McStay Supply Co. v. John S. Cook & Co.

• Decision Date: 04 January 1913
• Docket Number: 1,870.
• Citation: 132 P. 545,35 Nev. 284
• Parties: MCSTAY SUPPLY CO. v. JOHN S. COOK & CO. [*]
• Court: Nevada Supreme Court

132 P. 545

35 Nev. 284

MCSTAY SUPPLY CO. v. JOHN S. COOK & CO. ^[*]

No. 1,870.

Supreme Court of Nevada

January 4, 1913

Rehearing Denied June 4, 1913.

Appeal from District Court, Esmeraldo County; Theron Stevens, Judge.

Action by the McStay Supply Company against John S. Cook & Co. Judgment for plaintiff, and defendant appeals. Affirmed.

Bryant & O'Brien, of Denver, and Henry M. Hoyt, of Goldfield for appellant.

Robert L. Hubbard, of Los Angeles, for respondent.

SWEENEY C.J.

The record discloses that plaintiff, respondent herein, is a California corporation; that defendant banking company is a Nevada corporation; that the defendants Stoddard were copartners doing business in Goldfield in carrying on a warehouse, storage, and transfer, or drayage business; that plaintiff sold and shipped merchandise to purchasers in Goldfield; that defendants Stoddard hauled and delivered said goods to said purchasers; that the defendants Stoddard collected for plaintiff from such customers $2,653.62; that the money so collected was the property of the plaintiff, and was collected for the sole purpose of payment and delivery to plaintiff; that the defendants Stoddard without right or authority and wrongfully deposited the money collected in the defendant bank to their own credit on or about September 10 1907, while the money was the property of the plaintiff; that the money so deposited remained in defendant bank, was in defendant bank when suit was brought, and was the money of the plaintiff; that plaintiff demanded the money of defendant bank; that defendant bank refused to pay over the same; that plaintiff first learned that the bank had its money on September 23, 1907. Upon this state of facts the plaintiff asked to be decreed to be the owner of the $2,653.62 so deposited by the defendants Stoddard in the defendant bank that the defendant bank be decreed to pay over and deliver said money to plaintiff; for costs and for full relief.

To the complaint in the action defendants Stoddard made no defense. The defendant bank took no exceptions by demurrer or otherwise to the complaint, but filed an answer in which it specifically admitted its own corporate existence; the copartnership of the defendants Stoddard, and that they were engaged in and carrying on a warehouse, storage, and transfer or drayage business; that they had an account with defendant bank in the name of Stoddard Bros.; and, by failure to sufficiently or at all deny all or any of the remaining allegations of plaintiff's complaint, admitted the whole thereof.

For an affirmative defense defendant bank alleged that it was a banking corporation doing a general banking business; that prior to the bringing of the suit Stoddard Bros. as copartners kept an account in defendant bank; that money was deposited by Stoddard Bros. in said account; that the money so deposited in said account was the property of Stoddard Bros.; that Stoddard Bros. borrowed various sums of money from the bank and gave their note before plaintiff's goods were shipped; that on September 13th, Stoddard Bros. failed, owing defendant bank; that at the time of failure they had a balance to their credit of about $3,200; that the defendant bank credited said balance against the indebtedness of Stoddard Bros. to the defendant bank; that said charge of said balance against said indebtedness closed the business between Stoddard Bros. and the bank, so far as the account was concerned; that defendant bank never knew or had any knowledge or notice that any sums of money deposited to the credit of the said Stoddard Bros. were the property of the plaintiff or any one else.

Upon this complaint and answer the cause was tried by the court, without a jury, and the court found as matters of fact and as conclusions of law as follows: That on August 10, 1907, plaintiff sold to purchasers at Goldfield merchandise of the value of $2,653.62; that Carl and Lytton Stoddard were copartners as Stoddard Bros.; that they were doing a general transfer or drayage business in Goldfield; that Stoddard Bros. hauled all of said goods and merchandise from the railway freight depot in Goldfield and delivered said merchandise to said purchasers; that Stoddard Bros. collected from the purchasers the value of said goods aggregating $2,653.62; that Stoddard Bros. wrongfully deposited said money in defendant bank to their own credit; that the money sò deposited was the property of the plaintiff; that the $2,653.62 so deposited remained in said bank from the time of deposit to the date of trial, and that plaintiff is still the owner; that plaintiff demanded the said moneys of the defendant bank; that defendant bank refused to pay or deliver said money to plaintiff; that on September 13th defendant bank credited Stoddard Bros. upon their indebtedness to the bank with the amount of their balance; that Stoddard Bros. never authorized or consented to such application of the moneys to the payment and discharge of their debt to the bank; that, prior to such application of said moneys to said indebtedness, the defendant bank had actual knowledge and notice that plaintiff was the owner of $2,653.62 of the balance in the account of Stoddard Bros.; that Stoddard Bros. claimed no right or title in or to any of said moneys; that previous to shipping the goods, and previous to the delivery thereof and the collection of the value thereof, and previous to the deposit of said moneys in said bank, C. E. McStay, an officer of the plaintiff, had a conversation with I. J. Gay, assistant cashier of the defendant bank, in charge of the bank, at the place of business of defendant bank; that said McStay made inquiry of said bank, through its said assistant cashier, as to the general standing and trustworthiness of said Stoddard Bros.; that said Gay told said McStay that the business relations of said Stoddard Bros. with said bank were satisfactory; that at that time Stoddard Bros. owed the bank $12,000; that between the date of said conversation and the closing of Stoddard Bros.' account said indebtedness had been reduced, and no additional credit had been extended to Stoddard Bros. by said bank; that, by taking plaintiff's money to pay the debt of Stoddard Bros., defendant bank would gain and plaintiff would lose; that the allegations of plaintiff's complaint are true; that the relation existing between plaintiff and Stoddard Bros. was that of principal and agent; that it was the duty of Stoddard Bros. to remit the said money to the plaintiff, but that in violation of plaintiff's rights Stoddard Bros. wrongfully deposited said money in said bank in their own name; that the deposit was wrongful; that the depositor had no right or title in or to the money; that the bank acquired no right or title therein or thereto; that the same was a trust fund, and so remained in the hands of the bank; that the plaintiff was the beneficial owner; that the bank had no right to appropriate the same to the debt of Stoddard Bros.; that the bank had notice of the beneficial ownership of plaintiff; that plaintiff is entitled to the money, and was entitled to the same on September 13, 1907; that the attempt of the bank to pay Stoddard Bros.' debt to it with plaintiff's money was wrongful and without right, title, or authority; that Stoddard Bros. never authorized the bank's action; that plaintiff in no manner ever consented thereto; that to permit the bank to retain said money would result in benefiting the bank and injuring the plaintiff by the wrongful act of the agent and the unauthorized seizure by the bank; that to require the bank to restore the property of plaintiff to it will not deprive the bank of anything belonging to it, and plaintiff will receive only that which it is entitled to; that plaintiff is entitled to interest from September 25, 1907, in addition to the original and principal trust fund of $2,653.62.

In rendering its decision the lower court made use of the following language: "To this complaint an answer was filed, which is insufficient to raise an issue on any of the allegations of the complaint, except that it denies that the defendant bank had, at any time, any moneys belonging to the plaintiff which it failed to deliver upon demand. To many allegations of the complaint no denials are made; to others a general denial is interposed, which amounts to nothing." Because of the use of that language counsel for the defendant bank asked leave of the court to file an amended answer for the sole purpose of making their denials sufficient in form to raise the issues, and leave was granted for such purpose. Pursuant to such permission the defendant bank filed an amended answer, and the same was considered by the court on motion for a new trial, and it is proper to say that the case was tried on the answer and denials assumed to be sufficient. All this with respect to the amended answer was permitted by the court notwithstanding the fact that in the opening of the trial counsel for plaintiff called the attention of the court and counsel for the defendant bank to the form of the denials and their insufficiency, and counsel for the bank thereafter proceeded to trial without amendment, insisting that the denials were sufficient.

It is asserted by appellant that the trial court erred for the three following reasons:

"First. The plaintiff has mistaken its remedy, and under the facts found by the court should have brought a suit in equity instead of an action at law.

Second. There is a total failure of proof to establish the allegations of the complaint in the case, either at law or in equity.

Third. Even though the plaintiff had filed a proper bill in equity and had proved the facts set forth in the opinion of the court and in the findings of fact, then, under the law, the...