Vandagrift v. Masonic Home of Missouri

• Decision Date: 29 February 1912
• Parties: VANDAGRIFT v. MASONIC HOME OF MISSOURI.
• Court: Missouri Supreme Court

145 S.W. 448

VANDAGRIFT v. MASONIC HOME OF MISSOURI.

Supreme Court of Missouri. Division No. 1.

February 29, 1912.

Motion for Rehearing Overruled March 29, 1912.

1. BANKS AND BANKING (§ 119)—DEPOSITS —RELATION OF DEBTOR AND CREDITOR.

The relation of debtor and creditor subsists between a bank and its depositor.

2. BANKS AND BANKING (§ 150)—DEPOSITS — OVERDRAFTS — RELATION OF DEBTOR AND CREDITOR.

When a bank permits its customer to over-draw, he thereby becomes the debtor and the bank the creditor.

3. BANKS AND BANKING (§ 150)—DEPOSITS —OVERDRAFTS—LIABILITY OF PAYEE.

The treasurer of a corporation had an account with a bank, and the bank received of the money of the corporation originally deposited in another bank a greater sum than it returned, and permitted the treasurer to transfer such money to his personal account and to overdraw such personal account by checks given to certain creditors of the corporation to an amount sufficient to replace his misappropriation of the corporation's funds, at a time when the corporation had no knowledge of such fact and when the treasurer's books showed that his accounts were correct. Held, in an action by the bank's receiver as for money had and received, to recover the unpaid balance of such overdrafts, that the corporation was not liable.

4. REFERENCE (§ 8)—COMPULSORY REFERENCE —ACCOUNT.

Where the determination of the issues involves examination of a long account with numerous items, the case is one wherein a compulsory reference may be ordered.

Appeal from St. Louis Circuit Court; G. C. Hitchcock, Judge.

Action by E. C. Vandagrift, receiver of the Bates National Bank, against the Masonic Home of Missouri. Judgment for defendant, and plaintiff appeals. Affirmed.

This suit is by the receiver of the insolvent Bates National Bank, located at Butler, Bates county, Mo., against the Masonic Home of Missouri, a corporation created for charitable purposes, in three counts, set forth in the petition. The first two were based upon notes purporting to be signed "Masonic Home of Missouri, by F. J. Tygard, Treasurer," dated, respectively, December 25, 1905, and March 12, 1906, and for the sums of $3,000 and $1,500. The right to recover on these two counts of the petition was not claimed on the oral argument in this court. The only count of the petition left is the third count, which is in assumpsit for $17,522.88. The answer to this count of the petition is a general denial. The case was referred by consent, and the taking of testimony before the referee was concluded, and a report made by him on the 26th of September, 1906. The facts found by the referee are, in substance: That the defendant was organized as a corporation on the 12th of October, 1886, for the purpose, as shown by its articles, "to establish and maintain a home for indigent Masons of Missouri and for resident needy widows and orphans of deceased Masons, * * * and to hold such property and conduct such business as may be necessary for the successful maintenance of said home." That following its organization of the first board of directors, F. J. Tygard was elected treasurer and was annually re-elected to that office for a period of 20 years, or until September, 1906. That during this time said Tygard was president of the plaintiff bank and its predecessor, and in each of said banks he kept an account headed "F. J. Tygard, Treasurer, Masonic Home of Missouri." His duties as treasurer are defined in the by-laws of the defendant as follows: "Sec. 3. The treasurer shall be the custodian of all moneys and securities belonging to the home, and disburse the same in payment of expenses by the direction of the board of directors, and shall not make any payment except on proper vouchers drawn by order of the board and signed by the president and secretary; submit to the board, or any member thereof, his books, papers and accounts whenever requested so to do, and to report annually to the president, and oftener if required, the financial transactions of the board and the home, and transmit to his successor in office his official effects." Under the by-laws of the defendant, its secretary (John R. Parson and S. C. Bunn) was required to record the proceedings of the board of directors, when approved, take care of the seal, and perform other duties required by the board, and "to receive all moneys belonging to this corporation; he shall give receipts therefor and shall keep an accurate account thereof. Funds which may come into the hands of the secretary from any source shall be by him paid over to the treasurer, * * * and he shall take the treasurer's receipt therefor." By a later by-law the treasurer was charged with the duty of paying the expenses of the defendant under direction of its board of directors, and to submit to the board his books, papers, and accounts when requested, and to make annual reports to the president. The secretary was also further directed to deposit sums received by him "to the credit of the treasurer in such bank as the treasurer may designate." The treasurer was further forbidden to pay out money "except upon drafts of the president and secretary issued in pursuance of orders from the board."

The report of the referee further sets out: That the grounds and buildings of defendant were purchased by contributions and donations from various Masonic orders. That its expense funds were acquired by assessments laid upon their members by local Masonic lodges throughout the state of 50 cents per head on each member. That an appropriation out of said funds was made by the various Masonic lodges and paid over to the secretary of the home, who, in turn, paid the same to F. J. Tygard, treasurer of the home, or placed it to his credit in some bank. That for some years before 1906 the secretary, under the direction of said Tygard, deposited such collections in the State National Bank of St. Louis, to wit, "to the credit of F. J. Tygard, treasurer of the Masonic Home." That the treasurer used such deposits in the payment of warrants made out in proper form for the expenses of the home, or from time to time withdrew and transferred them to the Bates National Bank of Butler, Mo., of which he was president. That he kept three separate accounts in said last-named bank, one in his individual name, one as treasurer of the Masonic Home, and one as treasurer of the Grand Commandery of Knights Templar, and used the funds in each account indiscriminately in crediting money held by him as treasurer of the home, for paying out money for the home, as stated in plaintiff's second amended petition (these underlined words were the only change made in the report of the referee when it was confirmed by the court), and for credits and payments on his own account and as treasurer of the Grand Commandery, and in issuing checks to Tygard & Clark, and in transferring credits to a bank at Rich Hill. Mo. Tygard & Clark was a firm composed of Tygard, the president, and Clark, the cashier, of the Bates National Bank, engaged in making speculative ventures and using for that purpose sometimes money belonging to the home. The Rich Hill Bank was a bank at Rich Hill, Mo., in which Tygard was interested and of which he was vice president. That Tygard made full and regular monthly and annual reports of the condition of his accounts as treasurer of the home to the president of its board of directors, which were fully distributed. That his books and accounts were annually and at times oftener forwarded to the office of the Masonic Home and examined by direction of its board of directors and compared with the books kept by the secretary. That annually an expert accountant was employed to examine and compare reports of these two offices. That warrants for the expenses of the Masonic Home were, by the direction of the treasurer, made payable at the State National Bank of St. Louis, and, after such payments, he took credit for the same as treasurer. That three instances in which this did not occur, the payments were made under the direction of the board and shown by receipts instead of by warrants. That the evidence adduced on the trial disclosed that, when the notes referred to in the first and second counts of plaintiff's petition were executed, the treasurer, according to the showing of his books, had then on hand larger sums than were expressed in the face of said notes. That early in September, 1906, before the plaintiff went into the hands of a receiver, the treasurer had on hand, according to his books, to the credit of the home, $1,290.36; and that he paid over to his successor as treasurer this amount. That during the entire term of his incumbency as treasurer, he never attempted to create any obligation against the home or in its name other than the two promissory...