Nash v. Normandy State Bank

• Decision Date: 10 March 1947
• Docket Number: No. 39677.,39677.
• Citation: 201 S.W.2d 299
• Parties: NASH et al. v. NORMANDY STATE BANK et al.
• Court: Missouri Supreme Court

201 S.W.2d 299

NASH et al. v. NORMANDY STATE BANK et al.

No. 39677.

Supreme Court of Missouri, Division No. 1.

March 10, 1947.

Rehearing Denied April 21, 1947.

Appeal from Circuit Court, St. Louis County, Division No. 2; John Witthaus, Judge.

Action by Helen C. Nash and R. B. Nash, doing business under the style and firm name of Daily Service Lines, Inc., against Normandy State Bank, a corporation, William McDonald and Henry H. Seib, for damages for fraudulent representations. From an adverse judgment, plaintiffs appeal.

Judgment affirmed.

Taylor R. Young and Alvin Goldman, both of St. Louis, for appellants.

Jesse E. Bishop, of St. Louis, for respondents.

VAN OSDOL, Commissioner.

Action to recover $8,500 actual and $1,500 punitive damages alleged as resulting from fraudulent representations by defendants whereby plaintiffs were induced to authorize the payment over to another, or others, of moneys which had been held by the defendant, Normandy State Bank, a depositary pursuant to an escrow agreement. At the conclusion of plaintiffs' case, the trial court sustained the three defendants' motions for a directed verdict; rendered judgment upon the verdict returned as directed; and subsequently overruled plaintiffs' motion for a new trial. Plaintiffs have appealed.

Plaintiffs-appellants have made no complaint of the trial court's ruling in directing a verdict for defendant-respondent, William McDonald; but they assign error of the trial court in directing verdicts for the defendants-respondents, Normandy State Bank and Henry H. Seib. Defendant-respondent, Henry H. Seib, is the cashier of defendant-respondent Bank — it is the view of plaintiffs-appellants that the evidence introduced and the inferences which may be fairly drawn therefrom are sufficient to require the submission of the issues of plaintiffs' case, as against these two defendants, to the jury.

In testing the sufficiency of the evidence to make out a case submissible to a jury upon motion for a directed verdict, a plaintiff's evidence must be considered true and the plaintiff given the benefit of every inference of fact which can be reasonably drawn therefrom. Lowry v. Mohn, Mo.Sup., 195 S.W.2d 652; Hardin v. Illinois Cent. R. Co., 334 Mo. 1169, 70 S.W.2d 1075; Section 112, Civil Code of Missouri, Laws of Missouri 1943, p. 387, Mo.R.S.A. § 847.112. If the evidence supporting the essential issues of plaintiff's case is substantial, it is sufficient and the case should be submitted to the jury. But it is a judicial function to determine whether the evidence is substantial, and, if it is not, there is nothing for the jury to decide. Morgan v. Kroger Grocery & Baking Co., 348 Mo. 542, 154 S.W.2d 44.

We believe an extensive narration of the evidence and an exact statement of the theory of plaintiffs' claim are necessary to a proper understanding of the case.

One D. (Dorothy) K. Crisp had agreed to assign a 5/32 interest in an oil and gas lease on lands (Spitler tract) situate in Clinton County, Illinois, to plaintiffs for a consideration of $4,500.

An escrow agreement between plaintiff, R. B. Nash, and Crisp was executed March 8, 1940, in terms as follows,

"* * * in consideration of ten dollars in hand paid by party of the second part to party of the first part, said parties of part do herewith deposit with Normandy State Bank * * * that certain instrument, to-wit:

"Assignment of Oil and Gas Lease hereto attached, and $4500 in cash, as an escrow to be `held,' kept and retained until * * * a certain oil and gas well has been completed to the Devonian formation on the property described in the said attached assignment — at which time said oil and gas lease assignment shall be delivered to party of the 1st part and said $4500 to party of the Second part — Proof of same to be given escrow agent by affidavit of party of second part (Crisp) — and supported by Halliburton wire line measurements." (Our italics.)

On the same day, March 8, defendant Bank acknowledged the receipt of the escrow agreement and of the assignment of the interest in the lease, and of checks (subsequently collected by defendant Bank) aggregating $4,500; and undertook for a $10 consideration to hold and disburse the money "according to the tenor of the escrow agreement in our files.

March 9, 1940, Crisp entered into a contract under which well-drilling contractors, Kane and Shelbourne, were to complete the drilling of an oil well on the leased land "until * * * Devonian sand is reached." April 11, 1940, defendant Bank paid $3,500 (of the $4,500 held by it as a depositary pursuant to the escrow agreement, supra) to Shelbourne and others, to whom Crisp had made assignments of the money so held by defendant Bank.

An escrow holder is charged with the performance of an express trust governed by the escrow agreement with duties to perform for each of the parties, which duties neither can forbid without the consent of the other. Morris v. Davis, 334 Mo. 411, 66 S.W.2d 883; Meredith v. Meredith, 287 Mo. 250, 229 S.W. 179; Seibel v. Higham, 216 Mo. 121, 115 S.W. 987, 129 Am. St.Rep. 502; 19 Am.Jur., Escrow, § 13, p. 430; 30 C.J.S., Escrows, § 8, pp. 1203, 1204. The term "escrow" is generally applied to a written instrument so deposited, but the term has been applied, although technically somewhat inaptly, to money deposited to be held until the performance of a condition. 30 C.J.S., Escrows, § 3, pp. 1193, 1194. We think of no real reason, in the instant case, to pursue a more apt term to be applied to money thus specially deposited.

In our case, there was evidence introduced tending to show the Devonian lime formation (which carries sometimes one, sometimes two and sometimes three strata of "pay sand") in the "Centralia field" is at the depth of 2,900 to 3,000 feet. The Devonian lime formation was "topped" in drilling the particular well at a depth of 2,911 feet, and there was further drilling of eight or nine feet "to get into the pay sand." The drilling was continued into or through the Devonian lime formation to a drilled-well depth of 2,945 — the continued drilling was at the request of Crisp. According to the testimony of Shelbourne, in the continued drilling the "first strata was approximately nine feet of pay; it was around seven or eight in the second paysand; and in the third pay was practically all water, very little viscosity."

Now, as we understand, it is plaintiffs' position that defendant Bank should not have paid the money to Shelbourne and others (assignees of Crisp) because the well was not completed "to" but was drilled through the Devonian lime formation, thereby ruining the well's potential productivity; and that defendant Bank paid out the money, $3,500, without having the proof of the completion of the well "by affidavit of party of the second part (Crisp)," as provided in the escrow agreement, supra. It is plaintiffs' theory that defendants fraudulently represented to plaintiffs that the well had been completed as stipulated in the escrow agreement; and that defendants fraudulently represented to plaintiffs that defendant Bank had been provided with the affidavit of Crisp verifying such a completion of the well, thereby inducing plaintiffs to direct defendant Bank to pay over the money to the assignees of Crisp; and thereby inducing (it is tacitly assumed in plaintiffs' brief) plaintiff, R. B. Nash, to sign on April 11, 1940, an instrument which we designate a "quittance or receipt," as follows,

"Proper and sufficient information in the form of affidavits having been furnished the Normandy State Bank, escrow agent for R. B. Nash and D. K. Crisp that all conditions have been complied with according to the escrow agreement dated March 8th, 1940, I hereby acknowledge receipt of the Assignment of Oil and Gas Lease that was attached to said escrow agreement from D. K. Crisp, and which was to be delivered to me when conditions were fulfilled."

Plaintiffs alleged that they have been thus deprived of a well which, had it been "drilled to the Devonian," would have produced 50 barrels of oil per day, and such a well would have been of value "at least $5000"; and that they have been further damaged to the extent of $3,500 because induced by the alleged fraudulent representations to direct the defendant Bank to pay over that sum to Crisp's assignees.

Concerning the facts and circumstances of the payment, and the execution of the quittance or receipt, plaintiff (R. B.) Nash testified that defendant Seib on April 10, 1940, called plaintiff Nash by telephone and told him that Shelbourne was at the bank and wanted to withdraw "that money * * * And I said, `Well, are they finished over there, are you sure they have finished up the job,' and he said, `Yes, they have completed the job.' Well, I said, `Why do you want me over there, you got your instructions, and why do you want me to come in?' Well, he said, `They want to settle up and we would like to have you over here and be sure everything is all right.'" Plaintiff Nash went to the bank the following morning, April 11, at which time and place there were present defendant Seib; the contractor, Shelbourne; and an attorney, Woodside, who owned the oil-drilling "rig" used by Kane and Shelbourne. Shelbourne said, "he had finished the well, and had come over to get his money." Plaintiff Nash was asked by defendant Seib, "if it would be all right to pay this money out (to Shelbourne) * * * and I (plaintiff Nash) said, `In the first place, I don't know Mr. Shelbourne; I don't know whether he was entitled to it or not.' Well, he said, `Crisp had assigned over this money to Shelbourne and others.' Well, I said, `Of course, if you have that in writing, why that is your responsibility to pay them.' Well, he said, `How about the balance of this money to Shelbourne, and he (Woodside, we infer) wants some money, too.' Well, I said, `If you think it is completely drilled to pay out, but I don't know whether it is completed or...