Pierce v. Live Stock Nat. Bank
| Decision Date | 16 December 1931 |
| Docket Number | No. 40988.,40988. |
| Citation | 239 N.W. 580,213 Iowa 1388 |
| Parties | PIERCE & GAMET v. LIVE STOCK NAT. BANK. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Woodbury County; Miles W. Newby, Judge.
This action is brought in equity for an accounting. The plaintiff claims that the defendant wrongfully permitted certain of plaintiff's deposits in the defendant bank to be withdrawn and appropriated by an employee of the plaintiff to his personal use. Plaintiff alleges that an accounting would disclose that there is more than $37,000 due from the bank to the plaintiff. The defendant denied generally, made certain admissions, pleaded laches and negligence on the part of the plaintiff and acquiescence in statements rendered to plaintiff and sought recovery on a counterclaim. The court dismissed the plaintiff's petition and entered judgment against the plaintiff on the defendant's counterclaim for approximately $13,000. Plaintiff appeals.
Affirmed.Shull & Stilwill and C. R. Jones, all of Sioux City, for appellants.
Jepson, Struble & Sifford, of Sioux City, for appellee.
The record in this case is very voluminous, and the arguments of counsel are extensive and exhaustive. It will be entirely impossible, within the reasonable limits of an opinion, to attempt to set out the evidence in detail. A very large number of items of credit and debit, running through a long period of time, in the accounts of the bank, are involved. We have read the record carefully and examined in detail all these various items, and we shall content ourselves with a general statement of our conclusions in respect thereto without discussion of the several items.
Prior to September 1, 1925, a commission firm was engaged in business in Sioux City under the name and designation of the Sioux City Live Stock Commission Company. It was a partnership composed of two individuals, Newman and Benson. These parties maintained two accounts in the appellee bank, both of which were carried under the name of the Sioux City Live Stock Commission Company, one designated as “general account,” the other as “agency account.” In a general way it may be said that the general account was the account in which said commission company carried its own funds. The agency account was an account in which the commission company carried the business of its customers, and against this account were drawn checks payable to customers, and from this account there was transferred to the general account the amount of commissions that belonged to said firm. On or about September 1, 1925, the appellant took over all the business of the Sioux City Live Stock Commission Company, which will be hereafter referred to as the commission company. The former members of the commission company became members of the appellant firm, which thereafter operated under the firm name of Pierce & Gamet. Another man became a member of the firm at the time, but retired shortly thereafter. About the time of the organization of the new firm, it opened up two accounts in the appellee bank in the name of the appellant, one of which was designated as “agency account” and the other as “general account.” It appears that the agency account standing on the books of the appellee in the name of the commission company was not in fact closed at the time of the organization of the new firm. This account appears to have been carried thereafter on the ledger sheet of the appellee, and by some employee of the bank (the evidence not clearly disclosing by whom or under what authority) the word “agency” was crossed out and in its stead the word “general” was written. From that time on this account in the name of the commission company continued to be carried on the books of the appellee, and, as will be shown later, it was used as an instrumentality for the abstraction of funds by an employee of appellant. The appellant contends that after the organization of the appellant no business of the new firm was properly carried in the books of the appellee in said account in the name of the commission company. The record shows, however, that the appellant found that it was to its advantage to continue to use the name of the commission company to some extent in connection with its business. It appears that consignments of live stock continued to be made in the name of the commission company and that in some instances the members of the appellant firm used the name of the commission company in the transaction of such business. In any event, it appears that, after the organization of the appellant, three accounts were carried in the appellee bank, to wit, the said account in the name of the commission company, and the “agency account” of the appellant, and the “general account” of the appellant.
Briefly stated, the contention of the appellant is that an employee of the appellant, one Schmidt, used these accounts in the appellee bank for his own purposes and as a medium for the abstraction of large sums belonging to the appellant. It is contended that Schmidt caused deposits to be made of moneys belonging to the appellant, sometimes in one of these accounts and sometimes in another, continuing to use the old account of the commission company as a means of convenience, and that by issuing checks against said accounts payable to himself as “treasurer” he transferred funds of appellant to his own account in said bank and converted the same to his own use. The evidence discloses in minute detail these several manipulations on the part of Schmidt. Many of the transactions are not directly traceable in the record, but it does clearly appear that Schmidt abstracted and appropriated to his own use some $40,000 or more of money belonging to the appellant. Schmidt was aided to some extent in concealing his manipulations from appellant by the assistance of a bookkeeper in the appellee bank. This aid consisted mainly in withholding checks that had been drawn against the accounts of the appellant for a time in order that an overdraft might not appear in said accounts until deposits had been made therein, and in falsifying statements that had been correctly prepared by appellee's employees. There is no evidence whatever that any officer of the appellee bank had any knowledge in any way of this conduct on the part of the bookkeeper, or that proper entries were not made on the books of the bank correctly reciting the actual transactions. The books of the bank at all times correctly showed the deposits and checks that were drawn against the accounts referred to. During all the time involved in this case the man Schmidt was a trusted employee, first of the commission company and subsequently of the appellant, and all the abstractions for which appellant seeks recovery were made by Schmidt. Both the commission company and the appellant gave to the appellee express written authority to pay checks signed by Schmidt and drawn on said accounts in appellee bank. Before the organization of appellant, the commission company filed with the bank a written instruction as follows: “The Live Stock National Bank, of Sioux City, Iowa, is hereby authorized to charge to the account of the S. C. Live Stock Commission Company any check, note, draft or acceptance bearing the signature of John Newman, P. K. Tolles, F. L. Schmidt, or E. A. Benson, whose signatures appear on the reverse side of this card.” This card is then signed by the three members of the then firm. On the back of this card there is this: Among the signatures thereto is the signature of F. L. Schmidt, and also the signatures of the members of the firm.
After the organization of the appellant, a power of attorney was executed and delivered by it to appellee as follows:
“Know All Men by These Presents:
That Pierce & Gamet have made, constituted and appointed F. L. Schmidt true and lawful attorney for us and in our name, place and stead, to check upon all funds standingto our credit on the books of the Live Stock National Bank, Sioux City, Iowa, hereinafter termed the bank, and endorse all checks, promissory notes, bills-of-lading, and other negotiable instruments made payable to us or presented to said bank in our name for deposit, discount or collection, and to execute in our name promissory notes, and to assign and hypothecate as collateral security for the payment thereof any stocks, bonds or other evidences of debt or choses in action belonging to us, giving and granting to the said attorney by these presents full power and authority in or about the premises, to have, use and take all lawful ways and means in our aforesaid name. And, generally, all and every other act or acts necessary to be done in or about the premises for us in our name, to do, execute and perform as fully and effectually as we might do if personally present, thereby ratifying all acts which our said attorney shall lawfully do in and about the premises by virtue hereof. This power of attorney is to be irrevocable by us without the written consent of the above named bank.”
That the appellant was knowingly retaining and using the account in the name of the commission company after the organization of appellant firm is not only evidenced by certain transactions which members of the appellant conducted in the name of the commission company, but also by a letter of instruction from the appellant to the appellee as follows: ...
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