State ex rel. Am. Surety Co. v. Haid

• Decision Date: 09 July 1930
• Docket Number: No. 29796.,29796.
• Citation: 30 S.W.2d 100
• Parties: THE STATE EX REL. AMERICAN SURETY COMPANY OF NEW YORK v. GEORGE F. HAID ET AL., Judges of St. Louis Court of Appeals.
• Court: Missouri Supreme Court

30 S.W.2d 100

THE STATE EX REL. AMERICAN SURETY COMPANY OF NEW YORK v. GEORGE F. HAID ET AL., Judges of St. Louis Court of Appeals.

No. 29796.

Supreme Court of Missouri. Division One.

July 9, 1930.

Certiorari to St. Louis Court of Appeals.

WRIT QUASHED.

Bryan, Williams & Cave for relator.

(1) The decision of the Court of Appeals holding that a contract or transaction entered into in contravention of and in violation of the provisions of a statute is lawful and is not illegal, is in conflict with and contradictory to the latest previous and controlling rulings of this court as announced in the opinions in Tri-State Amus. Co. v. Amusement Co., 192 Mo. 419; Bank v. Trust Co., 187 Mo. 530; National Bank of Commerce v. Francis, 296 Mo. 196; Live Stock Assn. v. Land & Cattle Co., 138 Mo. 394; Parke, Davis Co. v. Mullett, 245 Mo. 168; Sprague v. Rooney, 104 Mo. 360; State ex rel. Barrett v. First National Bank, 297 Mo. 397; State ex rel. Fire Ins. Co. v. Cox, 306 Mo. 547; Bassen v. Monckton, 308 Mo. 641; Kusnetsky v. Ins. Co., 313 Mo. 143; and contrary to: Secs. 11799, 11737, 11696, R.S. 1919, and Section 7 of Article XII of the Constitution of Missouri. (2) The holding of said court to the effect that the statutes of the State are not declarative of the public policy of the State, and that acts done in violation of a statute can be questioned only by the State, is in conflict with the preceding decisions, and the rulings announced by this court in Moorshead v. U. Rys. Co., 203 Mo. 165. (3) The holding of said court that a bond or insurance policy given to indemnify a trust company for losses occurring while the trust company is engaged in receiving deposits away from its banking house or while engaged in branch banking is a legal contract and is not a bond given to indemnify against the consequences of doing an illegal act, nor a bond given to induce the commission or in consideration of the commission of an illegal act, is in conflict with the rulings of this court in each of the cases hereinbefore cited and contravenes the rulings in the decisions of this court in Blair v. Ins. Co., 10 Mo. 565; Harrington's Admr. v. Crawford, 136 Mo. 467. (4) The application of that rule of construction favorable to the insured and inimical to the insurer by the Court of Appeals as paramount to the superior rule of construction that the intent of the parties is to be ascertained by considering the whole of the instrument and each and every part thereof, and the failure by the Court of Appeals to consider those portions of the bond expressly limiting the coverage thereof to the trust company business done at or growing out of such business done at the designated banking house of the trust company conflicts with Callaway v. Henderson, 130 Mo. 86; Enright v. Schaden, 242 S.W. 92. (5) The application by said court in its opinion of that canon of construction that an insurance contract must be construed liberally in favor of the insured and strictly against the insurer, although the application of that rule of construction results in an agreement to indemnify for losses occurring as the result of engaging in a business or transaction prohibited by statute, conflicts with the principles laid down by this court in the various cases heretofore cited and with that paramount rule of construction that of the two possible constructions — one legal and the other illegal — the former must be adopted, as announced by this court in the latest controlling decisions in Glover v. Ins. & Security Co., 130 Mo. 173; Wiggins Ferry Co. v. Ry. Co., 128 Mo. 224; Bank v. Flanagan Mills Elevator Co., 268 Mo. 547.

Marion C. Early and Ivon Lodge for respondents.

(1) The opinion of the Court of Appeals before this court for review does not conflict with the decisions of this court cited by relator, and is in full accord with the latest and controlling opinions of this court. Koenan v. Daues, 288 S.W. 14; Bassen v. Monckton, 274 S.W. 404; Kusnetsky v. Insurance Co., 313 Mo. 143, 281 S.W. 47; Hall v. Bank, 145 Mo. 418; Cass v. Insurance Co., 188 Mo. 13; McClintock v. Bank, 120 Mo. 127; Ditzell v. Shoecraft, 274 S.W. 880; Thornton v. Bank, 71 Mo. 227; Cherokee Strip Live Stock Assn. v. Land Co., 138 Mo. 394; Drug Co. v. Robinson, 81 Mo. 18; Insurance Co. v. Smith, 117 Mo. 261; Cantley v. Drainage District, 2 S.W. (2d) 612; McCannon v. Haskins, 180 S.W. 21; O'Bannon v. Widick, 198 S.W. 432, 220 S.W. 853; Bank v. Matthews, 98 U.S. 629; 36 Cyc. 1161. (2) The decisions of this court uniformly hold that under facts similar to those in the case at bar the State alone can question ultra vires acts of a corporation. The opinion does not conflict with the case of Moorshead v. U. Rys. Co., 203 Mo. 165, or with Thornton v. Bank, 71 Mo. 221; Cass v. Insurance Co., 188 Mo. 13; Bank v. Matthews, 98 U.S. 621. (3) This court cannot pass upon whether or not the decision in the case at bar is in conflict with Section 7 of Article XII of the Constitution, nor whether it conflicts with Secs. 11799, 11696, R.S. 1919, since those matters were not urged before the Courts of Appeals and the opinion contains no mention of them. State ex rel. Bradley v. Trimble, 289 S.W. 922; State ex rel. Utz v. Daues, 287 S.W. 606; State ex rel. Winters v. Trimble, 290 S.W. 115; State ex rel. United Rys. Co. v. Allen, 240 S.W. 117. (a) The opinion is not in conflict with Section 7, Article XII of the Constitution as interpreted by decisions of this court. Bank v. Harrison, 12 S.W. (2d) 758; Summit v. Realty Co., 208 Mo. 512; Gold Mining Co. v. Insurance Co., 267 Mo. 607. (4) An opinion of the Court of Appeals which is right will not be quashed because of an apparent ruling of this court to the contrary that is manifestly unsound. State ex rel. Woodson v. Trimble, 287 S.W. 627; State ex rel. Thomas v. Daues, 283 S.W. 51.

ELLISON, C.

Certiorari bringing up the record of the St. Louis Court of Appeals in a cause entitled Wellston Trust Co. v. American Surety Co. of New York, the defendant therein being the relator here. The Court of Appeals opinion is reported in 14 S.W. (2d) 23, and reference is made thereto for a fuller statement of the facts. The ultimate question presented is whether the respondent judges contravened the latest controlling decisions of this court in affirming a judgment of the Circuit Court of St. Louis County holding the relator liable on its insurance policy or bond indemnifying the plaintiff Trust Company against loss by robbery.

For a year and a half the Peoples Motorbus Company had been a depositor in the Trust Company, or bank as we shall hereafter call it. During that period the deposits were sometimes made by the Motorbus Company at the banking house of the Trust Company in Wellston, and at other times were received at the office of the Motorbus Company in the same city by the cashier or other employees of the bank sent there for that purpose. The latter practice had obtained for the whole eighteen months aforesaid with the knowledge of all the active executive officers of the bank, but the Motorbus Company was the only customer to whom this service was extended. One day in September, 1926, as the bank cashier and another employee were returning from such a mission they were held up and robbed of about $4500 which had just theretofore been turned over to them by the Motorbus Company. The aforementioned suit followed and the bank had judgment for the whole sum.

The usual course followed by the bank and its customers when money was deposited was that the customer would make out duplicate deposit slips, retaining one and giving one to the bank, or, specifically, to the officer or employee handling the particular transaction. The bank, or such employee, would then enter a credit in the customer's pass book. In the case of the Motorbus Company all this was done, whether the deposit was received at the bus office or at the bank, and the form of pass book and deposit slips employed were such as other customers, generally, had and used. Credit for funds received at the bus office was not entered on the bank ledger until after the money reached the bank (as was necessarily true, we infer, because the bank ledgers were kept at the bank). But no evidence of the receipt of the money was given to the Motorbus Company other than the entry in its pass book made when the deposit was turned over. The foregoing routine was followed on the day of the robbery in handling the funds involved in this case. The next day the Trust Company entered on its deposit ledger a credit to the account of the Motorbus Company for the amount thereof.

The policy or bond sued on provided:

"The American Surety Company of New York, in consideration of an annual premium agrees to indemnify Wellston Trust Company, hereinafter called the insured, against the direct loss sustained of any money or securities, or both, in which the insured has a pecuniary interest, or held by the insured as bailee, trustee or agent, and whether or not the insured is liable therefor, through robbery, larceny, theft, or holdup by whomsoever committed while such money or securities are in transit within twenty miles of any of the insured's offices and in the custody of any of its employees."

Section 11799, Revised Statutes 1919, defining the powers and purposes of trust companies, contains a proviso added in the reenactment of our banking laws in 1915, Laws 1915, pp. 103, 165, providing that "no trust company shall maintain in this state a branch trust company or receive deposits or pay checks except in its own banking house." A similar provision appears in Section 11737 with respect to banks. The Court of Appeals held these statutes did not relieve the relator or render void or voidable at its instance the transaction whereby the Trust Company received the deposit from the Motorbus Company at the latter's office. The relator contends this ruling contravened certain decisions of this court, which we cite in the succeeding...