St. Charles Sav. Bank v. Edwards

• Decision Date: 01 June 1912
• Citation: 147 S.W. 978,243 Mo. 553
• Parties: ST. CHARLES SAVINGS BANK v. GEO. L. EDWARDS, HARRY F. KNIGHT, J. HERNDON SMITH and THEODORE D. PECK, Doing Business Under Name and Style of A. G. EDWARDS & SONS, Appellants
• Court: Missouri Supreme Court

147 S.W. 978

243 Mo. 553

ST. CHARLES SAVINGS BANK v. GEO. L. EDWARDS, HARRY F. KNIGHT, J. HERNDON SMITH and THEODORE D. PECK, Doing Business Under Name and Style of A. G. EDWARDS & SONS, Appellants

Supreme Court of Missouri, Second Division

June 1, 1912

Appeal from St. Louis City Circuit Court. -- Hon. Hugo Muench Judge.

Affirmed.

George L. Edwards for appellants.

(1) The court permitted the plaintiff during the trial to amend its petition, so as to substitute new causes of action in lieu of the one at first declared upon, and to recover upon causes of action not declared upon in its petition. A change by amending the petition from a suit against a partnership to a suit against individuals is a substitution of a new cause of action, and to permit a recovery against individuals in a suit against a partnership is to allow a recovery on a cause of action not pleaded. Sears v. Mortgage Co., 56 Mo.App. 122; Myers v. Railroad, 120 Mo.App. 288; Watson v. Boland, 136 Mo.App. 622; Steele v Braizer, 139 Mo.App. 337; Purdy v. Pfaff, 104 Mo.App. 339; Dunlap v. Kelly, 105 Mo.App. 7; Scoville v. Glassner, 79 Mo. 449; Liese v Myer, 143 Mo. 547; Slaughter v. Davenport, 151 Mo. 26; Timber Co. v. Railroad, 180 Mo. 420; Yall v. Gillham, 187 Mo. 393; McHugh v. Transit Co., 190 Mo. 85. (2) The retirement of a member or addition of a member of a partnership, ipso facto operates as a dissolution of the firm. Spaunhorst v. Link, 46 Mo. 199; Seuffert v. Gille, 230 Mo. 479. (3) The causes of action declared upon by plaintiff were barred by the Statute of Limitations, Sec. 4273, R. S. 1899, at the time when plaintiff amended its petition. Buell v. Transfer Co., 45 Mo. 563; Sims v. Field, 24 Mo.App. 566; Wasson v. Boland, 136 Mo.App. 622. (4) Since the drafts in question were negotiable and the defendants acquired them for value, prior to maturity, and without any actual knowledge of any defect or infirmity therein, the plaintiff cannot recover. Notice of a defect or infirmity in a negotiable instrument cannot be imputed to an innocent holder for value prior to maturity, by constructive notice. Nothing short of actual bad faith will impeach his title. Sec. 10026, R. S. 1909; Hamilton v. Marks, 63 Mo. 167; Banking Co. v. Comm. Co., 195 Mo. 262; Coleman v. Stocke, 139 S.W. 216. (5) The doctrine is well established that in the absence of evidence to the contrary, the presumption always prevails that public officers have discharged their duties properly. This doctrine of presumption has been applied to persons generally, and it has been held that every man is presumed to have performed all of his official and social duties. Mathias v. O'Neil, 94 Mo. 520; Blodgett v. Schaffer, 94 Mo. 552; Agan v. Shannon, 103 Mo. 661; Bluedorn v. Railroad, 108 Mo. 439; State v. Bank, 120 Mo. 161; Chouteau v. Railroad, 122 Mo. 375; State v. Crumb, 157 Mo. 556. (6) Where one of two innocent parties must suffer for the wrongful act of another, the one who puts the party in position to do it must be the sufferer. Lee v. Turner, 89 Mo. 489; Neuhoff v. O'Reilly, 93 Mo. 170; Banking Co. v. Comm. Co., 195 Mo. 262.

Edward D'Arcy and Percy Werner also for appellants.

(1) Under the "Negotiable Instruments" statute (Sec. 10026, R. S. 1909) "to constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith." In this case the trial court directly found that defendants had taken the drafts in question "for full value in good faith, and without actual knowledge of any fraud or irregularity on the part of A. F. Mispagel in issuing the same." (2) Under the Negotiable Instrument statute (Sec. 10026), where the negotiable paper is taken without actual knowledge of infirmity or defect and in good faith for full value, the right of the holder is absolute and cannot be defeated by any mere presumption. Reeves v. Letts, 143 Mo.App. 199; Bank v. Leeper, 112 Mo.App. 694; Bank v. Russell, 139 S.W. 735. (3) The court, sitting as a jury, gave the following instruction: "The court finds from the evidence that the defendants received the drafts in question from A. F. Mispagel for full value in good faith, and without any knowledge of any fraud or irregularity on the part of A. F. Mispagel in issuing the same." Under this instruction it was clearly error to find for the plaintiff. (4) Sec. 10026 of the Negotiable Instrument statute affects, limits and relates to the remedy and not to the validity of the instrument sued on, and applies to all suits brought after the passage of the act, and should have governed the trial court in this case. 8 Cyc. 935; Hand v. Ballon, 12 N.Y. 541; Lord v. Chadbourne, 42 Me. 429; Commonwealth v. Hampden Co., 23 Mass. 501; Winslow v. People, 17 Ill.App. 222.

T. C. Bruere, Lon O. Hocker and C. W. Wilson for respondent.

(1) The judgment of the circuit court should be affirmed because the case is brought to this court by simply filing here a certified copy of the judgment and order granting the appeal, whereas the printed abstract of the record furnished by the defendants is fatally deficient in these particulars: (a) It fails to set out the judgment or to advise the court against what parties the judgment was rendered. (b) It sets out no record entry of the order granting the appeal. (c) It fails to set out any record entry showing that the bill of exceptions in the case was ordered filed and as a matter of fact filed and made a part of the case. Supreme Court Rule 16; St. Charles v. Budd, 174 Mo. 122; Storage Co. v. Glasner, 150 Mo. 426; State v. Walker, 194 Mo. 375; Bondurant v. Ins. Co., 73 Mo.App. 477; Bower v. Daniel, 198 Mo. 317. (2) The cashier of a bank has no right to issue drafts on its correspondents in payment of his individual debts, and a creditor of a cashier who receives such drafts, takes them with notice that the cashier is appropriating the assets of the bank for the payment of his individual debts. The form of the draft itself puts the creditor on inquiry and is notice to him of the fact that the cashier is using the bank's funds in his private business. Kitchen v. Comm. Co., 105 Mo.App. 463; Banking Co. v. Comm. Co., 195 Mo. 262; Lee v. Smith, 84 Mo. 304; Lamson v. Beard, 94 F. 30; Gale v. Bank, 104 F. 214; Bank v. Investment Co., 140 S.W. 921. (3) There is nothing in the contention made by appellants that they took the drafts from Mispagel for full value and in good faith, and without actual knowledge of any actual fraud and cannot be held responsible under the Negotiable Instruments statute. The statute has no application in the case. The drafts were issued directly to defendants by Mispagel. The instruments themselves were in such form as to impart notice to defendants that Mispagel was using bank assets in payment of his private debts. Sec. 10026, R. S. 1909; Kitchen v. Comm. Co., 105 Mo.App. 463; Banking Co. v. Comm. Co., 195 Mo. 262; Bank v. Investment Co., 140 S.W. 921. (4) Nor is there anything in the claim that error was committed in allowing plaintiff to dismiss as to T. D. Peck. Plaintiff had a right to recover against those persons who constituted the firm of A. G. Edwards & Sons at the time the drafts were issued to and collected by the firm. If Peck was not a member of the firm then, the plaintiff had a perfect right to dismiss as to him and recover against those who were. This was all that was done in this matter. Secs. 2772, 1981, 1734, 2769, R. S. 1909; Simpson v. Schulte, 21 Mo.App. 639; Gates v. Watts, 54 Mo. 590; Priddy v. Mackenzie, 205 Mo. 194; Mfg. Co. v. Horn, 112 Mo.App. 722; Crews v. Lackland, 67 Mo. 619; McLean v. McAllister, 30 Mo.App. 109; Bryant v. Hawkins, 47 Mo. 410; Bank v. Cotey, 70 Mo. 150; Willis v. Barron, 143 Mo. 456.

FERRISS, J. Brown, P. J., and Kennish, J., concur.

OPINION

FERRISS, J.

This controversy arises upon the following facts, which are not substantially controverted:

The plaintiff is a banking institution, located at St. Charles, Missouri. From 1890 to 1904 its cashier was one A. F. Mispagel. The appellants, during the year 1903, were engaged in St. Louis in the grain and stock brokerage business as partners under the firm name of A. G. Edwards & Sons. From February 12, 1903, to November 25, 1903, Mispagel was dealing in stocks and grain on open account with appellants' firm. From time to time, upon request from appellants, Mispagel sent them remittances to apply to his credit on this account. Such remittances, during the period mentioned, amounted in the aggregate to about $ 9,500. They were made in the form of checks drawn by the St. Charles Savings Bank, by Mispagel, cashier, on its depository bank in St. Louis, payable to the order of A. G. Edwards & Sons. There were thus remitted sixteen checks at different dates and for different amounts. Of these the following, which differs from the others only as to date and amount, may be taken as an example:

ST. CHARLES SAVINGS BANK. No. 7555

St. Charles, Mo. Sept. 30, 1903.

Pay to the order of A. G. Edwards & Sons $ 650.00 (six hundred and fifty dollars.)

To THE MECHANICS' NATIONAL BANK,

St. Louis, Mo.

A. F. Mispagel, Cashier.

Each and all of said checks were indorsed by A. G. Edwards & Sons, collected by them, and the proceeds credited to the individual account of Mispagel current in said stock and grain operations. Each remittance was made in response to a written request addressed to Mispagel personally, and referring to his individual account. The following may serve as an example of the form and general tenor of such letters:

St. Louis, Aug. 19, 1903.

Mr. A. F. Mispagel,

St. Charles, Mo.

Dear...