State v. Chacago Bonding & Surety Co.

• Decision Date: 27 September 1919
• Docket Number: No. 20166.,No. 20169.,20166.,20169.
• Citation: 279 Mo. 535,215 S.W. 20
• Court: Missouri Supreme Court
• Parties: STATE ex rel. ELBERTA PEACH & LAND CO. v. CHICAGO BONDING & SURETY CO.

215 S.W. 20

279 Mo. 535

STATE ex rel. ELBERTA PEACH & LAND CO. v. CHICAGO BONDING & SURETY CO.

No. 20166.

No. 20169.

Supreme Court of Missouri, Division No. 1.

September 27, 1919.

Rehearing Denied October 10, 1919.

Appeal from St. Louis Circuit Court; William T. Jones, Judge.

Action by the State, on the relation and to the use of the Elberta Peach & Land Company, against the Chicago Bonding & Surety Company. From a judgment granting plaintiff part of the relief sought, defendant appeals, and plaintiff also appeals. Affirmed on defendant's appeal; and on plaintiff's, reversed and remanded, with directions.

This is an action on a receiver's bond. It was brought in the name of the state of Missouri, at the relation and to the use of the Elberta Peach & Land Company against the Chicago Bonding & Surety Company. On motion of defendant a reference of the whole issue was directed by the court, on the ground that the trial would require the examination of a long account. The facts as found by the referee and as to the correctness of which no question is raised, are substantially as follows:

On January 28, 1915, in a certain cause pending in the circuit court for the city of St. Louis, entitled "Boyd, Administratrix, et al. v. Elberta Peach & Land Company, a corporation, et al.," the court appointed one Henry L. Haydel receiver, authorizing and directing him as such receiver to take into his possession all of the real estate and personal property belonging to the said Elberta Peach & Land Company, including money on deposit to the credit of said company. The order of appointment was conditioned upon the giving of a bond in the sum of $20,000, to be approved by the court. Thereafter, on January 30, 1915, said Haydel presented a bond as receiver, executed by himself as principal and the defendant as surety, in the sum of $20,000, conditioned that if said Haydel, as such receiver, should faithfully obey such orders as the court might make in relation to said trust, and should faithfully and truly account for all moneys, assets, property, and effects that should come into his hands and possession, and should in all respects perform all the official duties of said receivership, the obligation to be void. The bond as presented was duly approved by the court and ordered filed, and Haydel entered upon the discharge of his duties as receiver, taking into his custody and possession all of the real and personal property and assets of different kinds belonging to relator.

At the time of the receiver's qualification as such, relator had deposited to its credit with the Central National Bank in St. Louis the sum of $9,166.35. On or about February 9, 1915, "Henry L. Haydel, Receiver of Elberta Peach & Land Company" opened an account with said Central National Bank with an initial deposit of $9,166.35, which account so appeared on the books of the bank and was so manifested by the issuance of a passbook in the name aforesaid, showing said sum as credited. The referee was unable to determine from the evidence whether the relator closed his balance with the bank by check in favor of the receiver, or whether upon the request of the receiver, and upon the exhibition of the order of his appointment, the bank closed by debit the account in the name of the Elberta Peach & Land Company and opened a new account to balance said debit in the name of the receiver, but he found that one of these two courses was pursued. After the opening of this account Haydel from time to time deposited to his credit as receiver rents accruing from relator's real estate and collected by him as such receiver, and drew checks against the account, which he signed, "Henry L. Haydel, Receiver, Elberta Peach & Land Co." The total amount of assets that came into Haydel's possession, for which he was bound to account, was $10,209.90. This amount was made up of the bank credit of $9,166.35, rents collected in the sum of $869.37, and 32 cents allowed as interest on bank deposits. Of the total assets that came into his hands Haydel faithfully administered and accounted for the sum of $2,173.03; the remainder, $8,036.87, he converted to his own use. Of this amount $7,815 was obtained from the Central National Bank by means of checks drawn from time to time against his account as receiver. There were seven of these checks in all; they were all precisely alike, except as to dates and amounts, and except that in some of them H. L. Haydel was designated as payee, while in others Haydel Realty Company was designated payee. The Haydel Realty Company was a corporation in which Haydel was the sole party in interest. One of these checks is as follows:

                         "Central National Bank
                     "Saint Louis, Feb. 11th, 1915. No. 2
                

"Pay to the order of H. L. Haydel $400.00, four hundred and 00/100 dollars.

                                      "H. L. Haydel
                

"Receiver Elberta Peach & Land Co." Indorsement on back:

                      "H. L. Haydel
                      "Haydel Realty Co
                      "H. L. Haydel, Pres."
                

The remainder of the fund embezzled, $221.87, never found its way into the bank. Haydel died May 1, 1915, leaving no real estate or assets whatever, other than those to which his widow was entitled as her absolute property. May 5, 1915, the court appointed Elmer E. Pearcy successor receiver in the place of Haydel. Pearcy duly qualified, and in his first inventory and report to the court disclosed that the balance of $8,036.87 was due from Haydel. The court approved the report, and directed Pearcy to make demand upon the defendant Surety Company for said sum, and to prosecute said claim against the defendant to compel the payment of said sum. The successor receiver made demand, which was refused, and he then instituted this suit.

The defendant is in the general surety and bonding business for hire. It is incorporated under the laws of Illinois and is duly admitted to do business in this state under the insurance laws thereof. The referee further found as follows:

"I think it entirely clear the principal has not faithfully accounted for the funds coming into his hands, and it must have been absolutely plain precisely what the shortage was. * * * It is not in evidence that it ever made known or discussed the contention that it was not liable, because the bank still had the funds. No authorities have been presented by it applicable to its defense under such a bond. No tender has even been made of the amounts with which the bank question is not concerned. If the statute for penalty applies, I find vexatious refusal to pay the loss, and assess plaintiff's damages therefor at 10 per cent. of the amount of the loss, and an attorney's fee of $750."

The defendant admits that, if it is liable for an attorney's fee, $750 is a reasonable allowance therefor.

The petition, after pleading all necessary matters of inducement, alleges the execution of the bond, and assigns as breach that said Haydel used said funds of relator that came into his custody as receiver, and appropriated the same to his own use, thereby embezzling said funds of relator. It further alleges a vexatious refusal to pay the loss. The prayer is for the penalty of the bond, and an assessment of relator's damage at $8,036.87, with interest, and in addition thereto 10 per cent, thereof for vexatious refusal to pay and a reasonable attorney's fee.

The answer is a general denial, with this further statement:

"Further answering, defendant states that whatever moneys or assets came into the possession of Henry L. Haydel as receiver of the relator were fully and completely accounted for by said Henry L. Haydel as receiver to the relator, by lawfully and properly expending and disbursing a portion thereof in behalf of relator, and by returning the balance to the relator, or by leaving it in a bank or banks in such manner that relator has since come into possession of same."

At the inception of the hearing before the referee the defendant objected to the reception of any evidence, on the ground that the petition did not state a cause of action, in that the right of action, if any, is in the successor receiver, and not the Elberta Peach & Land Company. The objection was overruled.

The referee recommended judgment for the penalty of the bond, and an assessment of damages in relator's favor at the amount of its less caused by Haydel's defalcation, with interest amounting to $8,738.54, not allowing attorney's fee for relator or the additional 10 per cent. for vexatious refusal to pay. Numerous exceptions were timely filed by both plaintiff and defendant. All of these the court overruled, and rendered judgment for the penalty of the bond, and awarded relator execution for damages in accordance with the referee's recommendations. Both sides appealed, and stipulated that the two appeals be consolidated and heard as one cause in this court.

All a defendant's exceptions to adverse' rulings of the referee and the trial court were properly saved for review, and in the final analysis present but two questions for decision on defendant's appeal. The first is whether the suit is properly brought at the relation and to the use of the Elberta Peach & Land Company; the second is whether either the relator or successor receiver sustained any loss by the Central National Bank having honored Haydel's checks as above set out and charging them against his account as receiver.

The referee reported, as one of his conclusions of law, that the statute of Missouri, in Session Acts 1911, with reference to vexatious delay, has no application to this action. Plaintiff filed written exceptions to the report in this respect. This was overruled by the Court. If the record shows that exception was made and saved to this ruling, its correctness is for determination on plaintiff's appeal. On March 17, 1919, plaintiff presented to the trial court in which the cause was tried its bill of exceptions; it was signed by the judge and an order of court entered of record making the bill, so...