Steinberg v. Merchants Bank of Kansas City

• Decision Date: 20 December 1933
• Docket Number: No. 30076.,30076.
• Citation: 67 S.W.2d 63
• Parties: JOSEPH STEINBERG ET AL., Appellants, v. MERCHANTS BANK OF KANSAS CITY.
• Court: Missouri Supreme Court

67 S.W.2d 63

JOSEPH STEINBERG ET AL., Appellants, v. MERCHANTS BANK OF KANSAS CITY.

No. 30076.

Supreme Court of Missouri.

Division Two, December 20, 1933.

Appeal from Jackson Circuit Court. — Hon. A. Stanford Lyon, Judge.

AFFIRMED.

B.M. Achtenberg and E.H. Gamble for appellants.

(1) The court erred in refusing Instruction 1, requested by plaintiffs. (a) Sec. 2838, R.S. 1929, has no application to the facts in this case. The answer does not state a defense under the statute. 7 C.J., p. 756; Natl. Bank v. Savings Bank, 244 Mo. 554. The facts do not bring this case within the statute. State ex rel. Dean v. Daues, 14 S.W. (2d) 1002; McCullum v. Bank, 209 Mo. App. 266; R.S. 1919, sec. 842; Savings Bank v. Edwards, 243 Mo. 553; Griffin v. Bank, 246 S.W. 180; Lee v. Smith, 84 Mo. 304; Ike v. Bank, 26 Mo. App. 129; Merc. Ins. Co. v. Hope Ins. Co., 8 Mo. App. 408; Bank v. Orthwein, 160 Mo. App. 369; Railroad Co. v. Central Trust Co., 204 Fed. 546, 123 C.C.A. 72; Blake v. Bank, 219 Mo. 644; Holland Banking Co. v. Republic Natl. Bank, 41 S.W. (2d) 815; Holland Banking Co. v. Continental Natl. Bank, 324 Mo. 1, 22 S.W. (2d) 821; Mo. Tp., Chariton Co. v. Farmers Bank, 42 S.W. (2d) 353; Kenneth Inv. Co. v. Bank, 96 Mo. App. 125; Austin Western Road v. Commercial Bank, 255 S.W. 585; Napoleon Hill Cotton Co. v. Stix, 217 S.W. 323; Charcoal Co. v. Moore, 178 Mo. App. 692, 162 S.W. 745; McCullam v. Buckingham Hotel Co., 198 Mo. App. 107, 199 S.W. 417; Kitchens v. Teasdale Com. Co., 105 Mo. App. 469; Johnson v. Bank, 56 Mo. App. 257. (b) If this case could be deemed one that is within the statute, the evidence is such as to justify the court in finding, as a matter of law, that the defendant had the "actual knowledge" therein required. Martin v. First Natl. Bank, 51 Fed. (2d) 840; Griffin v. Bank of Commerce, 246 S.W. 180; Authorities cited supra. (2) The court erred in refusing Instruction 2 requested by plaintiff. Interest is recoverable, from date funds are diverted, as a matter of law. R.S. 1919, sec. 6491; Cotton Co. v. Dry Goods Co., 203 Mo. App. 30. (3) The court erred in permitting J.D. Greenbaum, Manuel Zvirin, H.L. Lebrecht and the witness Wheeler to testify that J.D. Greenbaum, during the latter part of 1920 and during the year 1921, had made various payments to and for the account of the Southwest Wholesale Grocery Company, and had deposited money by means of personal checks and otherwise to the credit of its account in bank, and that from time to time during the period aforesaid he, the said Greenbaum, had borrowed money which he had applied as aforesaid. Reynolds v. Whittemore, 190 S.W. 594. (4) The court erred in admitting defendant's Exhibit P (1) purporting to be a waiver of errors in bank statement. Natl. & Co. v. Bank, 69 Atl. 607, 16 L.R.A. (N.S.) 593; Bank v. Barnes, 65 Ill. 16; Meyers v. Bank, 193 Pa. 1, 44 Atl. 280, 74 Am. St. Rep. 672; Bank v. Farrell, 272 Fed. 371, 16 A.L.R. 651; American Sash & Door Co. v. Commerce Trust Co., 56 S.W. (2d) 1034. (5) The court erred in permitting defendant's witness, Lebrecht, to state whether he or the bank profited by the cashing of the checks in question. (6) If this case should have been submitted to the jury at all, the court, under the peculiar circumstances then confronting plaintiffs by reason of the rule in the Everhart case, should of its own motion have fully instructed the jury upon the merits, and erred in submitting it on instructions covering only the form of the verdict. Everhart v. Bryson, 244 Mo. 507; La Monte Bank v. Crawford, 27 S.W. (2d) 762.

I.J. Ringolsky, Wm. G. Boatright, Harry L. Jacobs and Ringolsky, Boatright & Jacobs for respondent.

(1) A new cause of action cannot be first raised by way of reply. Statement of matter by way of reply which is not pursuant to the previous pleading of the same party and does not follow the cause of action set up in the petition is a departure and improper and evidence cannot legally be received in support of the same. Hammons v. Hammons, 300 Mo. 144; Jennings v. Cherry, 301 Mo. 321; 49 C.J., pp. 342-343, sec. 420; 41 C.J., p. 66, sec. 68. (2) Since April 9, 1917, it has been the statutory right of a creditor in this State to accept a check of an officer, agent or employee drawn on corporate, firm or partnership funds, in payment of the private debt of such agent, unless the creditor has actual knowledge that the issuance of such check is unauthorized. Laws 1917, p. 144, now Sec. 2838, R.S. 1929; Holland Banking Co. v. Republic Natl. Bank, 41 S.W. (2d) 815. (3) Prior to such statute it was uniformly held in this State that a creditor who as endorsee received such check in payment of the personal debt of the agent was liable the same as if the check had been made payable to such creditor in the first instance and the same principles of law were held applicable. Lee v. Smith, 84 Mo. 304; McCullam v. Jewelry Co., 218 S.W. 345; Napoleon Hill Cotton Co. v. Grocery Co., 204 Mo. App. 427, 222 S.W. 876; Bank v. Edwards, 243 Mo. 553. (4) The statute protects the "payee or other person collecting such check." This language includes not only the payee but an endorsee, transferee, assignee, holder or literally any other person collecting such check. If the drawee is payee or endorsee of such check the statute inures to its benefit the same as any other person. Holland Banking Co. v. Republic Natl. Bank, supra. (5) A receiver or his assignee have no greater rights under the statute than the corporation, firm or partnership in whose shoes they stand and to whose rights they have succeeded. Reynolds v. Third Natl. Bank, 225 S.W. 901; Hollander v. Heaslip, 222 Fed. 808; Ewing v. Miller, 1 Mo. 234; Sumrall v. Sun Mutual Ins. Co., 40 Mo. 27; Higgins v. Cartwright, 25 Mo. App. 609; United Shoe Machinery Co. v. Ramlose, 210 Mo. 631. (6) The omission of the word "wholesale" from the company name made the checks no less those of the company. Mere clerical errors may be safely disregarded where the intent is clear and a company, firm, partnership or corporation may be bound although its full or correct name has been misstated. 2 Morse on Banks and Banking (6 Ed.), p. 979, sec. 444; Guess v. Russell Bros. Clothing Co., 231 S.W. 1015; Blades v. Cinder Block Co., 10 S.W. (2d) 319; Underhill Const. Co. v. Nilson, 3 S.W. (2d) 399; Public Industrials Corp. v. Reading Hdw. Co., 29 Fed. (2d) 975. (7) There was substantial evidence from which the jury could find that the bank in good faith believed, and had reasonable cause to believe, that at the time of receiving the checks the Greenbaum notes represented money borrowed by him on his personal credit for the benefit and use of the company. Therefore, even in the absence of the statute, it would be necessary to find that the bank had actual knowledge that issuance of the checks was unauthorized before it could be held liable. Griffin v. Natl. Bank of Commerce, 246 S.W. 180; Natl. Bank v. Hyde Park, 101 Ill. 595; 21 R.C.L., pp. 913-4; Berry v. Oerman, 60 S.E. 604; Lbr. Co. v. Devine, 194 Pac. 754; Newhall v. Wyatte, 34 N.E. 1045. (8) The general rule that existed prior to the statute, and still existing in case the same is inapplicable, does not apply to the facts in the case at bar. The checks were signed by a trustee to whom the same were not payable and who on the face of the checks had no interest in them. They were merely countersigned by the officer to whom they were payable. (9) Where it is the custom of a principal to allow his agent to draw checks payable to himself, the general rule existing prior to the statute, and existing now in event of its inapplicability, does not apply. Napoleon Hill Cotton Co. v. Grocery Co., 204 Mo. App. 427, 222 S.W. 876. (10) It is the duty of the principal, who would avoid liability, to disavow and repudiate the unauthorized act within a reasonable time after knowledge thereof. Failure to repudiate is evidence of ratification and will often constitute a prima facie case of ratification. Platt v. Francis, 247 Mo. 296; 21 R.C.L., pp. 919, 921, 930, 931; Atherton v. Beaman, 256 Fed. 871, cited with approval in Sweet v. Lang, 14 Fed. (2d) 762. (11) Plaintiffs expressly ratified the issuance of all the checks except the two in question. They were all issued at the same time, at the same place and by the same persons and constituted part and parcel of one transaction. Ratification of a part constitutes ratification of the whole. St. Louis Mut. Life Ins. Co. v. Walter, 46 S.W. (2d) 166; Mitchell v. Joplin Natl. Bank, 200 Mo. App. 243; State ex rel. v. Harrington, 100 Mo. 170; Plummer v. Knight, 156 Mo. App. 321; Austin-Western Road Machinery Co. v. Commercial State Bank, 255 S.W. 585. (12) Where a bank delivers cancelled checks and a statement of the account to the customer he is under legal obligation to examine the same within a reasonable length of time and complain, if any cause therefor exists. Failure to complain within a reasonable time makes the account stated conclusive, and the customer is estopped to complain later. Reynolds v. Third Natl. Bank, 225 S.W. 901; McKeen v. Bank, 74 Mo. App. 281; Wind v. Fifth Natl. Bank, 39 Mo. App. 72; Kenneth Invt. Co. v. Natl. Bank, 96 Mo. App. 125, also 103 Mo. App. 613; Leather Mfgs. Natl. Bank v. Morgan, 117 U.S. 96, 6 Sup. Ct. 657; Hammerschlag Mfg. Co. v. Importers & Traders Natl. Bank, 262 Fed. 266; First Natl. Bank v. Farrell, 272 Fed. 371; England Natl. Bank v. United States, 282 Fed. 121. (13) Plaintiffs cannot complain of the refusal to direct a verdict in their favor because without making such request at the close of defendant's case, they introduced rebuttal evidence thereby admitting that some issuable fact existed. (14) Where a material and controlling fact is based on oral testimony the testimony of plaintiff, even though uncontradicted, does not entitle the court to direct a verdict for plaintiff. State ex rel. v. Ellison, 286 Mo. 225, 226 S.W. 577. (15) If no instructions are requested on...