State Bank of Iowa Falls v. American Hardwood Lumber Co.

• Decision Date: 22 December 1906
• Parties: STATE BANK OF IOWA FALLS, Respondent, v. AMERICAN HARDWOOD LUMBER COMPANY, Appellant
• Court: Missouri Court of Appeals

98 S.W. 786

121 Mo.App. 324

STATE BANK OF IOWA FALLS, Respondent, v. AMERICAN HARDWOOD LUMBER COMPANY, Appellant

Court of Appeals of Missouri, St. Louis

December 22, 1906

[Copyrighted Material Omitted]

Appeal from St. Louis City Circuit Court.--Hon. Jesse A. McDonald Judge.

AFFIRMED.

STATEMENT.--Omitting caption, the petition is as follows:

"Plaintiff states that it is a banking corporation, duly organized and existing under the laws of the State of Iowa; that defendant is a corporation organized and existing under the laws of the State of Missouri; that on April 27, 1904, defendant wrote to the Iowa Falls Manufacturing Company, a corporation of the State of Iowa, doing business at Iowa Falls, in said State that said last mentioned corporation might draw a draft upon defendant for the sum of $ 730.28, and that said draft would be accepted and paid by defendant when so drawn, said letter being herewith filed and marked 'Exhibit A;' that upon receipt of said letter, and on the second day of May 1904, the said Iowa Falls Manufacturing Company did draw a draft on defendant in favor of plaintiff in said sum of $ 730.28, whereby said Iowa Falls Manufacturing Company requested defendant at sight to pay to the order of plaintiff, said sum for value received and to charge the same to the account of said Iowa Falls Manufacturing Company, the drawer thereof, said draft being herewith filed and marked 'Exhibit B;' that plaintiff, having previously been shown said letter from defendant to said Iowa Falls Manufacturing Company, and acting upon the faith of the promise therein contained, acquired said draft for a valuable consideration, to-wit: The sum of $ 730.28, whereby defendant became bound to pay to plaintiff the amount named in said draft; that nevertheless defendant has refused to pay said draft or any part thereof, though demanded so to do by plaintiff, and the same still remains wholly due and unpaid. Wherefore plaintiff prays judgment against defendant for said sum of $ 730.28, with interest and costs, and as damages for the non-payment of said draft a further sum equal to ten per cent on the principal sum specified in said draft, in accordance with the provisions of the statute in such cases made and provided."

The answer is a general denial.

The letter (Exhibit A) referred to in the petition is as follows:

"St. Louis, Mo., April 27, 1904.

"Iowa Falls Mfg. Co.,

"Iowa Falls, Iowa.

"Gentlemen: Your draft for $ 730.38 was presented to us to-day, but we requested that it be returned for correction. The amount due (see note you paid) was $ 730.28. We are ready to accept and pay a draft for that amount, and can only account for its being for more than this figure by thinking that your bookkeeper erred in drawing the papers. Please correct, whereupon we shall promptly take care of it. With kind regards, and trusting that this is satisfactory to you, we are,

"Very respectfully,

"AMERICAN HARDWOOD LBR. CO.,

"G. H. COTTRILL, Secy."

The draft (Exhibit B) is as follows:

"STATE BANK OF IOWA FALLS,

"Iowa Falls, Iowa, May 2, 1904.

"Pay to the order of Frank D. Peet, Cashier, $ 730.28, seven hundred thirty dollars and 28-100, with exchange, value received and charge to account of Iowa Falls Mfg. Co. By C. D. SHAW, Pres."

The issues were tried by the court without the aid of a jury. The evidence tends to show that the Iowa Falls Manufacturing Company, an Iowa corporation, having its place of business and chief office at Iowa Falls, in said State, and defendant, a Missouri corporation, having its chief office and place of business in the city of St. Louis, Missouri, were engaged for some time prior to April 27, 1904, in the business of "kiting" checks, drafts, etc. , between themselves through plaintiff bank at Iowa Falls, and the State National Bank, in the city of St. Louis, the respective banks of the two parties. Prior to April 18, 1904, defendant company had either deposited for collection, or had discounted with the State National Bank of St. Louis, three items payable by the Iowa Falls Manufacturing Company, one note for three hundred dollars and one note for six hundred and fifty dollars, due on the nineteenth day of April, 1904, and a draft for $ 730.28, which were forwarded to plaintiff bank by the State National Bank for collection. In regard to these items, defendant, on April 18th, wrote the Iowa Falls Manufacturing Company, as follows:

"Noting that one of your notes was due to-day (although you had not so advised us, as requested) we wired you to pay same and draw on us to cover. We trust you have done this, in order to save yourself protest charges. We enclose herewith our check for $ 300 and our check for $ 650. This covers the next two notes due we believe to-morrow, the nineteenth. Kindly take care of all this, paying notes as due, and acknowledge receipt."

This letter was preceded by the following telegram of the same date: "Draw on us for note due to-day. Don't allow same to be protested."

Mr. Peet, cashier of plaintiff bank, testified the president of the Iowa Falls Manufacturing Company brought him the telegram, told him of the arrangement between his company and defendant company, in respect to the two notes maturing on the day following, and requested him to make a sight draft for $ 1,681.98 to cover the three items; that he made the draft and discounted it for the Iowa Falls Manufacturing Company and applied the proceeds to the payment of the draft for $ 730.28, and the two notes to fall due the next day, and in payment of one dollar and seventy cents exchange, and the two notes, aggregating $ 950, and the draft (for $ 730.28) were cancelled and delivered to the Iowa Falls Manufacturing Company, and the proceeds of the draft for $ 1,681.98 were remitted to the State National Bank, from whom the two notes and draft had been received for collection, and at the same time the draft of the Iowa Falls Manufacturing Company to the defendant company for $ 1,681.98 was forwarded to St. Louis for collection. On its way to St. Louis this draft passed the letter of April 18th, supra, on the way to Iowa Falls, inclosing two checks, one for three hundred dollars and one for six hundred and fifty dollars, for the Iowa Falls Manufacturing Company. Consequently, the defendant refused to pay the draft for $ 1,681.98, and wired the Iowa Falls Manufacturing Company, on April 20th, as follows: "Order draft recalled. Made new one for seven hundred and thirty dollars. You have our check covering balance;" and at the same time wrote as follows:

"In explanation of our telegram would state we have already mailed you checks to cover notes which are due, which check you probably have received ere this. We requested that you would recall your sight draft and make one for $ 730, which will be duly honored. We thought best to wire you of this fact, which we have accordingly done this morning, and we trust this will meet your approval."

In the meantime, the Iowa Falls Manufacturing Company had returned the two checks, and on April 20th wired defendant as follows: "Take care of draft; have returned your checks," and followed the telegram with the letter quoted below:

"We have your favor of the eighteenth instant, together with the . . . checks to take up the note here at the bank. . . . We are sorry that . . . letter was received too late to use these checks, as we drew on you for the three notes at the bank yesterday, so we are returning your two checks enclosed herewith. Trusting the above is satisfactory, we remain," etc.

The draft for $ 1,681.98 was protested and returned to plaintiff. On April 22d, defendant wrote the Iowa Falls Manufacturing Company, as follows:

"Yours 20th. Your draft has already gone back, so we take the liberty of returning our two checks and we suggest that you draw on us for the balance. With kind regards, and asking Mr. Pelton if he is in the market for any lumber, we remain," etc.

Mr. Peet testified that when the draft for $ 1,681.98 was returned, he called in the president of the Iowa Falls Manufacturing Company, who brought the above letter and defendant's two checks, one for three hundred dollars and one for six hundred and fifty dollars, and the draft for $ 1,681.98 was taken up by these two checks and a draft drawn by the Iowa Falls Manufacturing Company on defendant for $ 735.28 "with exchange" (in which draft was included $ 3.40 for exchange and protest fees on prior drafts), and thereupon cancelled and surrendered the draft for $ 1,681.98 and forwarded the new draft for $ 735.28 to St. Louis for collection. This draft was protested for non-payment, and the letter of April 27th (Exhibit A) followed. This letter was brought to plaintiff by the president of the Iowa Falls Manufacturing Company and the draft sued on was drawn on the faith of it. It was also protested for non-payment. The secretary of defendant, in respect to the reason why defendant refused to pay the draft, testified as follows:

"Q. Did you refuse to pay on the ground that exchange was demanded?

"Mr. Walther: I object to that.

"The Court: Objection overruled; to which ruling defendant then and there duly excepted.

"A. I have already stated we refused to pay because the Iowa Falls Manufacturing Company owed us money, and we would have refused on account of exchange.

"Q. You did not refuse on that ground, so you said, you did not refuse on that ground, isn't that correct?

"A. If exchange had not been waived, we would have refused on that ground."

The Iowa Falls Manufacturing Company has since gone into voluntary bankruptcy. On the trial, defendant objected to the draft as evidence on two grounds: first, that it varied from the instrument described in the petition; and, second, that as it...