Third National Bank of St. Louis v. St. Charles Savings Bank

• Decision Date: 02 July 1912
• Citation: 149 S.W. 495,244 Mo. 554
• Parties: THIRD NATIONAL BANK OF ST. LOUIS, Appellant, v. ST. CHARLES SAVINGS BANK, Appellant
• Court: Missouri Supreme Court

149 S.W. 495

244 Mo. 554

THIRD NATIONAL BANK OF ST. LOUIS, Appellant, v. ST. CHARLES SAVINGS BANK, Appellant

Supreme Court of Missouri

July 2, 1912

Appeal from Boone Circuit Court. -- Hon. Nick M. Bradley, Special Judge.

Reversed and remanded (with directions).

Eugene H. Angert and E. W. Hinton for plaintiff-appellant.

(1) The finding for the plaintiffs on the special count was proper because the defendant ratified and adopted the unauthorized guaranty by collecting, retaining and appropriating the proceeds of the certificates of deposits issued to it by plaintiff, after full knowledge that such certificates had been obtained on the strength, and by means of the guaranty. (a) The defendant bank had the corporate power to raise money, either by direct borrowing, or by endorsing or guaranteeing the note of a third person. Lyons v Bank, 220 Mo. 538; Donnell v. Bank, 80 Mo. 165; Bank v. Bank, 101 U.S. 181; Bank v. Bank, 109 N.W. 61; Autin v. Bank, 174 U.S. 125. (b) The transaction in question was, in fact and in effect, a raising or borrowing of money by means of a guaranty, because it originated in an agreement for a loan to defendant, and was consummated by the issuance of the certificates of deposit directly to defendant on the faith of the guaranty executed on its behalf for the payment of a straw note. (c) Since a bank is probably without power to bind itself by an accommodation indorsement or guaranty, it was therefore competent and proper for the plaintiff to prove the consideration and purpose of the guaranty, namely, the loan or advance of money to defendant. Donnell v. Bank, 80 Mo. 165; Bank v. Bank, 109 Mo. 61; Liebke v Knapp, 79 Mo. 22. (d) Since the defendant could have authorized the execution of the guaranty in the first instance, it had the power to ratify and adopt the guaranty which Mispagel assumed to execute on its behalf. Bank v. Bank, 101 U.S. 181; Bank v. Bank, 109 N.W. 61; Donnell v. Bank, 80 Mo. 165; Hume v. Eagon, 73 Mo.App. 271; Swofford v. Bank, 81 Mo.App. 46. (e) The defendant did ratify the guaranty by collecting and appropriating thereof after full knowledge of the whole transaction. Bank v. Bank, 101 U.S. 181; Bank v. Bank, 109 N.W. 61; Bank v. Trust Co., 187 Mo. 494; Donnell v. Bank, 80 Mo. 165; Bank v. Bank, 107 Mo. 133; Bank v. Fricke, 75 Mo. 178; Hume v. Eagon, 73 Mo.App. 271; Swofford v. Bank, 81 Mo.App. 46. (f) And the previous refusal to ratify, or the repudiation of the contract, did not destroy the subsequent acts of adoption. Hatch v. Taylor, 10 N.H. 538; Haney v. Baptist Inst., 113 Ga. 289; Fleishman v. Verdoes, 111 Ia. 322. (2) If the defendant can escape liability on the written contract, because not formally authorized, then the written contract is out of the way, and the plaintiff is entitled to recover on the count for money loaned. Bank v. Lyons, 220 Mo. 538. (3) In any event the plaintiff is entitled to recover on the count for money had and received, because it stands admitted that defendant collected $ 20,000 of the plaintiff's money, for which the plaintiff has received no consideration, if the guaranty fails. Bank v. Lyons, 220 Mo. 538; Appleton v. Bank, 190 N.Y. 417; Bank v. Appleton, 216 U.S. 196; Aldrich v. Bank, 176 U.S. 341.

W. M. Williams, Theodore C. Bruere, F. G. Harris, and C. W. Wilson for defendant-appellant.

(1) Judge Bradley held the term of the Boone Circuit Court at which this case was tried, and he signed the bill of exceptions. He was the proper person to sign said bill, which was merely completing the record of the term held by him. State v. Bobbitt, 215 Mo. 30; State v Gordon, 196 Mo. 195; Sec. 3960, R. S. 1909; Patterson v. Yancy, 97 Mo.App. 687; Bener v. Daniel, 198 Mo. 315; State v. Morris, 230 Mo. 631. (2) The trial court erred in permitting the plaintiff's witnesses, Galbreath and Huttig, to testify to the conversations and understandings between them and Mispagel, at the time he and Baird applied for the loan. (a) Because the contract made between the parties and sued on in this case, was at the time reduced to writing. Oral testimony was not admissible to alter, vary, explain, or enlarge the written contract that was finally made. Bank v. Terry, 67 Mo.App. 16; Helmrichs v. Gehrke, 56 Mo. 79; Tracy v. Iron Works, 104 Mo. 198; Morgan v. Porter, 98 Mo. 140; Construction Co. v. Tie Co., 186 Mo. 61; Meredith v. Holmes, 105 Mo.App. 352; Reigalt v. Coal & Coke Co., 217 Mo. 160; Boyd v. Paul, 125 Mo. 9; Squier v. Evans, 127 Mo. 518; Harrington v. Brockman Co., 107 Mo.App. 418; Bank v. Bayless, 35 Mo. 428, 41 Mo. 274. (b) Because in this transaction the defendant's cashier, Mispagel, was not acting within his powers and duties as cashier, and consequently his statements and representations were not binding upon the defendant. For while the statements and representations made by a cashier in the ordinary course of business are binding upon his bank, yet when he engaged in matters that are outside his duties and beyond his powers, his representations and statements do not bind his principal. Bank v. Froman, 129 Mo. 430; Bank v. Lovitt, 114 Mo. 519; Bank v. Shaumberg, 38 Mo. 228; Benton v. Bank, 122 Mo. 339; Fraber v. Hicks, 131 Mo. 192; Hickman v. Green, 123 Mo. 176; Windsor v. Bank, 18 Mo.App. 674; Smith v. Boyd, 162 Mo. 157; Keyser v. Hinkle, 127 Mo.App. 73. (3) The trial court erred in refusing defendant's instruction directing a finding against the plaintiff and in favor of the defendant on the first count of plaintiff's petition. (a) Because the alleged guaranty contract executed by Mispagel to plaintiff was illegal and void, being made in violation of the provisions of an express statute, enacted for the government of bank cashiers and other bank officers, which plainly prohibits any officer of a bank from contracting such obligations, except in obedience to an order of the board of directors. Sprague v. Rooney, 104 Mo. 358; Board of Trade v. Brady, 78 Mo.App. 585; R. S. 1909, secs. 1099, 1112; Bank v. Hughes, 62 Mo.App. 581; Chew v. Ellingwood, 86 Mo. 260; Savings Assn. v. Sailer, 63 Mo. 24; Hume v. Eagan, 83 Mo.App. 576; Vansandt v. Hobbs, 84 Mo.App. 628; Bacon, Dawson & Co. v. Bank, 79 Mo.App. 406; Powers v. Woolfolk, 132 Mo.App. 362; Dowing v. Reiper, 7 Mo. 585; Rothwell v. Gibson, 121 Mo.App. 279. (b) Because the plaintiff knew that Mispagel in executing the guaranty contract was acting without authority and outside of his legitimate powers. It is presumed to know the law. Bank v. Lyons, 220 Mo. 577. (c) Because at the time of the execution of said guaranty, October 13, 1904, the plaintiff parted with no money on the faith of it. The evidence is conclusive -- all one way -- that the plaintiff paid out no money in this matter until November 30, 1904, almost two months after the execution of the papers sued on. In the meantime plaintiff was fully advised that the defendant repudiated and refused to ratify Mispagel's action in executing the guaranty contract, and at the same time insisted that plaintiff should pay the time certificates it had issued on October 13. Plaintiff paid the money with a full knowledge of the facts and cannot recover back money so paid. State ex rel. v. Stonestreet, 92 Mo.App. 220; Brewing Co. v. St. Louis, 187 Mo. 376; Claflin v. McDonough, 33 Mo. 416; Wolfe v. Marshall, 52 Mo. 167. (4) The judgment of the trial court was upon the first count of the petition, which is a suit upon a guaranty executed by defendant's cashier, without the authority of its board of directors, of a note executed to the plaintiff by Baird. The cashier had no authority to execute the guaranty in behalf of the defendant bank, and the bank is not bound thereby. R. S. 1909, sec. 1099; Bacon, Dawson & Co. v. Bank, 79 Mo.App. 406; Tiedeman on Commercial Paper, sec. 116; 1 Am. and Eng. Ency. Law (2 Ed.), 348; Morse on Banks and Banking (3 Ed.), sec. 65; 5 Cyc. 523; Bank v. Seymour, 72 N.W. 724. (5) A bank cannot make an accommodation indorsement, notwithstanding "the party accommodated uses the money borrowed, as here, for the payment of a demand which the accommodation indorser holds against the party for whose benefit the pretended promise is made." Bacon, Dawson & Co. v. Bank, 79 Mo.App. 411; 7 Am. and Eng. Ency. Law (2 Ed.), 489; Davis v. Railroad, 41 Am. Rep. 221. (6) The acceptance of the certificates of deposit and the collection thereof by the defendant bank was not a ratification of the guaranty executed by the cashier without authority. The loan was made by the plaintiff bank to Baird, and the certificates of deposit were received and collected as a payment on his debt to the defendant, with express notice to plaintiff that defendant denied liability on the guaranty. Bacon, Dawson & Co. v. Bank, 79 Mo.App. 406; Bank v. Seymour, 73 N.W. 724. (7) The note and guaranty upon their face showed that Baird was the principal debtor and the bank a mere guarantor. The writings established this relationship between the parties, and it was incompetent to attempt, by parol evidence, to change the same. Wood v. Motley, 83 Mo.App. 97; Bank v. Terry, 67 Mo.App. 17; Bank v. Wells, 98 Mo.App. 581. (8) Defendant cannot be held for money loaned to it under the second count of the petition. (a) The money was borrowed by Baird, and plaintiff bank was notified at the time that the purpose was to reduce Baird's indebtedness to defendant. This could not have been accomplished by a loan to the defendant. An action for money lent cannot be maintained upon a collateral undertaking to guarantee advances to be to a third person. 27 Cyc. 827; Douglan v. Reynolds, 7 Peters (U.S.) 113. (b) The guaranty is an independent collateral agreement and the guarantor is not the maker of the note. Tiedeman on Commercial Paper, 415. (9) Defendant cannot be held on the third count for money had...