Smith v. The Jefferson Bank

• Decision Date: 30 October 1906
• Parties: SMITH et al., Respondents, v. THE JEFFERSON BANK, Appellant
• Court: Missouri Court of Appeals

97 S.W. 247

120 Mo.App. 527

SMITH et al., Respondents, v. THE JEFFERSON BANK, Appellant

Court of Appeals of Missouri, St. Louis

October 30, 1906

Appeal from St. Louis City Circuit Court.--Hon. Daniel D. Fisher Judge.

REVERSED AND REMANDED.

STATEMENT.--This is an action for damages for the alleged conversion by defendant of two carloads of eggs belonging to plaintiffs. Plaintiffs were partners doing business in the city of Fredonia, Kansas, under the name of the Fredonia Produce Company. Defendant is a banking institution in the city of St. Louis. The carloads of eggs in question were shipped by plaintiffs from Fredonia on the 12th and 14th days of July 1904, and consigned to B. W. Redfearn in St. Louis. The terms of the shipments are shown by two ordinary bills of lading in which plaintiffs are designated as consignors and Redfearn as consignee. Invoices were sent to Redfearn along with the bills of lading, notifying him of the shipments and that the terms were cash on delivery. The bills of lading are not contained in the record, but, as we understand, they were issued by the St. Louis & San Francisco Railroad Company which company took charge of the cars at Fredonia, hauled them to St. Louis and there delivered them to the American Refrigerator Transit Company at its cooling establishment on Gratiot street about the 17th or 18th of July, and the Refrigerator Company, the petition alleges, delivered the eggs on the same day to the Mound City Produce Company without a surrender of the bills of lading or without permission from or ratification by the plaintiffs, or the consignee, Redfearn. The Mound City Produce Company was a corporation engaged in handling poultry, eggs and other country produce, both on commission and by purchases and sales on its own account. Its place of business was in the city of St. Louis. Redfearn was its president and seems to have been in entire control of it. The other employees were C. L. Gunn, W. P. Johnson and H. H. Johnston, the latter being the secretary. What happened to the two carloads of eggs on their arrival in St. Louis was this: On July 18th the day of their arrival, H. H. Johnston, secretary of the Mound City Company, reconsigned the eggs to James Rowland & Co., a firm of produce dealers in New York, taking bills of lading from the Wabash Railroad Company at St. Louis for the eggs in the name of the Mound City Produce Company as consignor, and James Rowland & Company, as consignee. On the same day Johnston drew two drafts on Rowland & Company for the price of the eggs, one for $ 1,300 and one for $ 1,175. These drafts were drawn payable to the order of the Jefferson Bank and in the name of the Mound City Produce Company as drawer. The drafts, with the bills of lading issued by the Wabash Railroad Company attached, were deposited in the bank the proceeds going to the credit of the Mound City Produce Company on the books of that institution. At the same time Johnston drew two drafts in the name of the Mound City Produce Company for similar amounts in favor of plaintiffs as payees and on the Mound City Produce Company itself; that is to say, the Produce Company was both the drawer and the drawee. These drafts were remitted to plaintiffs on that day and on receipt were deposited by them to their credit in the State Bank of Fredonia, and by the latter institution sent to its correspondent in St. Louis for collection. They never were paid because the Mound City Produce Company failed before the presentment. Accompanying the drafts was this letter:

"St. Louis, Mo., July 18, 1904.

"Fredonia Produce Company,

"Fredonia, Kansas.

"Gentlemen: Enclosed we hand you one draft for $ 1,175, covering the amount drawn on Messrs. James Rowland & Co., against your 275 cases out of Fredonia, July 12th in A. R. L. No. 4780, and the other for $ 1,300, covering the amount drawn against them on your 306 cases out of Fredonia, July 14th, A. R. L. No. 5801. We were unable to dispose of these eggs here at what we considered a satisfactory price, and therefore forwarded them to New York.

"Yours respectfully,

"MOUND CITY PRODUCE COMPANY."

As to whether the foregoing acts of Johnston, the secretary of the Mound City Company, were directly authorized by Redfearn, the evidence is contradictory. Johnston testified that they were specifically authorized, while Redfearn's testimony goes to show he was absent from the office of the Mound City Company when they occurred. As to whether said company obtained the eggs from the American Refrigerator Company on presentment of the original bills of lading issued to plaintiffs, or without those bills, is not clear. Johnston testified that the Mound City Company could frequently obtain cars of eggs shipped from plaintiffs at Fredonia without the bills of lading, saying the bills of lading were "open," whatever that may mean, and not required to be presented to the railroad company as a condition on which the property would be surrendered. After the eggs had been shipped to Rowland & Company at New York, and drafts drawn on that concern for the price, and before the eggs or drafts reached New York, it becoming apparent to Gunn, another employee of the Mound City Company that that corporation was in a failing condition, he telegraphed to Rowland & Company in the name of the Fredonia Produce Company, to remit for the eggs direct to plaintiffs. He says the reason he did this was that he found out that the defendant bank was endeavoring to have the eggs diverted from the original consignee, and knowing they belonged to plaintiffs, he felt it was his duty to get the proceeds into the hands of the right parties. In conformity to this notice, Rowland & Company refused to pay the drafts drawn on them by the Mound City Company for the eggs and notified plaintiffs by telegram that if the eggs came into their hands they would hold the proceeds safe. This telegram was dated July 21st. On the 23d of that month Rowland & Company notified plaintiffs by wire that they (Rowland & Company) would not get the eggs as the defendant bank had control of them. The fact in this connection is that when the Jefferson Bank learned by wire that Rowland & Company had refused payment of the drafts drawn by the Mound City Company and which the Jefferson Bank held with the bills of lading attached, said bank gave notice to the Hanover National Bank of New York that it was the holder of the two drafts with bills of lading attached, and that if Rowland & Company would not pay the drafts, to have the eggs turned over to some reliable commission firm to sell for the defendant, it guaranteeing to hold the seller harmless against all claims. This telegram was concurred in by the Mound City Company by a postscript signed by Redfearn himself; though Redfearn denies knowing at the time he signed the postscript that the message referred to the particular eggs belonging to plaintiffs. The eggs were afterwards sold by Saxton & Company, another firm in New York, and defendant received the proceeds. Plaintiffs subsequently instituted this action for the conversion of the property by the defendant bank and the American Refrigerator Company, alleging that the two defendants had conspired together to divert the eggs from Redfearn to the defendant bank, the property having been disposed of for the bank's benefit; that the action of the Mound City Company in getting possession of the eggs in St. Louis, reshipping them and drawing drafts on the consignee in its own favor, and negotiating the drafts, with the bills of lading attached, to the bank, was done without authority from the plaintiffs or their agent Redfearn; further, that the drafts were deposited with the defendant bank to the credit of the Mound City Company, either as security for or payment of a pre-existing debt which it owed the bank. It was further charged that the two defendants knew the Mound City Company was a commission firm with no power over property other than to sell and remit to its principals, and also knew the eggs were the property of the plaintiffs and that the Mound City Company had no authority, right or permission from plaintiffs to take or receive the eggs from the Refrigerator Company and that the latter had no right, permission or consent to deliver the eggs to the former company; that the Jefferson Bank at no time paid out anything on the drafts drawn on Rowland & Company, but diverted the eggs in transit and appropriated the proceeds in liquidation of the debt owed by the Mound City Company; that plaintiffs never ratified any act by which the eggs were diverted to the Mound City Company, or any of the acts and doings of said company and the two defendants in reference to said property. Subsequently a nonsuit was taken as to the American Refrigerator Transit Company and, the Bank, being left as sole defendant, filed an answer which was in effect, first, a general denial; second, that both the Mound City Company and Redfearn were authorized by the plaintiffs to handle produce shipped by plaintiffs to St. Louis, either by selling the same in said city or reconsigning it elsewhere and in case it was reconsigned, were authorized to draw against the same with bills of lading attached to drafts and sell and dispose of the drafts; that the Mound City Company had reconsigned the eggs sued for, drawn drafts with bills of lading attached and discounted the drafts to defendant who had paid that company the proceeds; third, that the proceeds of the drafts were used by the Mound City Company to pay certain indebtedness it owed plaintiffs, so that the latter actually received the proceeds of the discount; fourth, that after having sold the defendant the drafts with bills of lading attached, the Mound City Company informed plaintiffs of what had been done...