Scott v. First Nat. Bank

• Decision Date: 28 September 1938
• Docket Number: 33871
• Parties: Oreon E. Scott and Raymond G. Scott, Copartners Doing Business Under the Firm Name of Oreon E. & R. G. Scott, Appellants, v. First National Bank in St. Louis, a Corporation
• Court: Missouri Supreme Court

119 S.W.2d 929

343 Mo. 77

Oreon E. Scott and Raymond G. Scott, Copartners Doing Business Under the Firm Name of Oreon E. & R. G. Scott, Appellants, v. First National Bank in St. Louis, a Corporation

No. 33871

Supreme Court of Missouri

September 28, 1938

Appeal from Circuit Court of City of St. Louis; Hon. Robert J Kirkwood, Judge.

Reversed and remanded as to counts 1 to 15, inclusive, and affirmed as to counts 16 to 40, inclusive.

Jeffries Simpson & Plummer for appellants.

(1) Defendant, depositary bank, was under an absolute contractual duty to pay checks of the plaintiffs, its depositors, only on the genuine endorsement of said checks by the payees thereof. American Sash & Door Co. v. Commerce Trust Co., 332 Mo. 98, 56 S.W.2d 1034; East St. Louis Cotton Oil Co. v Bank of Steele, 200 Mo.App. 187; Ward v. First Natl. Bank of Dexter, 224 Mo.App. 472, 27 S.W.2d 1069; Miners' & Merchants' Bank v. St. Louis Smelting & Refining Co., 178 S.W. 212; Union Biscuit Co. v. Springfield Gro. Co., 143 Mo.App. 307, 126 S.W. 996; Merchants Bank v. Ins. Co., 110 Mo.App. 65, 84 S.W. 101; Missouri-Lincoln Trust Co. v. Third Natl. Bank, 154 Mo.App. 103, 133 S.W. 357; State ex rel. v. Globe Indemnity Co., 222 Mo.App. 918, 9 S.W.2d 669; Rossi v. Nat. Bank of Commerce, 71 Mo.App. 161; Lieber v. Fourth Natl. Bank, 137 Mo.App. 158, 117 S.W. 672; Jordan-Marsh Co. v. Natl. Shawmut Bank, 201 Mass. 397; U.S. Cold Storage Co. v. Central Mfg. Dist. Bank, 343 Ill. 513; City of N. Y. v. Bronx County Trust Co., 261 N.Y. 72; American Surety Co. v. Empire Trust Co., 262 N.Y. 184. (a) The checks, not being intended to be issued to fictitious payees by Raymond G. Scott, who signed them on plaintiffs' behalf, were not payable to bearer. American Sash & Door Co. v. Commerce Trust Co., 332 Mo. 98, 56 S.W.2d 1034. (b) The alleged negligence of plaintiffs can constitute no justification for the defendant's payment of the checks on the forged endorsements of the payees' names because: It pertained to the issuance of the checks and not to the forgery of the endorsements or its detection. American Sash & Door Co. v. Commerce Trust Co., 332 Mo. 98, 56 S.W.2d 1034; American Surety Co. v. Empire Trust Co., 262 N.Y. 181; Los Angeles Inv. Co. v. Home Savs. Bank of Los Angeles, 180 Cal. 609; Open Shop Employing Printers Assn. v. Chicago Trust Co., 263 Ill.App. 195. Defendant paid the checks in reliance upon the endorsement and guaranty of other banks. Jordan-Marsh Co. v. Natl. Shawmut Bank, 201 Mass. 397; City of N. Y. v. Bronx County Trust Co., 261 N.Y. 72; Grafeman Dairy Co. v. Bank, 290 Mo. 311, 235 S.W. 435, Id., 315 Mo. 849, 288 S.W. 359. Plaintiffs owed the defendant no duty to keep their books or conduct their business in any particular way. Paton Co., Inc., v. Guaranty Trust Co., 238 N.Y.S. 362; U.S. Cold Storage Co. v. Central Mfg. Dist. Bank, 343 Ill. 513. Meyer's previous embezzlement did not put plaintiffs on notice that he would commit forgery in connection with plaintiffs' checks. Missouri-Lincoln Trust Co. v. Third Natl. Bank, 154 Mo.App. 101; U.S. Cold Storage Co. v. Central Mfg. Dist. Bank, 343 Ill. 513. (2) Instruction 4 is erroneous because it authorizes a finding for defendant in violation of the rule that plaintiffs, as depositors, were not obliged to examine the endorsements on the canceled checks returned by the defendant bank. American Sash & Door Co. v. Commerce Trust Co., 332 Mo. 98, 56 S.W.2d 1044; Lieber v. Fourth Natl. Bank, 137 Mo.App. 158, 117 S.W. 678; Union Tool Co. v. Farmers & Merchants Natl. Bank, 218 P. 424; National Surety Co. v. President & Directors of Manhattan Co., 169 N.E. 372; Los Angeles Inv. Co. v. Home Savs. Bank, 180 Cal. 601; 7 C. J. 688; 67 A. L. R. 1125, 1127; 99 A. L. R. 450. (3) Instructions 3 and 4 were erroneous for other reasons. (a) They recited detailed portions of the evidence. C. I. T. Corp. v. Hume, 48 S.W.2d 157; Moffett v. Butler Mfg. Co., 46 S.W.2d 873; Rice v. Jefferson City B. & T. Co., 216 S.W. 753. (b) They referred to the pleadings as to the issues involved in the various counts. McCaslin v. Mullens, 17 S.W.2d 685; Lally v. Morris, 26 S.W.2d 56; Bullmore v. Beeler, 33 S.W.2d 164. (c) They were argumentative. Gleason v. Texas Co., 46 S.W.2d 548; Dohring v. Kansas City, 81 S.W.2d 948; Henry v. Mo. Ins. Co., 68 S.W.2d 856. (d) They conflicted with correct instructions given by the court at the instance of the plaintiffs. Nagy v. St. Louis Car Co., 37 S.W.2d 515; Wilson v. Chattin, 335 Mo. 375, 72 S.W.2d 1002; Haton v. Ill. Cent. Ry. Co., 335 Mo. 1186, 76 S.W.2d 131; Freeman v. Berberich, 332 Mo. 831, 60 S.W.2d 395. (e) They submitted questions of law to the jury. Macklin v. Fogel Const. Co., 326 Mo. 38, 31 S.W.2d 19; Menefee v. Scally, 247 S.W. 261. (4) The court erred in ruling on objections to evidence. (a) The court permitted the defendant to offer the testimony of Meyer as to being in a position where he was compelled to work for the plaintiffs under such conditions as they saw fit to impose by reason of his being indebted to surety company on account of embezzlement but the court, on the other hand, refused to permit the plaintiffs to show by the testimony of Hortleder that as a matter of fact Meyer was paid by the plaintiffs a salary in excess of that paid by other concerns for similar service, and further refused to permit the plaintiffs to introduce the testimony of Hortleder as to the general treatment of Meyer by the plaintiffs during Meyer's employment there. American Tobacco Co. v. Schulenburg, 17 S.W.2d 557; Jones & Jones v. Cooley Lake Club, 122 Mo.App. 118, 98 S.W. 82.

Thompson, Mitchell, Thompson & Young for respondent.

(1) The gross negligence of the appellants in the issuance of the checks was directly connected with the forgeries and aided and facilitated the same and was the proximate cause thereof, and the appellants are thereby estopped to deny the right of the defendant to charge them against the account of the appellants. American Sash & Door Co. v. Commerce Trust Co., 332 Mo. 98, 56 S.W.2d 1034; East St. Louis Cotton Oil Co. v. Bank of Steele, 200 Mo.App. 188, 205 S.W. 99; Clifford Banking Co. v. Donovan Comm. Co., 195 Mo. 262, 94 S.W. 527; Allen Grocery Co. v. Bank, 192 Mo.App. 476, 182 S.W. 777; Famous Shoe & Clothing Co. v. Crosswhite, 124 Mo. 34, 27 S.W. 397; Defiance Lbr. Co. v. Bank of California, 180 Wash. 533, 41 P.2d 135; Land Title & Trust Co. v. Northwestern Natl. Bank, 196 P. 230, 50 L. R. A. 75, 46 A. 420; Snyder v. Corn Exchange Natl. Bank, 221 Pa. 599, 70 A. 876; Fletcher-American Natl. Bank v. Crescent Paper Co., 193 Ind. 329, 139 N.E. 664; Weisberger Co. v. Bank, 84 Ohio St. 21, 34 L. R. A. (N. S.) 1100, 95 N.E. 379; Leather Mfrs. Natl. Bank v. Morgan, 117 U.S. 96, 29 L.Ed. 811, 6 S.C. 657; Osborn v. Corn Exchange Natl. Bank, 218 Ill.App. 28; Bartlett v. First Natl. Bank, 247 Ill. 490, 93 N.E. 337; DeFeriet v. Bank of America, 23 La. Ann. 310; Grand Lodge of Kansas v. State Bank, 92 Kan. 876, 142 P. 974, L. R. A. 1915-B, 815. (2) The appellants were not entitled to recover on the last twenty-five counts because of their negligence in failing to discover and report to the defendant the first fifteen forgeries, in addition to the negligence of the appellants in connection with the issuance of the checks representing the last twenty-five counts. American Sash & Door Co. v. Commerce Trust Co., 332 Mo. 98, 56 S.W.2d 1034; Lieber v. Bank, 137 Mo.App. 158, 117 S.W. 672; Wind v. Bank, 39 Mo.App. 85; Erickson v. Iowa Natl. Bank, 211 Iowa 495, 230 N.W. 342; Pannonia B. & L. Co. v. Bank, 93 N. J. Law 377, 108 A. 240; Osborn v. Corn Exchange Natl. Bank, 218 Ill.App. 28; Prudential Ins. Co. v. Bank, 227 N.Y. 510, 125 N.E. 824, 15 A. L. R. 146; Fletcher-American Natl. Bank v. Crescent Paper Co., 193 Ind. 329, 139 N.E. 664; General Cigar Co. v. Bank, 290 F. 143; Kenneth Inv. Co. v. Bank, 103 Mo.App. 613, 77 S.W. 1002; Detroit Piston Ring Co. v. Wayne County Bank, 252 Mich. 163, 233 N.W. 185, 75 A. L. R. 1273. (3) The defendant exercised due care in paying the checks. Indianapolis v. Natl. City Bank, 80 Ind.App. 677, 141 N.E. 249; Lieber v. Bank, 137 Mo.App. 158, 117 S.W. 672; England Natl. Bank v. United States, 282 F. 121; Weisberger Co. v. Bank, 84 Ohio St. 21, 34 L. R. A. (N. S.) 1100, 95 N.E. 379; Osborn v. Corn Exchange Natl. Bank, 218 Ill.App. 28; Prudential Ins. Co. v. Bank, 227 N.Y. 510, 125 N.E. 824, 15 A. L. R. 146; Fletcher-American Natl. Bank v. Crescent Paper Co., 193 Ind. 329, 139 N.E. 664. (4) Defendant's Instructions 3 and 4 were properly given. (5) The defendant presented a valid defense showing that the plaintiffs had sought and obtained recompense from Meyer and had settled and adjusted the entire loss occasioned by Meyer's forgeries. Jones v. First Natl. Bank of Lincoln, 3 N. U. 73, 90 N.W. 912; Crook v. First Natl. Bank of Baraboo, 83 Wis. 31, 52 N.W. 1131; Stotts City Bank v. Miller Lbr. Co., 102 Mo.App. 75, 74 S.W. 472; Bank of United States v. Bank of Georgia, 10 Wheat. 333, 6 L.Ed. 334.

All concur, except Lucas, J., not sitting.

OPINION

PER CURIAM

The facts, stated in the Divisional opinion of Cooley, C., in Division No. Two, are adopted (without use of quotation marks) as follows:

Suit at law, in forty counts, ranging in amount from $ 90 to $ 3091, aggregating $ 24,634.42. The suit was brought to recover money paid by the bank out of plaintiffs' account therein on checks issued by plaintiffs, upon which the endorsements of the named payees were forged, the checks, therefore, not being paid to the named payees or to their orders. There were forty such checks, each being described in a separate count of the petition. There was a verdict for defendant bank on each count, from which the plaintiffs appealed.

It was admitted by the pleadings and at the trial below that...