Pierce Petroleum Corp. v. Guaranty Bond State Bank
| Decision Date | 21 November 1929 |
| Docket Number | (No. 3722.) |
| Parties | PIERCE PETROLEUM CORPORATION v. GUARANTY BOND STATE BANK OF MT. PLEASANT. |
| Court | Texas Court of Appeals |
Appeal from District Court, Titus County; R. T. Wilkinson, Judge.
Action by the Pierce Petroleum Corporation against the Guaranty Bond State Bank. Judgment for defendant, and plaintiff appeals. Reversed and remanded.
Cantey, Hanger & McMahon, F. T. Denny, and Alfred McKnight, all of Fort Worth, and T. C. Hutchings, of Mt. Pleasant, for appellant.
J. A. Ward, of Mt. Pleasant, for appellee.
The appellant is a foreign corporation, and has a permit to do business in the state of Texas. Some time prior to January 1, 1926, it established an agency at Mt. Pleasant, in Titus county, Tex., for the purpose of selling petroleum products, such as gasoline, oil, and similar articles. During the year 1925 and part of 1926 G. H. Reidout was the representative in charge of that agency. Reidout was authorized to sell appellant's goods for cash and on time. He was required to report his sales and make remittances periodically to the appellant's Dallas office. He received as compensation for his services a commission on the sales made. He was instructed, when making collections by check, payable to the appellant, to indorse those checks for exchange only. He was furnished a rubber stamp with the following words: It was his duty to apply the proceeds of such checks to the purchase of exchange payable to the order of the appellant, and immediately forward the same to its Dallas office. He had no authority to indorse checks payable to the appellant for any other purpose, or to open an account for the appellant with any bank at Mt. Pleasant or elsewhere.
In May, 1926, the books and accounts of Reidout showing his dealings with the appellant and its customers were examined by one of the appellant's auditors; and it was found that Reidout owed the appellant the sum of $4,095.88 which had not been accounted for.
The evidence showed that, when Reidout took charge of appellant's agency at Mt. Pleasant, he opened an account in his own name with the Guaranty Bond State Bank, the appellee in this case. During that time he was permitted by the bank to deposit to his personal credit in that account certain checks which had been received by him as collections for the sale of petroleum products, and which were made payable to the appellant. After the discovery of the shortage, Reidout was discharged, and a demand was made upon the bank by the appellant for the payment of the amount of its funds which had been placed to the credit of Reidout during the months of March, April, and May, 1926. Upon the refusal of the bank to comply with that demand, the appellant filed this suit, against the bank alone, alleging a conversion of its funds. In its amended original petition the appellant listed the following checks, which it claimed had been wrongfully deposited by the bank to the personal credit of Reidout:
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Date | Payor | Payee | Amt
----------------|--------------------------|---------------------|-----------
March 6, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | $252.44
March 19, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | 219.76
March 20, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | 61.17
April 2, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | 222.00
April 13, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | 394.16
April 28, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | 294.10
May 3, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | 142.58
May 14, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | 227.31
May 19, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | 18.82
May 19, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | 107.60
May 20, 1926 | Jefferson Service Sta. | Pierce Pet. Corp. | 100.00
April 17, 1926 | Driggers Brothers | Pierce Pet. Corp. | 132.20
April 10, 1926 | W. A. Ford | Pierce Oil Corp. | 303.38
May 10, 1926 | W. A. Ford | Pierce Oil Co. | 411.80
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Total ....................................................... $2,887.32
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This was followed by a general averment that during the months of March, April, and May, 1926, Reidout collected for appellant large sums of money in cash and in checks payable to the appellant, which had been deposited by the bank to the personal credit of Reidout with full notice of appellant's interest in such funds. The prayer was for judgment for the sum of $2,887.32, the value of the checks converted, and interest thereon, aggregating $3,500. The bank answered, in substance, that full restitution had been made of all the funds belonging to the appellant which had been wrongfully deposited to the personal credit of Reidout during the term of his agency. The bank specially pleaded that it had issued and delivered to Reidout cashiers' checks, and exchange payable to the appellant, in different sums, aggregating $6,815.74, an amount largely in excess of the value of the checks which it is charged with having converted.
There was practically no conflict in the evidence, and, when the introduction of testimony was concluded, the court gave a peremptory instruction in favor of the bank, as defendant.
The appellant contends in this appeal that the state of the evidence was such that the court not only should have refused the instruction given, but should have peremptorily directed a verdict in its favor.
The proof showed that the fourteen checks listed by the appellant in its amended original petition were, upon their face, payable to the appellant, and had been received by Reidout as collections from customers who had purchased appellant's goods; that Reidout presented those checks to the bank indorsed "Pierce Petroleum Corporation by R. Reidout, Agent," and that the bank then placed the amount of those checks to his personal credit on its books. It is conceded that in thus giving Reidout a personal credit for the amount of the checks, which the bank knew belonged to the appellant, appellee bank was guilty of a misapplication of funds, and thereby became liable to the appellant for the amount so misapplied. It therefore becomes unnecessary to discuss the authorities cited by the appellant on that proposition. The question before us is, does the proof relied on conclusively show that the bank thereafter made restitution? Upon that issue the burden of proof rested on the bank.
It is undisputed that during the period beginning March 1, 1926, and ending May 19 following, Reidout made the following remittances to the appellant:
March 1, 1926 ......................... $1,305 24
March 11, 1926 ......................... 379 01
March 19, 1926 ......................... 1,008 99
April 2, 1926 ......................... 1,147 29
April 13, 1926 ......................... 764 07
April 22, 1926 ......................... 78 95
April 28, 1926 ......................... 605 78
May 3, 1926 ......................... 598 87
May 11, 1926 ......................... 129 31
May 14, 1926 ......................... 300 58
May 19, 1926 ......................... 497 65
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Total .............................. $6,815 74
The remittances were in the form of drafts payable to the appellant, drawn by the Guaranty Bond State Bank on banks at Dallas. Those drafts were delivered to Reidout, and by him sent to appellant's Dallas office and there received. The proof also shows that in payment for those drafts Reidout drew his personal checks for amounts aggregating $4.764.58 against his account with the appellee bank. It thus appears that during the months of March, April, and May, 1926, Reidout withdrew and paid over to the appellant, from his personal account, more money than it is claimed was wrongfully deposited to the credit of that account. Whether or not that fact was sufficient to exonerate the bank from its liability incurred by improperly crediting appellant's funds to that account depends on the connection between the deposits and remittances.
When the bank, upon the unauthorized indorsement of Reidout, deposited to his credit checks which upon their face were payable to the appellant, the bank not only became liable for the conversion of those checks, but also assumed the status of a trustee holding those funds in trust for the true owner. In prosecuting this suit it devolved upon the appellant to trace its funds into that account. After that was done, it then devolved upon the bank...
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