People's National Bank of Rock Island v. Central Trust Company

• Decision Date: 10 February 1904
• Citation: 78 S.W. 618,179 Mo. 648
• Parties: PEOPLE'S NATIONAL BANK OF ROCK ISLAND v. CENTRAL TRUST COMPANY, Appellant
• Court: Missouri Supreme Court

78 S.W. 618

179 Mo. 648

PEOPLE'S NATIONAL BANK OF ROCK ISLAND v. CENTRAL TRUST COMPANY, Appellant

Supreme Court of Missouri, First Division

February 10, 1904

Appeal from Jackson Circuit Court. -- Hon. J. H. Slover, Judge.

Reversed.

Garland M. Jones and Scarritt, Griffith & Jones for appellant.

(1) There is no misrepresentation of fact in the statement of defendant upon which this action is founded. The language relied upon as constituting the fraud for which defendant should respond in damages, namely, "a note is secured by chattel mortgage on certain stuff," is probably as common an expression as any used by persons engaged in trade. It seems very strange, if it has such pregnant meaning as is contended for by plaintiff, that the law books which record the controversies between such men have not already made it clear that by such language the user intends to convey the idea that the stuff described in the mortgage is at the time the statement is made in existence and in condition it is described to be in the mortgage; that the title of the mortgagor thereof is indefeasible. (2) Defendant acted in good faith in making the representation relied upon as the basis of this action. Its officers believed the Baumbaugh note to be secured by a mortgage on the identical cattle described in it, a copy of which mortgage came into their possession with the note, and that belief was founded upon such representations made to them by responsible men in the ordinary course of business that any reasonable man would have entertained the same belief. They showed the sincerity of their belief by investing the corporation's money and their own in the paper. These undisputed facts preclude a recovery in deceit. No Missouri case goes to the extent of holding that a person, who, upon reasonable grounds believes a certain state of facts to exist, can be mulcted in damages for deceit because of his statement made in good faith of the existence of those facts. Houston v. Tyler, 140 Mo 268; Bank v. Byers, 139 Mo. 652; Hamlin v Abell, 120 Mo. 188; Dulaney v. Rogers, 64 Mo 201; Lovelace v. Suter, 93 Mo.App. 440; Paretti v. Rebenack, 81 Mo.App. 498; Felix v. Shirley, 60 Mo.App. 624; Redpath v. Lawrence, 42 Mo.App. 101; Koontz v. Kaufman, 31 Mo.App. 397; Arthur v. Mfg. Co., 12 Mo.App. 335; Bank v. Sells, 3 Mo.App. 85; Lord v. Goddard, 13 How. 198; Addison on Torts (Wood's Ed.), secs. 1177, 1178; 1 Benj. on Sales (Corbin's Ed.), sec. 638; Cooley on Torts, pp. 500, 501; Webb's Pollock on Torts (Eng. Am. Ed.), pp. 355, 362, 364, 368; Bigelow on the Law of Fraud, pp. 509-520.

Wollman, Solomon & Cooper for respondent.

(1) The case was tried by the court sitting as a jury, a jury having been waived, and there were no declarations of law, or instructions asked, given or refused, but simply a general finding for plaintiff. It follows, therefore, that the judgment will not be disturbed for there is nothing for this court to review. Miller v. Breneke, 83 Mo. 163; Bethune v. Railroad, 139 Mo. 574; Wischmeyer v. Richardson, 153 Mo. 556. (2) The representations were positive and unqualified concerning material facts susceptible of actual and certain personal knowledge; they were made recklessly and as of knowledge, and defendant not only knew that it did not know them to be true, but made them recklessly and without information sufficient to justify it in forming an honest belief in their truthfulness, and being false, they were therefore fraudulent. Buford v. Caldwell, 3 Mo. 355; Dulaney v. Rogers, 64 Mo. 201; Herman v. Hall, 140 Mo. 276; Clinkenbeard v. Weatherman, 157 Mo. 114; Raley v. Williams, 73 Mo. 310; Wickham v. Grant, 28 Kans. 522; Kerr on Fraud and Mistake, pp. 54, 56; Curtis v. Stilson, 38 Kans. 306; Lynch v. Merc. Trust Co., 18 F. 487; Ainslie v. Medlycott, 9 Ves. 21; Brooks v. Hamilton, 15 Minn. 31; 1 Hilliard on Torts, p. 14; 8 Enc. Pl. and Pr., p. 905; Borders v. Kattleman (Ill.), 31 N.E. 19; 8 Am. and Eng. Ency. Law (1 Ed.), 801; Bradley v. Powers (Me.), 42 A. 362; Haycroft v. Creasy, 2 East 103; Krause v. Busacker (Wis.), 81 N.W. 407; Fisher v. Mellen, 103 Mass. 506; Bullitt v. Farrar (Minn.), 6 L. R. A. 149; Cabot v. Christie, 42 Vt. 121; 2 Addison on Torts (Wood's Ed.), sec. 1177; 14 Am. and Eng. Ency. Law (2 Ed.), p. 95; Furnace Co. v. Moffatt, 147 Mass. 403; Babcock v. Osmer, 153 N.Y. 608; Kuntze v. Kennedy, 147 N.Y. 130; Moline Plow Co. v. Carson, 72 F. 392; Wheeler v. Baars, 33 Fla. 710. (3) The record amply sustains the finding of the court below, that the fraudulent representations were relied upon, and that plaintiff was induced thereby to purchase the note. But the law does not require that the fraudulent representations should have been the sole inducement. Becraft v. Grist, 52 Mo.App. 589; Cahn v. Reid, 18 Mo.App. 131; Bradleys v. Powers, 42 A. 362; Clark on Contracts, p. 345; James v. Hodsden, 47 Vt. 127; Kerr on Fraud and Mistake, p 74; Bish., Non-Cont. Law, sec. 336; Bigelow, Fraud, p. 545.

OPINION

VALLIANT, J.

This is a suit for damages, founded on alleged fraudulent misrepresentations. It is what is commonly called an action for deceit. Plaintiff is a national bank at Rock Island, Illinois; the defendant a Missouri corporation located at Kansas City, and engaged in the business generally conducted by trust companies, which includes the buying and selling of promissory notes. The transaction out of which this suit arises was the sale by the defendant to the plaintiff of a promissory note purporting to be secured by a mortgage on two hundred head of cattle in Marion county, Kansas. The transaction was conducted by letter correspondence through the mail. The first letter in point of date introduced in evidence by the plaintiff was from the cashier of the American National Bank to the cashier of the plaintiff, which was as follows:

AMERICAN NATIONAL BANK.

Kansas City, Mo., Aug. 20th, 1898.

Mr. C. Hellpenstell, Cashier, Rock Island, Ills.

Dear Sir: -- I told you yesterday I would write you in regard to cattle commission firms. Before giving you a list I will say, while we do not discount the value of a good endorsement, in a good, stiff firm, we figure more particularly on the value of the cattle actually covered by the mortgage in each case, and the general reputation and standing of the farmer or feeder who makes the paper. As you know this business is not a new thing and the business is as well established in this section as loaning on stocks and bonds in the east. The different commission houses have their regular line of customers in these farmers and feeders as a bank has in its correspondents; and in this way, being regular customers, we local banks become to know in some measure the value of these individuals, knowing many of them personally.

As regard to the different firms' endorsement we would say that the larger firms are usually on the back of a proportionally larger amount of paper than the firms of smaller capital, so that, in many cases, the paper of the smaller firms are as much in demand as the larger, because the security (number and grade of cattle for a given loan) is as good or better. However, the mere endorsement of some of the firms here is within itself perfectly good.

[Here follows a list of names of fourteen commission firms, in which is A. J. Gillespie & Co.'s.]

We local banks get a great deal of first class cattle paper from our corresponding banks in the country, especially Kansas, Missouri, Texas, Indian Territory and Oklahoma, bearing their endorsement, which is good paper.

There is plenty of this paper out here for us all, so I will be pleased to do anything for you I can at anytime, by way of advice, selection of it, or even the purchase of it for you, for there are about a half dozen eastern banks that I now buy paper for, and have done so in some cases two or three years.

However, as I told you yesterday, I am a stockholder and director in The Central Trust Company of this city, which is making a business of handling this paper, buying it for itself and also for its connections, and I would be pleased for you to deal with them, unless you have some preference elsewhere. I will have them write you and submit you offerings, if agreeable. Yours, etc.,

J. R. Dominick.

The first two letters from the defendant were in the nature of solicitations for the plaintiff's custom and were as follows:

Kansas City, Mo., Aug. 22, 1898.

Mr. C. Hellpenstell, Cashier Peoples National Bank, Rock Island, Ills.

Dear Sir: -- Mr. Dominick, Cashier of the American National Bank, says you buy considerable cattle paper in this market, and suggests that we correspond with you in regard to it.

We handle a great deal of this paper. In fact we make a specialty of it, buying it for our own use and placing it with our connections. We buy it outright and carry it until it is sold, and when sold we either endorse it or not, as is preferred by the purchaser, making a difference of one per cent in the discount rate where we endorse it. We are familiar with the standing of the different commission firms here at the stock yards and are in touch with them and examine carefully all papers taken. Since we have commenced business we have never had a note to run past due a day.

Our company is now increasing its capital stock to $ 100,000, $ 85,000 of which has been paid in.

We carry accounts with the Produce Exchange Trust Company, New York City, American Trust & Savings Bank, Chicago, and American National Bank, Kansas City, to whom we respectfully refer.

At the present time, our discount rate to you would be six per cent without indorsement, or five per cent with it. All paper could be sent to you, subject to inspection, and if not found satisfactory you could return it. When paper matures we would...