Newco Land Co. v. Martin

• Decision Date: 13 September 1948
• Docket Number: 40289
• Citation: 213 S.W.2d 504,358 Mo. 99
• Parties: Newco Land Company, a Corporation, and Hartford Accident and Indemnity Company, a Corporation, Appellants, v. William W. Martin, William S. Bedal and George F. Hardie, as Members of and Constituting a Voluntary Organization Styled "Bondholders' Protective Committee for Holders of Bonds of the St. Louis Joint Stock Land Bank," Respondents
• Court: Missouri Supreme Court

213 S.W.2d 504

358 Mo. 99

Newco Land Company, a Corporation, and Hartford Accident and Indemnity Company, a Corporation, Appellants, v. William W. Martin, William S. Bedal and George F. Hardie, as Members of and Constituting a Voluntary Organization Styled "Bondholders' Protective Committee for Holders of Bonds of the St. Louis Joint Stock Land Bank," Respondents

No. 40289

Supreme Court of Missouri

September 13, 1948

Reported at 358 Mo. 99 at 116.

Original Opinion of June 14, 1948, Reported at 358 Mo. 99.

OPINION

PER CURIAM

On Motion for Rehearing or to Transfer to Court En Banc.

The Committee has filed a motion for rehearing or, in the alternative, for transfer to Court en Banc, urging, among other things, that Sec. 3225 is controlling. Each of the two issues discussed below is essential to the Committee's case.

Section 3225 authorizes creditors to accept the check of a corporation, firm, or copartnership in payment of the debt of an officer, agent, or employee of the corporation, firm, or copartnership "unless . . . such payee or other person at the time of collecting same, had actual knowledge that said check, draft or order was issued without authority of said corporation, firm or copartnership." The Committee says we overlooked that it did not have "actual knowledge" that Newco's check "was issued without authority," including Torrence's forgery of the signature of Newco's president thereon. Torrence acted for both parties. He had knowledge of all the facts and no one but him had any knowledge of the facts. He collected the check, bringing the transaction within the exception stated in Sec. 3225. Direct personal knowledge is not required. It is a general rule of law that one may not lawfully use the funds of another to pay his individual debts; and prior to the enactment of now Sec. 3225 in 1917 (Laws 1917, p. 143) corporation checks when accepted in payment of the individual indebtedness of a corporate employee and not in payment of the corporation's indebtedness were held to carry upon their face notice of their irregular and illegal character in the misappropriation of the corporate funds (an inference of fact) and the corporation could recover unless the party receiving payment established the employee's authority to issue the check in payment of his individual indebtedness. St. Louis Charcoal Co. v. Lewis, 154 Mo.App. 548, 551, 136 S.W 716, 717; Reynolds v. Title Guaranty Trs. Co., 196 Mo App. 21, 33(I), 189 S.W. 33, 36[1]; O'Bannon v. Moerschel, 204 Mo.App. 155, 157, 222 S.W. 1035, 1036[1]. The legislative intent was to change the rule that the face of the check imparted notice or knowledge of its illegality. The word "actual" was used to do away with the prior inference of misappropriation arising from the face of the check. Its purpose was not to change the principles of law which impute notice to or...