks when they admittedly did not know Torrence and had never seen him. Kenneth Inv. Co. v. Bank, 103 Mo.App. 613, 77 S.W. 1002. (5) The trial court erred in refusing to give Instruction L offered by the appellant to the effect that it was a rule of law that when one of two innocent persons must suffer, the loss should fall on the one whose negligence occasioned the loss and if the jury believed that Martin and Humphrey were negligent in signing checks in blank and leaving them in a place to which access could be had by any employee in the office and found that the Bank itself was not guilty of any negligence in issuing the Cashier's Checks then its verdict must be for defendant. Kuraner v. Columbia Natl. Bank, 230 Mo.App. 358, 90 S.W.2d 465; Allen Grocery Co. v. Bank of Buchanan County, 192 Mo.App. 476, 182 S.W. 777; Roberts v. Rider, 255 Ky. 266. (6) The trial court erred in excluding evidence offered by appellant to show that it was the custom of appellant and all of the banks in St. Louis that where checks payable to such bank were presented with a request for Cashier's Checks to be issued thereon that such bank would issue their Cashier's Checks in accordance with the instruction of the person presenting them, unless there were other circumstances sufficient to put the bank on notice that the depositor's funds were being misappropriated. Griffin v. Natl. Bank of Commerce, 246 S.W. 180; Zollman on Banks and Banking, Vol. 5, Sec. 2671, 2676; Morse on Banks and Banking, Sec. 9, p. 34; Bjorgo v. 1st Natl. Bank, 156 N.W. 277; Saddler v. Bank, 242 P. 1085; Hamburger Brothers v. Bank, 5 A.2d 87; Adams County v. Bank, 277 P. 575; Reconstruction Finance Corp. v. Rovetti, 15 F.Supp. 33. (7) The trial court erred in giving to the jury two instructions, each of which undertook to cover the entire case, the two instructions being in direct and irreconcilable conflict with each other. Bowen v. Epperson, 136 Mo.App. 571; Nagy v. St. Louis Car Co., 37 S.W.2d 513; Berryman v. Cox, 73 Mo.App. 67; Bouligney v. Ins. Co., 133 S.W.2d 1094.

Lashly, Lashly, Miller & Clifford, Jacob M. Lashly, Arthur V. Lashly and R. Forder Buckley for respondents.

(1) A bank is liable to the drawer of a check payable to the order of the bank where, as here, it diverts the proceeds of the check to a use other than that of the drawer-depositor without authority emanating from the drawer-depositor himself to so divert. Federal Saving & Loan Ins. Corp. v. Kearney Trust Co., 151 F.2d 720; Robbins v. Passaic Natl Bank & Trust Co., 109 N.J.L. 250, 160 A. 418; Bjorgo v. First Natl. Bank, 127 Minn. 105, 149 N.W. 3; Main Belting Co. v. Corn Exchange Natl. Bank & Trust Co., 325 Pa. 168, 188 A. 865; Graham v. Southington Bank & Trust Co., 99 Conn. 494, 121 A. 812; Paine v. Sheridan Trust & Savings Bank, 342 Ill. 342, 174 N.E. 368; People ex rel. Nelson v. Peoples Loan & Trust Co., 285 Ill.App. 552, 2 N.E.2d 763; Sims v. U.S. Trust Co., 103 N.Y. 472, 9 N.E. 605; Apostoloff v. Levy, 186 A.D. 767, 174 N.Y.S. 828. (2) Where, as here, it appears under the uncontroverted evidence that the bank itself is at fault or guilty of negligence in paying checks of a depositor, it cannot avoid liability to the depositor upon the ground that he was negligent in signing a number of checks in blank and leaving them accessible to others who might be tempted to fill them in wrongfully and cash them. Wussow v. Badger State Bank of Milwaukee, 204 Wis. 467, 234 N.W. 720; Sommer v. Bank of Italy, 191 Cal. 40, 293 P. 98; Screenland Magazine Inc. v. National Bank of New York, 42 N.Y.S. (2d) 286; Kenneth Inv. Co. v. Natl. Bank, 103 Mo.App. 613, 77 S.W. 1002; East St. Louis Cotton Oil Co. v. Bank of Steele, 200 Mo.App. 180, 205 S.W. 96; Kenneth Inv. Co. v. National Bank, 96 Mo.App. 125, 70 S.W. 173. (3) The equitable maxim or rule that where one of two innocent parties must suffer, he who afforded the opportunity for the wrong must bear the loss, has no application to the instant action for the reason that appellant bank is and was not an innocent party in the sense in which that term is used in the maxim invoked. Griffin v. National Bank, 246 S.W. 180; Federal Savings & Loan v. Kearney Trust Co., 151 F.2d 720, l.c. 726; First Nat. Bank of Bridgeport v. First Nat. Bank of Hartington, 111 Neb. 441, 196 N.W. 691; Dunbar v. Iowa State Bank, 221 Mo.App. 979, 295 S.W. 835; Boyer v. Bourn, 61 F.Supp. 715; Dennis v. Bank, 34 Cal.App. 318, 94 P.2d 51; Middle Tennessee Bank v. McKennon, 20 Tenn.App. 416, 99 S.W.2d 564. (4) The trial court did not err in excluding evidence offered by appellant to show that it was the custom of appellant and all of the banks in St. Louis that where checks payable to the bank were presented with a request for cashier's checks to be issued therefor, such bank would issue their cashier's checks in accordance with the instruction of the person presenting them because such a custom, if any, must yield to the contract between the depositor and the bank to pay checks according to their terms. Main Belting Co. v. Corn Exchange Natl. Bank & Trust Co., 325 Pa. 168, 188 A. 865; American Sash & Door Co. v. Commerce Trust Co., 322 Mo. 98, 56 S.W.2d 1034; Armstrong v. Pomeroy Natl. Bank, 46 Ohio St. 512, 22 N.E. 866; Cosmopolitan State Bank v. Lake Shore Trust & Savings Bank, 343 Ill. 347, 175 N.E. 583; 5 Michie on Banks & Banking, on pp. 337, 338, 527. (5) Respondents' failure, if any, to examine monthly statements bearing the notation, "Please examine at once. If no error is reported within ten days the account will be considered correct," and cancelled checks accompanying same, does not constitute a defense to respondents' action either on the theory of an account stated or estoppel. Kenneth Inv. Co. v. National Bank, 103 Mo.App. 613, 77 S.W. 1002; Graham v. Southington Bank & Trust Co., 99 Conn. 494, 121 A. 232; American Sash & Door Co. v. Commerce Trust Co., 25 S.W.2d 545; First Natl. Bank of Weslaco v. Patty, 62 S.W.2d 629; Irving Trust Co. v. Natl. City Bank of New York, 78 F.2d 665; First Natl. Bank of Philadelphia v. Farrell, 272 F. 371; Union Tool Co. v. Farmers & Merchants Natl. Bank of Los Angeles, 192 Cal. 40, 218 P. 424; Wussow v. Badger State Bank of Milwaukee, 204 Wis. 467, 234 N.W. 720; Basch v. Bank of America Natl. Trust & Savings Assn., 139 P.2d 1. (6) Instructions to juries must be read and interpreted together, and, as a whole. Scott v. First Natl. Bank, 343 Mo. 77, 119 S.W.2d 929; Neal v. Caldwell, 326 Mo. 1146, 34 S.W.2d 104. (7) In determining the correctness of a plaintiff's instruction the instruction is to be read as a whole and in connection with defendant's instruction. Smith v. Southern Illinois & Missouri Bridge Co., 326 Mo. 109, 30 S.W.2d 1077; McDonald v. Kansas City Gas Co., 332 Mo. 356, 59 S.W.2d 37; Larey v. Missouri-Kansas-Texas R. Co., 333 Mo. 949; 64 S.W.2d 681. (8) Instruction II is not in conflict with Instruction I as it merely supplies or elucidates whatever may be thought to be the possibly somewhat too general statement in Instruction I. Morris v. Equitable Assur. Soc. of United States, 340 Mo. 709, 102 S.W.2d 569. (9) An instruction covering the whole case and authorizing verdict, which requires finding of all essential...