R. S. Jacobs Banking Co. v. Federal Reserve Bank

• Decision Date: 02 December 1930
• Docket Number: No. 20895.,20895.
• Citation: 34 S.W.2d 173
• Parties: R. S. JACOBS BANKING CO. v. FEDERAL RESERVE BANK OF ST. LOUIS.
• Court: Missouri Court of Appeals

34 S.W.2d 173

R. S. JACOBS BANKING CO. v. FEDERAL RESERVE BANK OF ST. LOUIS.

No. 20895.

St. Louis Court of Appeals. Missouri.

December 2, 1930.

Rehearing Denied January 23, 1931.

Appeal from St. Louis Circuit Court; Erwin G. Ossing, Judge.

"Not to be officially published."

Action by R. S. Jacobs Banking Company, a corporation, against the Federal Reserve Bank of St. Louis. Judgment for defendant, and plaintiff appeals.

Affirmed.

Neale & Newman, of Springfield, and John P. McCammon, Jr., Ralph T. Finley and Jones, Hocker, Sullivan & Angert, all of St. Louis, for appellant.

James G. McConkey and Polk, Williams & Campbell, all of St. Louis, for respondent.

NIPPER, J.

This action was brought by the R. S. Jacobs Banking Company of Greenfield, Mo., against the Federal Reserve Bank of St. Louis, to recover the sum of $3,758.43, and interest, to cover losses suffered by the plaintiff bank on account of the failure of the Holland Banking Company of Springfield, Mo.

A trial by a jury was waived, and the case was tried by the court sitting as a jury, and resulted in a judgment for defendant and plaintiff has appealed. When originally filed, the case was removed to the federal court, and the evidence was there heard, after which the case was removed to the state court. Upon trial below, in the circuit court, the case was submitted on a stipulation and a transcript of the testimony given in the federal court. Each side filed a written request asking the court to make special findings of fact in writing separately from its conclusions of law.

The petition is in seven counts, but, inasmuch as the pleadings do not become particularly material upon appeal, we will state in substance what the petition alleges.

It is alleged in the first count that on February 8, 1921, the defendant notified the plaintiff that all checks, drafts, notes, and bills drawn upon the plaintiff, or upon the Dade County Bank of Greenfield, Mo., and the Bank of Arcola, of Arcola, Mo., received by the defendant for collection, would be sent by the defendant to the plaintiff for collection and returns, and designated the plaintiff as the defendant's agent for the collection of these checks, drafts, notes, and bills; that thereafter, and prior to January 14, 1924, the defendant instructed the plaintiff that the proceeds of the collection of such checks, drafts, notes, and bills should be forwarded by mail by the plaintiff to the Holland Bank in the form of plaintiff's draft upon the said Holland Bank, payable to the order of the Holland Bank; that during said time, and on and prior to January 14, 1924, the plaintiff maintained a cash balance with the defendant's said correspondent and agent, Holland Bank, for the purpose of paying such items of collection as should be necessarily remitted by the plaintiff under said arrangement; that on January 12, 1924, the plaintiff received from the defendant for collection its cash letter of January 11, 1924, containing checks, drafts, and bills aggregating $1,803.45; that on said date the plaintiff drew its draft in said sum on the Holland Bank, payable to said Holland Bank, and mailed said draft to said Holland Bank in payment of said cash letter in an addressed and stamped envelope furnished by the defendant for that purpose, as plaintiff had been directed by defendant to do; that the amount of said cash letter was thereby paid by the plaintiff to defendant's said agent and correspondent, Holland Bank; that the plaintiff thereupon notified the defendant of such payment by a self-addressed postal card furnished by the defendant for that purpose; that the plaintiff's obligation regarding the payment of such cash letter was fully and seasonably discharged by so mailing said draft and notifying the defendant of such payment, under said instructions by the defendant; that the plaintiff had on deposit with said Holland Bank a cash balance sufficient to pay said draft of $1,803.45 to its principal, the defendant herein; that thereafter on January —, 1924, the defendant made demand upon the plaintiff for the payment of said cash letter of $1,803.45 paid by plaintiff, as aforesaid, and the plaintiff refused to pay the same for the reason that plaintiff had fully complied with the defendant's instructions as to the payment thereof, and had fully paid the same and discharged its duty to the defendant with regard thereto, by mailing its draft to said Holland Bank, as aforesaid; that thereafter, on February 4, 1924, the defendant notified the plaintiff that it was charging back all of the items included in said cash letter to the defendant's indorsers; that the defendant did so charge back said items to its indorsers, and the several items contained in said cash letter were, in the usual and ordinary course, charged back by the several indorsers and payees to the makers thereof; that said items were wrongfully so charged back by the defendant; that by reason of the wrongful act of defendant in charging back said items to its indorsers, as aforesaid, the makers and drawers of said items, who were and are customers of the plaintiff, were compelled to pay said items a second time; that said makers and drawers could not understand why they were so compelled to pay, as aforesaid, and complained bitterly thereof, and that the wrongful act of the defendant in charging back said items was calculated to shake the confidence of the plaintiff's customers in the solvency of the plaintiff, and was wrongfully done by the defendant for such purpose, in order to wrongfully force and coerce the plaintiff to pay said cash letter of $1,803.45 a second time; that the defendant also for said purpose reported plaintiff's alleged failure to pay said items to the finance commissioner of Missouri, and that, by reason of said wrongful act of the defendant, the plaintiff was thereafter, on or about the 13th day of February, 1924, by duress and in order to save its reputation and credit, coerced into sending to the defendant said sum the second time in order to prevent the defendant from charging back said items, and did on the said date again pay the defendant said sum; that on January 14, 1924, the said Holland Bank was closed by order of the state banking department of Missouri, and taken over for liquidation by the commissioner of finance of said state; that, although said remittance and draft made by the plaintiff to said Holland Bank was received by said Holland Bank before the same was closed by the state banking department of Missouri, said item was never charged to the plaintiff's account in said Holland Bank; that the plaintiff never learned of the insolvency or the closing of said Holland Bank until after January 15, 1924; that in order to minimize its damages and recover what it could and protect both itself and the defendant in a situation which was likely to result in litigation concerning the liability of the defendant to the plaintiff for said wrongful acts, the plaintiff filed its claim with the commissioner of finance in charge of said Holland Bank with the amount of plaintiff's balance in said bank, and thereafter received a 40 per cent. dividend on said claim, and thereby received the sum of $721.38 on the amount which was on hand to pay its draft of $1,803.45, which is the total amount that can be realized from the estate of said Holland Bank, and that the balance of said item, to wit, $1,082.07, has not been paid by the defendant or any other person in its behalf, and is still due and unpaid, by reason whereof the plaintiff asked judgment for said sum of $1,082.07, with interest, and costs.

The other counts in the petition are of similar nature.

The answer to the first count alleges that, under the authority of the act creating the Federal Reserve Board (12 USCA § 241), the Federal Reserve Board issued and promulgated an order requiring all Federal Reserve Banks, including defendant, to operate a clearing house for its member and nonmember clearing banks, and promulgated certain regulations, which regulations were in full force and effect at all times, and various parts of these regulations were set forth in the answer.

The answer also refers to a circular, known as Circular No. 6, Series of 1922, alleged to have been issued by the Federal Reserve Board to all Federal Reserve Banks and nonmember clearing banks.

The answer denies the agency of the plaintiff for the defendant.

The answer also pleads an agreement on the part of the plaintiff, dated July 21, 1916, to collect items sent by the defendant to the plaintiff on the plaintiff, the Dade County Bank, and the Bank of Arcola.

It is then alleged that the plaintiff remitted direct to the defendant at St. Louis in St. Louis exchange, but that the plaintiff desiring to use Springfield exchange, entered into the arrangement with the Bank of Commerce of Springfield and then the Holland Bank of Springfield, by which the plaintiff remitted to said Springfield banks, and secured an arrangement with said Springfield banks for the transfer of the funds to the defendant at St. Louis, which arrangement is alleged to have been in force in January, 1924.

The answer admits the items were charged back, but denies that such act of charging the same back was wrongful, and denies that the payment of the amount of said cash letter by the plaintiff, on February 14, 1924, was made by duress and coercion, and alleges that said payment was voluntarily made.

The answer also pleads an estoppel against the plaintiff because of the filing of the claim against the Holland Bank and the securing of a 40 per cent. dividend on such claim.

We think it is unnecessary to refer further to the pleadings at this time.

Plaintiff seeks to recover of defendant on the theory that the Holland Bank of Springfield, Mo., was the agent of defendant, and therefore defendant is liable for the acts or negligence of its agent. A few preliminary facts are necessary to a proper discussion and determination of...