Reynolds v. Gerdelman

• Decision Date: 03 November 1914
• Docket Number: No. 13,757.,13,757.
• Parties: REYNOLDS v. GERDELMAN.
• Court: Missouri Court of Appeals

170 S.W. 1153

185 Mo. A. 176

REYNOLDS v. GERDELMAN.

No. 13,757.

St. Louis Court of Appeals. Missouri.

November 3, 1914.

Rehearing Denied December 8, 1914.

1. CORPORATIONS (§ 312) — OFFICERS — CORPORATE FUNDS — CHECKS — DELIVERY FOR PERSONAL DEBT.

Where one receives the check of a corporation, executed by one of its officers, in payment of a debt known by the creditor to be such officer's private debt, the check carries notice on its face of its irregular and illegal character, and the creditor accepting it takes the risk of being called on to restore the proceeds.

2. BILLS AND NOTES (§ 497) — CHECKS — BONA FIDE PURCHASER.

Where defendant, in the course of his automobile supply business, received and cashed a check executed in the name of an insurance company by its secretary, and there was no evidence that any private debt of the secretary was paid by the check, the company's receiver could not recover the amount thereof from defendant on the theory that, in receiving it, defendant was charged with notice that it had been illegally issued and uttered by the secretary in payment of his private debt.

3. INSURANCE (§ 36) — INSURANCE CORPORATION — ORGANIZATION — CERTIFICATE — LICENSE TO DO INSURANCE BUSINESS — CHECKS — ISSUANCE.

Rev. St. 1909, § 6900, provides that when a certificate of incorporation shall have been issued to the corporators of an insurance company, they shall be a body corporate and may organize and open books for subscriptions, and keep them open until the whole amount specified in the charter is subscribed, but it shall not be lawful for such company to issue policies or transact any business of any other kind or nature until they have fully complied with the requirements of the article so as to entitle the company to a license to do business as an insurance company. Held, that, since an insurance company, on receiving its certificate of incorporation, becomes a corporate entity to contract for the sale of its capital stock, a check issued by the secretary of such company in its name

and against its funds before being licensed to insure property could not be held to have been illegally issued, in the absence of other proof, as against one to whom it was transferred for value and in good faith, so as to entitle the company's receiver to recover the proceeds thereof.

4. INSURANCE (§ 50) — RECEIVER — RIGHT OF ACTION.

Where defendant received the check of an insurance company, issued by its secretary in good faith in the ordinary course of business for a proper consideration, the company's receiver could not recover the proceeds of the check in an action for money received, in the absence of some proof to show that ex æquo et bono defendant was not entitled to retain the same.

Appeal from St. Louis Circuit Court; Hon. Eugene McQuillin, Judge.

Action by Matt G. Reynolds as receiver of the Continental Assurance Company of America against Ben Gerdelman. Judgment for plaintiff, and defendant appeals. Reversed without remand.

Julian Laughlin, of St. Louis, for appellant. John S. Leahy and Chase Morsey, both of St. Louis, for respondent.

ALLEN, J.

This is an action for money had and received. The plaintiff is the receiver of the Continental Assurance Company of America, a corporation, and sues to recover the sum of $52.85, being the proceeds of a check issued by said corporation to the defendant. The cause was tried below by the court, without a jury, resulting in a judgment for plaintiff, and is here upon the defendant's appeal.

The evidence discloses that the Continental Assurance Company of America was incorporated under the laws of the state of Missouri to do an insurance business. It seems that a certificate of incorporation had been issued to the incorporators thereof, but that the latter never succeeded in obtaining subscriptions to all of its capital stock, and the company never received a license to transact business in the state as an insurance company. At the time of the transaction here in question, to wit, January 7, 1910, the defendant was conducting, in a small way, a business of repairing automobiles, and furnishing automobile supplies. In the course of his business he received and cashed the check in question, which was executed in the name of the Assurance Company, by Harry B. Gardner, secretary. On behalf of plaintiff there was nothing whatsoever to show for what the check was issued. A notation upon a stub in the Assurance Company's checkbook was to the effect that the check had been issued "for H. B. Gardner," the latter being then secretary of the company. The defendant testified that he could not recall the transaction, which took place nearly three years before the trial below; that his business was very small at the time, and that he then kept no regular books, and had no record of the matter; that he did at the time in question almost exclusively a cash business, and made no inquiry as to who was purchasing from him in such transactions.

From the record before us we are unable to see how the judgment can be sustained. One theory upon which the action proceeded was that the defendant was liable as for having received and cashed a check of the corporation executed by an officer thereof in payment of the latter's private debt. There can be no doubt that where one receives the check of a corporation executed by one of its officers, in payment of a debt known to the creditor to be such officer's private debt, the check carries notice upon its face of its "irregular and illegal...