Mushrove v. Macon County Bank

• Decision Date: 06 July 1914
• Docket Number: No. 11070.,11070.
• Citation: 187 Mo. App. 483,174 S.W. 171
• Parties: MUSGROVE et al. v. MACON COUNTY BANK OF MACON et al.
• Court: Missouri Court of Appeals

174 S.W. 171

187 Mo. A. 483

MUSGROVE et al. v. MACON COUNTY BANK OF MACON et al.

No. 11070.

Kansas City Court of Appeals, Missouri.

July 6, 1914.

Rehearing Denied February 27, 1915.

Appeal from Circuit Court, Randolph County; A. W. Waller, Judge.

Action by Annie W. Musgrove and others against the Macon County Bank of Macon, Mo., and another. From a judgment for plaintiffs, defendants appeal. Affirmed.

R. S. Matthews & Son and Guthrie & Franklin, all of Macon, for appellants. Web M. Rubey, B. R. Dysart, and Dan R. Hughes, all of Macon, for respondents.

JOHNSON, J.

Plaintiffs, who are called the "Jackson sisters" in the record and briefs, brought this suit November 6, 1911, in the circuit court of Macon county against the Macon County Bank, and afterward caused the Citizens' Bank of Macon to be joined as a defendant.

The substance of the cause alleged in the original petition was the conversion of the proceeds of certain notes owned by plaintiffs and left with the Citizens' Bank for collection and which, afterward, when that bank had gone into liquidation, were turned over to the Macon County Bank, which purchased all the assets and assumed all the liabilities of the defunct bank and after the transfer collected the notes in question and refused to account to plaintiffs for their proceeds. The prayer of the petition was for judgment "against defendant [the Macon County Bank] for the said sum of $4,676.04, with 6 per cent interest thereon from June 15. 1911, or for the surrender to plaintiffs of the notes hereinbefore alleged to have been bought of the Citizens' Bank on February 27, 1911, and if the said notes be less than the amount due plaintiffs, the difference be payable in cash, and for all necessary orders and decrees."

A change of venue was granted to Randolph county, where the case was tried on the third amended petition filed by plaintiffs, the separate answers of defendants, and the replies. This petition contained two counts, the first alleging the same facts and the same cause as the original petition, and the second pleading a cause, in substance, for money had and received. After hearing the evidence, the court rendered judgment for plaintiffs on the second count in the sum of $5,040.09, and defendants appealed.

The material facts of the case thus may be stated: The Jackson sisters received from their brother, who was administrator of their father's estate, $5,827.44, as the sum of their shares in the estate on final distribution, and one of the sisters (Mrs. Musgrove) went to the Citizens' Bank of Macon on February 27, 1911, and deposited the checks or drafts to the credit of the Jackson sisters. The cashier was the brother-in-law of the sisters, and all the transactions between them and the bank were conducted by Mrs. Musgrove and the cashier, in whom the sisters had the greatest confidence. He received the deposit and caused an entry to be made on the individual deposit ledger of the bank, "Jackson Sisters, February 27, 1911, $5,827.44 —$4,900.00." Immediately after making the deposit, Mrs. Musgrove told the cashier that she wished to invest the money in good notes, and he informed her that he could sell her four notes owned by the bank, and she agreed to purchase, for the account of the sisters, four notes, of the total face value of $4,900, which he selected from the bank's bills receivable. These notes appeared on the note blotter of the bank as:

                         No. 6094. H. Lee and H. M. Powell  $  500 00
                         No. 6095, H. Lee and H. M. Powell     500 00
                         No. 6169, D. M. Halliburton note
                          (deed of trust)................... 1,400 00
                         No. 2347, D. B. Moore note (deed of
                          trust)                             2,500 00
                

The cashier put a bracket before these entries, thus grouping them together and wrote on the margin the words "Jackson Girls." He drew a check for $4,900, to pay the purchase price, signed it "Jackson Sisters," with the consent of Mrs. Musgrove, and charged it against the deposit. The check was made payable to "Citz. Bank (3 notes) or bearer." The notes were not indorsed and delivered to Mrs. Musgrove, but were allowed to remain in the bank with the understanding that the bank would hold and collect them for the account of the Jackson sisters. No officer or director except the cashier knew of this transaction, the notes were left in the bank's note pocketbook, were afterward listed and exhibited by the cashier to the bank examiner as assets of the bank, and no entry was made on the books indicating that the check of $4,900 had been given in consideration of the sale and transfer of the notes to the Jackson sisters. Such indication as we have shown appeared on the margin of the note blotter and on the face of the check, but these facts were not brought to the notice of the directors or bank examiner. The inference from the evidence is very strong that the cashier wrongfully converted the proceeds of the check to his own use, and concealed from the directors and examiner the facts which showed the purpose for which it was drawn. Afterward Halliburton paid $242 on account of his note to the cashier, who credited the amount to the deposit account of the Jackson sisters, and Moore paid $69, which also was credited to that account. On March 2, 1911, the Jackson sisters bought a house and paid $800 on the purchase price by check drawn on their account by the cashier, who signed the check "Jackson sisters, per Lon Hayner" (the cashier). On June 14, 1911, the bank closed its doors and went into the hands of the bank examiner. At that time the account of the Jackson sisters on the deposit ledger showed total credits of $6,138.44 and debits of $5,700 (consisting of the two checks of $4,900 and $800), leaving a balance due plaintiffs of $438.44, and the four notes were still among the assets of the bank.

On or about August 1st, following the closing of the bank, the Macon County Bank was organized and took over all the assets of the defunct bank, including its banking house, furniture, and fixtures and excepting only certain disputed assets such as the four notes which, in the meantime, had been claimed by the Jackson sisters as their property. A written contract, approved by the state bank commissioner, was entered into by the two banks, which provided for the transfer of the assets to the new bank and the payment of all the debts of the old bank which, including deposits of $152,440.83, amounted to $157,260.88. A list of the depositors was attached which showed the Jackson sisters as depositors in the sum of $438.44. The recited assets consisted of loans and securities of $177,303.53, "as shown by the books of the bank," $6,000 in cash, the leasehold on the banking house, and the furniture and fixtures. The contract recited that the Citizens' Bank "is desirous of turning over all of its said cash, loans and other assets upon condition that second party will assume and pay off all sums due from said first party to its respective depositors and other creditors," and that the Macon County Bank "is desirous of obtaining the business and good will of said first party and is willing to assume the payment of all sums due from first party to its depositors and creditors." To effectuate these purposes the contract required the Citizens' Bank "to turn over and deliver to said second party all of the cash which it has on hand or to which it may be in any wise entitled * * * by proper assignment duly executed, to deliver to said second party all of its bills receivable * * * which said bills receivable are fully set forth in the itemized list hereto attached * * * to assign and deliver to said second party all the remaining assets of whatever kind and character including good will and leasehold on banking house." The contract recited and provided that the Citizens' Bank "simultaneously with the execution of this agreement has caused certain of its directors to deposit with the second party, the sum of ten thousand ($10,000.00) dollars to indemnify said second party against all loss that may be sustained by it in the payment and discharge of the deposits and viabilities of the first party." Further, the contract provided for the giving of a bond, by the Citizens' Bank as principal and certain named directors as sureties, to further indemnify the purchasing bank from loss and to secure the payment of compensation to it in the sum of $5,000 "for work, labor and expenses in collecting, protecting and handling the assets assigned to it." The Macon County Bank agreed "to and does assume full payment of all sums due from first party to its depositors, whether the same be sums deposited subject to check or time certificate deposits, as fully as the same is set forth in the itemized statement thereof, marked `Exhibit A' and attached hereto. Said time deposits, together with the interest accrued thereon to be paid as they mature, and all other deposits shall be paid by said second party upon application therefor by the respective depositors to and upon the second party. In addition to paying said deposits, said second party assumes and agrees to pay all other creditors of said first party existing at the time of the execution and delivery of this agreement * * * to collect all loans made by the first party evidenced by its bills receivable * * * to convert the remaining assets to be delivered to the second party into cash at the best price obtainable as fast as circumstances will reasonably permit," and that "when the second party shall have received out of the collection and sale of assets sufficient moneys to fully reimburse it for all moneys paid out by it to the depositors and creditors of first party, together with the necessary expenses and accruing interest in accordance with the terms of this contract, then the remainder of the bills receivable and assets of said first party shall either be turned back to the first party or the proceeds therefor upon final...