Napoleon Hill Cotton Company, a Corp. v. H. Oetter Grocery Company, a Corp.
| Decision Date | 08 June 1920 |
| Parties | NAPOLEON HILL COTTON COMPANY, a corporation, Appellant, v. H. OETTER GROCERY COMPANY, a corporation, Respondent |
| Court | Missouri Court of Appeals |
Argued and Submitted May 11, 1920.
Appeal from the Circuit Court of the City of St. Louis.--Hon. Rhodes E. Cave, Judge.
AFFIRMED.
Judgment affirmed.
H. R Boyd, W. M. Fitch and Homer Hall for appellant.
Bryan Williams & Cave for respondent.
(1) Under the decisions of the Missouri courts (prior to Act of April 9, 1917), where a corporation check was drawn by one of its agents to his own use anyone accepting such a check was presumed to do so with knowledge that such agent was acting beyond his authority and the burden of proof was upon anyone accepting such check to show the agent's authority, if any he had. This was a mere rule of evidence and not of substantive right. McCullom v. Buckingham, 199 S.W 417; Reynolds v. Whittemore, 190 S.W. 594; Bank v. Edwards, 243 Mo. 553; Bank v. Investment Co., 160 Mo.App. 369; Napoleon Hill Cotton Co. v. Stix, Baer & Fuller, 217 S.W. 223; McCullem v. Mermod, 218 S.W. 345. (2) By the Act of April 9, 1917 (Laws 1917, p. 143), this presumption or rule of evidence was abolished and the burden was placed on the corporation, before it could recover from one accepting such a check, to show that such one had actual knowledge that such check was issued without authority of said corporation. (3) No vested rights can be gained in rules or evidence, and such rules may accordingly be modified at the pleasure of the Legislature and when so modified are applicable to pending actions. 12 Corpus Juris, 982; 8 Cyc. 924; 36 Cyc, 1217-18; 1 Elliott on Evidence, 106; 3 Elliott on Contracts, 999; 8 Elliott on Contracts, 774; 26 Am. & Eng. Enc., 697-98; Coe v. Ritter, 86 Mo. 277; Clark v. Railroad, 219 Mo. 524; Lovell v. Davis, 52 Mo.App. 338; O'Bryan v. Allen, 108 Mo. 227; Gibson v. Railroad, 225 Mo. 473; Howard v. Strode, 242 Mo. 210. (4) That the new rule of evidence created by the Act of April 9, 1917, and effective on June 18, 1917, was controlling upon the trial court in the instant case decided September 10, 1917, requires no authority. (5) The plaintiff offered absolutely no evidence to show, nor is there any claim, that the defendants here had any "actual knowledge" that the checks in question were issued without the authority of the plaintiff, other than the presumption of knowledge which arose under the former decision, but which was abolished by the Act of 1917. And the Act of 1917 applying to this case, there can be no question but that the plaintiff is not entitled to recover. (6) Assuming that the Act of 1917 is not applicable to the instant case, the testimony certainly disclosed some evidence from which the trial court might have found as a fact (a) that Upshaw had in fact unlimited authority to draw checks on the company's fund to his own order and for his own use; (b) that the company (all the other stockholders besides Upshaw) in fact knew that Upshaw was so drawing checks on the company's funds to his own order in excess of his salary and ratified and approved his so doing. Either of which findings would preclude plaintiff's recovery. And, no declaration of law having been asked or given, if there is any evidence to sustain the judgment of the trial court on any theory, it will not be disturbed on appeal. First National Bank v. Wolz, 193 S.W. 614; Snyder v. Loyal Protective League, 196 S.W. 1022.
The petition in this case, after averring the incorporation of plaintiff and defendant, for the first cause of action avers that on February 11, 1911, defendant received a check of plaintiff for the sum of $ 225, drawn in the name of plaintiff on the Boatmen's Bank, to the order of one R. W. Upshaw, by him indorsed in blank and delivered to the defendant, indorsed by the latter to the Mercantile Trust Company of St. Louis, and paid by the Boatmen's Bank on February 13, 1911. Averring that the plaintiff, at the date of the draft or check, was not indebted to R. W. Upshaw in any sum whatever, and that defendant received a check for the money on that date and is indebted to plaintiff in that sum as money had and received by it, judgment is prayed for the amount of that check and interest from February 11, 1911.
The second cause of action is on a check of plaintiff, dated June 28, 1912, drawn by Upshaw and to his order, for the sum of $ 225, and put through bank and collected by defendant, it being averred that plaintiff was not indebted to the defendant on the date of the check in any sum whatever. Interest is also prayed on this from July 31, 1911.
The third count is on a check in the name of plaintiff, of date December 16, 1912, for $ 241, payable to R. W. Upshaw and signed by him as secretary and manager of plaintiff. Averring that it was not indebted to R. W. Upshaw in any sum whatever, and that defendant received the money to the use of plaintiff and was indebted to it for that sum, judgment is prayed for that and for interest from February 1, 1912.
The answer, admitting the incorporation of the parties, sets up that plaintiff is a corporation organized under the laws of the State of Missouri, with a capital stock of $ 250,000 with all of its stock, except 50 shares owned by the heirs of Napoleon Hill and Noland Fontaine; that Hill and Fontaine and their heirs were and are residents of Memphis, Tennessee, residing there, and that the business and office of the plaintiff company was and is in St. Louis, Missouri, and at the time these checks referred to were issued, was under the sole control, management and charge of R. W. Upshaw, who was the owner of 50 shares of stock in the corporation and its secretary and treasurer; that the corporation was organized as a matter of convenience for the parties, but that the corporate forms were seldom observed and the business and assets of the company were treated as if belonging to a partnership, the stockholders drawing from the treasury of the corporation such funds as they might from time to time need for their purposes; that Upshaw, secretary and treasurer of the corporation, was authorized by the stockholders and directors, both generally and specially, and by acquiescence in long custom, to deal with the assets and bank account of the corporation as he saw fit; that in pursuance of such authority, Upshaw was authorized to and did execute notes, checks and other instruments of various kinds and character on behalf of the corporation, and had authority and did issue checks for his own personal use on the bank account of plaintiff; that Upshaw was to receive a salary of $ 3600 per annum for his services, which he paid himself from time to time by issuing checks for his personal use upon the bank account of plaintiff; that the stockholders of the plaintiff company knew of this fact, and authorized Upshaw to make payments to himself in this manner; that Upshaw and other stockholders in the corporation from time to time, for their own purposes, drew upon the treasury of the corporation, and there was carried overdrafts upon the books of the plaintiff charged against various stockholders, which practice was well known to the stockholders of the corporation and approved and authorized by them; that after twenty years the Fontaine and Hill interests in the company became dissatisfied with the management of Upshaw, claiming that he had abused the privileges conferred upon him by the stockholders and the board of directors of the corporation and had overdrawn his account largely in excess of the amount they had expected and in excess of what they believed to be due for his salary and other obligations due from the company or the stockholders thereof to Upshaw; that knowledge came to the Fontaine and Hill interests of the alleged breach of trust on the part of Upshaw in the year 1912, at which time they caused some investigation to be made, and subsequently, in the latter part of 1913 and the early part of 1914, the stockholders of plaintiff company made a further investigation of the books and records of the company and became possessed of all the facts with reference to the dealings of Upshaw with the company and with other stockholders therein, and that with the knowledge that Upshaw had not properly kept his books and had falsified his accounts, the plaintiff company continued Upshaw in their employ, and on June 5, 1915, for the purpose of settling the differences and adjusting all matters between Upshaw and plaintiff company, the stockholders in the company, through their board of directors, accepted 50 shares of stock in plaintiff company, then belonging to Upshaw, in full satisfaction and settlement of the over draft shown on the books of the plaintiff company against Upshaw; that the stock of Upshaw in plaintiff company represented the total assets of Upshaw; that plaintiff and its stockholders, Fontaine and Hill, appropriated to themselves all of the assets of Upshaw for the purpose of liquidating the obligations of Upshaw to the company, and in so doing deprived the other creditors of Upshaw of the benefit of his assets; that at the time of this appropriation plaintiff company had actual knowledge of all the facts with reference to Upshaw's alleged defalcations, and that he had issued the checks to defendant described in plaintiff's petition; that these checks were issued by Upshaw in payment of his personal obligations for groceries furnished him by defendant for family use, and that defendant believes and has reason to believe that these checks were a part of the thirty-six-hundred-dollar salary of Upshaw, and that the primary liability to defendant on account of the...
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