Seward v. First Nat. Bank in Meridian

• Decision Date: 25 May 1942
• Docket Number: 34917.
• Citation: 193 Miss. 656,8 So.2d 236
• Court: Mississippi Supreme Court
• Parties: SEWARD v. FIRST NAT. BANK IN MERIDIAN.

8 So.2d 236

193 Miss. 656

SEWARD v. FIRST NAT. BANK IN MERIDIAN.

No. 34917.

Supreme Court of Mississippi

May 25, 1942

Creekmore & Creekmore, of Jackson, for appellant.

Wilbourn Miller & Wilbourn and Reily & Parker, all of Meridian, for appellee.

ANDERSON Justice.

Newton County was refunding its bonded indebtedness. The appellant Dr. Seward, owned and possessed $11,000 of the old bonds which were to be replaced by the new bonds. He turned them over to the appellee, the First National Bank, with authority to make the exchange. The exchange was made through the agency of Irving-Harris Corporation. It developed that $6,000 of the refunding bonds turned over to Dr. Seward through this channel were forgeries, resulting in a loss to him of their face value. He brought this action against the bank to recover the loss, on the ground that the forged bonds were negligently accepted by the bank; that by the exercise of reasonable care and diligence the bank would have detected the forgery. The names of the president and clerk of the Board of Supervisors were forged to the bonds. The trial resulted in a verdict and judgment for the bank, from which Dr. Seward appeals.

There was no harmful error committed against the appellant in the trial of the cause. The majority of the Court agree that the cross-examination of Dr. Seward by one of the bank's counsel, and his argument to the jury, both set out in the dissenting opinion of Judge Griffith, constitute error, but were without harm to the appellant, especially in view of the fact that the great preponderance of the evidence was in favor of the verdict of the jury.

The writer is of opinion, in which the Chief Justice concurs, that the court below erred in refusing the bank's request for a directed verdict, and feels constrained to give his reasons therefor, on the idea that they may be of some value to the Bench and Bar. Of course, if the bank was entitled to a directed verdict, the other questions would disappear.

We have here bailment for hire. The authorities are practically unanimous that, unless made so by statute or express contract, such a bailee, is only required to use reasonable care and diligence in carrying out the contract of bailment. There will be found a full discussion of the question, and citation of authorities, in 6 Am. Jur., chapter on Bailments, sections 240 to 246, inclusive. There is no decision of our Court directly in point on its facts, but the following throws some light on the question: In Greenville Insulating Board Corporation v. McMurray, 164 Miss. 809, 145 So. 730, the Court held that the bailee of personal property is not an insurer, nor liable for the value thereof, when destroyed without his negligence; and that the contract of bailment, to change the obligation of bailee to that of insurer, must expressly so provide.

Appellant recognized in his declaration, in plain and unmistakable language, that the measure of the bank's duty in handling the bonds was ordinary care and diligence, and that the alleged failure of the bank to exercise such care and diligence alone was the foundation of the suit. The evidence was addressed solely to that question, and so were the instructions for both parties. It is too late now for appellant to try to make a different case in this Court from that tried in the court below. He cannot put the trial court in error for trying the case on the theory he invoked himself. In other words, he cannot try one case below, and an entirely different case in the Supreme Court. Wilson v. Zook, 69 Miss. 694, 13 So. 351; Liverpool & L. & G. Ins. Co. v. Van Os, 63 Miss. 431, 56 Am.Rep. 810.

There was no evidence of real substance tending to show that the bank failed to exercise reasonable care in handling the bonds. Of course, if that be true, the bank was entitled to a directed verdict. The following are the undisputed facts:

It was the understanding between the Board of Supervisors and the bank that the latter should handle the refunding bonds. That plan, however, was abandoned, and the handling and delivery of the refunding bonds was entrusted to the Irving-Harris Corporation. Dr. Seward knew this and acted upon it.

The Board of Supervisors, by an order on its minutes, appointed the bank "to act as exchange agent in the matter of refunding the bonded indebtedness of Newton County." The order provided that the bank should calculate the accrued interest on the bonds, in order to arrive at the basis of exchange, and be "guided solely by the instructions of the Irving-Harris Corporation of Meridian as the basis of exchange and allocation of maturities." And its services therefor should be paid by the Irving-Harris Corporation.

At the same meeting of the Board an order was made appointing the Irving-Harris Corporation "as paying agent for the refunding bonds." The order recites that R. S. Majure, attorney for the county, had "contracted with T. S. McDonald, trading as Irving-Harris Corporation of Meridian, Mississippi, to carry out and effect the actual exchange of the bonds to be refunded." Which employment was ratified. The order provided that the Irving-Harris Corporation should make "cash settlement of accrued interest on bonds so ordered refunded"; and required of the Irving-Harris Corporation the execution of a "valid indemnity bond in the sum of $10,000.00, to be approved by the President of the Board of Supervisors."

Dr. Seward's letter to the bank demonstrates that he knew the refunding proceedings were in the hands of the Board of Supervisors and its attorney, and of the Irving-Harris Corporation, including the handling and delivery of the new bonds in exchange for the old ones. In his letter to the bank he uses this language; "You will please turn these over to Irving-Harris Corporation when they have turned over to you in exchange the following bonds," describing them, giving the denominations, rate of interest and when payable. In other words, Dr. Seward, by clear implication, said to the bank that it would find the bonds which he was to take in exchange for his in the custody of the Irving-Harris Corporation. Putting it differently, Dr. Seward said to the bank, "Deliver my bonds to the Irving-Harris Corporation, and take in exchange therefor bonds which they will deliver to you." This means that if Dr. Seward was relying on anyone to pass on the validity of the bonds taken in exchange, it was the Irving-Harris Corporation, and not the bank.

The forgery of the bonds was so cleverly done that it was with great difficulty it could be detected. One Barksdale, who was the chief manager of the affairs of the Irving-Harris Corporation, forged the bonds. He forged some for his own use, and borrowed money on them from the appellee bank, which was never repaid. The bank took them without any suspicion that the bonds were not valid.

Grenada Bank v. Moore, 131 Miss. 339, 95 So. 449, is not in point. In that case the bank accepted a deposit of the customer's securities under a bailment contract for hire. The bank undertook to safely keep the securities. One Taubert, an officer of the bank, took the securities and hypothecated them in various places for money which he used for his own purposes-in other words, he embezzled the securities. Citizens Bank of Coldwater v. Callicott, 178 Miss. 747, 174 So. 78, is not in point. There the bank invited and accepted a special deposit (diamonds for safe-keeping). The bank put the diamonds safely away, except that the officers and employes of the bank had access to them. When demand was made for their return they could not be found. It will be observed that in both cases there was an express contract to safely keep and return. In the present case there was neither an express nor an implied contract on the part of the bank to see that the bonds were not forged.

Affirmed.

GRIFFITH Justice (dissenting).

Appellant had had negotiations with a concern called Irving-Harris Corporation by which an exchange was to be made of $11,000 of bonds owned by appellant for certain other bonds, later to be mentioned, but instead of sending his bonds direct to Irving-Harris Corporation, thereby trusting that concern to make the exchange, appellant sent them to appellee bank accompanied at the same time by the following letter, addressed to the bank:

"Enclosed find Newton County bonds as follows: Junior College Improvement 5 1/2% Numbers 24, 31, 32, 33, 39, 40, 41, 42, 67, 68, 81. Also my check payable to Irving-Harris Corp. in the amount of $25.00.

You will please turn these over to Irving-Harris Corp. when they have turned over to you in exchange the following bonds: Newton County Federal Aid Highway 4 1/2% Refunding, $1000.00 due 7/1/47, $1000.00 due 7/1/48, $4000.00 due 7/1/51. Newton County Supervisor's Road Dist. # 3, 5% refunding: $500.00 due 7/1/62. All minus July 1, 1937 coupons, and Kemper County 4 1/4% General Obligation Funding: $500.00 due 9/1/40, $500.00 due 9/1/50, $500.00 due 9/1/55, all minus Sept. 1, 1937 coupons.

When this exchange has been made you will please mail me the above described bonds." Signed D. Seward.

The bank admits the contents of the letter, and that it acted in the transaction for hire, and that in the exchange it received and accepted $6,000 in forged bonds.

There is a distinction between a general contract of bailment and a special contract of bailment, and wherein the special contract contains or embraces directions under which the bailee is to handle or dispose of the property in a particular manner according to the directions. This principle was expressly recognized and enforced by this Court in Miller v. Bank of Holly Springs, 131 Miss. 55, 68, 95 So. 129, 31 A.L.R. 698, and there the court said that in the case of a general contract of...