W. A. Gage & Co. v. Bank of Holcomb

• Citation: 196 S.W. 1077
• Decision Date: 06 March 1917
• Docket Number: No. 13985.,13985.
• Parties: W. A. GAGE & CO. v. BANK OF HOLCOMB.
• Court: Missouri Court of Appeals

196 S.W. 1077

W. A. GAGE & CO. v. BANK OF HOLCOMB.

No. 13985.

St. Louis Court of Appeals. Missouri.

March 6, 1917.

On Motion for Rehearing, July 10, 1917.

Appeal from Circuit Court, Dunklin County; W. S. C. Walker, Judge.

"Not to be officially published."

Action by W. A. Gage & Co., a corporation, against the Bank of Holcomb. From a judgment for plaintiff, defendant appeals. Reversed.

R. L. Ward, of Caruthersville, and J. P. Tribble, of Kennett, for appellant. St. John Waddell, of Memphis, Tenn., and John A. Hope, of St. Louis, for respondent.

ALLEN, J.

An April 10, 1912, the plaintiff, a corporation under the laws of Tennessee, located at Memphis, Tenn., instituted this action in the circuit court of Dunklin county against the defendant, a banking corporation of that county, organized under the laws of this state. The petition is in three counts.

The first count avers:

That plaintiff "carries on the business of cotton factors and lends money in the states of Missouri and Tennessee"; that the defendant bank has power to loan and borrow money; "that one of the methods used by the bank in borrowing money was to draw the draft of said bank, signed by its cashier, on the lender for the sum sought as a loan; that said cashier had power and authority specially conferred upon him by defendant's board of directors to draw the drafts of said bank for such loans, and power and authority to bind the bank to pay such loans as were made to it on such drafts; that the board of directors of said bank conferred authority on its said cashier to pay such loans as were made to said bank on such drafts by its course of conduct in permitting said cashier, in the ordinary course of the business of said bank actually confided to him as such cashier, to draw the drafts of said bank upon its correspondent banks in payment of the debts, including the loans made to said bank."

It is alleged:

That on March 1, 1909, plaintiff loaned defendant the sum of $1,000; "that said loan to said bank was negotiated and made in this way: Said bank drew its draft on plaintiff for one thousand dollars, which draft bears date of February 25, 1909."

And it is alleged that plaintiff paid this draft on March 1, 1909, and that defendant "failed and neglected to pay plaintiff said sum or any part or portion thereof." This count concludes with a prayer for judgment against defendant for $1,000, with interest thereon at the rate of 6 per cent. from March 1, 1909.

The second count of the petition is drawn in precise conformity to the first, except that it is averred that defendant loaned plaintiff $1,000 on March 26, 1909, by paying a draft drawn by plaintiff on defendant for said sum on March 25, 1909.

The third count alleges that defendant is justly indebted to plaintiff in the sum of $1,000 for money had and received by defendant from plaintiff with interest thereon at the rate of 6 per cent. from March 26, 1909, praying judgment accordingly.

It is unnecessary to specially notice the answers to these respective counts. The trial before the court and a jury resulted in a verdict and judgment in favor of plaintiff on the first count of the petition for $1,000, with interest at the rate of 6 per cent. from February 25, 1909. From this judgment defendant prosecutes the appeal before us.

It appears that on January 19, 1909, plaintiff mailed to defendant a "circular letter" which came into the hands of defendant's cashier, one McL. Delaney. This letter, in part, is as follows:

"We write to say that, if any of your customers owe you money on cotton that they are holding, we would be glad to have them consign the cotton to us, either to be sold promptly, or held as long as they wish. We * * * will be glad to advance within a small margin of the actual value of the cotton, on draft with B/L attached. * * * Also, if you see any one who wants to borrow some money for their farming operations, and you do not make the loan, we would appreciate it if you would have them write us."

It is to be inferred that not long prior to the sending of this letter plaintiff's president was at Holcomb and conferred with defendant's cashier. The latter on January 20, 1909, wrote plaintiff a letter in part as follows:

"I shall take pleasure in giving you some firstclass business through here. * * * I think we could use a nice little amount this summer for you, as you stated while here that you would rather let the banks have same than to place it with the cotton men through the country. If this is agreeable please let me hear from you at your convenience. If not, then I think I can place it where it will secure you some shipments of cotton this season."

On February 4, 1909, plaintiff responded by a letter addressed to "McL. Delaney, Cashier," stating that plaintiff desired to enter into some arrangement for "putting out some money" in the community in which defendant is located, saying, "You can give us your notes for such an amount as you might need and put it out to the farmers around," and plaintiff further stated therein that it always required its customers to contract to ship a certain number of bales of cotton during the following cotton season, and that when a loan was made to a farmer he must be required to ship plaintiff the requisite number of bales of cotton.

This is all of the correspondence shown to have passed between plaintiff and defendant's cashier prior to February 25, 1909. On that date Delaney drew a draft upon plaintiff for $1,000; the sum represented thereby being the subject-matter of the first count of plaintiff's petition.

This draft, which was filed with the petition and put in evidence, is upon a form designated "Customer's Draft." It is made payable to the order of the Bank of Holcomb, directed to plaintiff, and signed, "McL. Delaney, Cashier." On the same day Delaney wrote plaintiff as follows:

"As per instruction from your Mr. Gage when he visited me some time ago, and your letters recently, I have to-day made sight draft and mailed you Cirt. (sic) for same under separate cover, to loan out to farmers, and I will have them agree to ship you such an amount of cotton as you want them to ship, all, if I possibly can, I can use quite a good amount for you this summer at 6 per cent. * * *"

This was signed, "McL. Delaney." In reply plaintiff, on March 1, 1909, addressed a letter to "McL. Delaney, Cashier," in which plaintiff says:

"We do not understand the way you have fixed this matter up. * * * Should you decide that you could use say $3,000 and give us your note for same payable next fall, we will place the note to your credit under date of same, and allow you interest on your credits at the same rate as charged on the note. Then whenever you put out a loan to farmers you could draw on us for the amount of the same and take such security as you wish. For a loan of $3,000 we would expect a cotton agreement from you to ship as much as 225 bales next season, and you in turn in making loans to the farmers could get them to agree in writing that they would ship us their cotton or a certain number of bales. We want to explain that our dealings would be entirely with you and we would only look to you to see that the contract for shipping cotton is filled. * * * We will pay the draft you speak of and will thank you to advise us how much more you will probably need so we can fix the papers."

With plaintiff's next letter, of date March 3, 1909, addressed to "The Bank of Holcomb," was inclosed a form for a written agreement to be filled out and executed by defendant. This form of agreement, a copy of which was introduced in evidence, is of the character indicated by plaintiff's letter of March 1, 1909, supra. It was never executed by defendant or its cashier, nor was any note ever executed to plaintiff.

Other correspondence passed between plaintiff and defendant's cashier, but it is unnecessary to notice these communications. It appears that on March 25, 1909, Delaney drew another draft on plaintiff for $1,000, similar to that above mentioned, which plaintiff paid. But we are not concerned therewith. The evidence shows that the proceeds thereof were placed to plaintiff's credit in the defendant bank and afterwards checked out by plaintiff.

The draft of February 25, 1909, drawn by Delaney, was indorsed in the name of the defendant bank by Delaney as cashier, and was by him immediately forwarded to the International Bank of St. Louis, defendant's correspondent at that place. The International Bank indorsed it "to the order of any bank or banker," and forwarded it to the Union & Planters' Bank & Trust Company of Memphis, Tenn., to whom plaintiff paid the amount thereof on presentment. The Memphis bank duly remitted therefor to the International Bank, and the latter accordingly credited defendant's account on its books with the proceeds of the collection. Thereafter defendant checked out this sum, together with other funds which had been kept on deposit by it in the International Bank.

The record discloses that upon this drawing, indorsing, and forwarding this draft Delaney at once placed the said sum of $1,000 to his individual credit in the defendant bank, that he later drew out the same by his individual checks, and that the defendant received nothing whatsoever by virtue of the transaction.

The record further discloses that Delaney had no authority whatsoever from defendant's board of directors to borrow or receive any money from plaintiff for defendant, or to enter into any transaction in defendant's behalf of the character indicated above. And the evidence is that defendant's directors knew nothing of the correspondence which Delaney conducted with plaintiff, and were ignorant of the entire transaction here involved until about June, 1909, after Delaney's connection with the defendant bank had been severed, when it was found that he had misappropriated funds of the bank.

Though plaintiff alleged in its petition that defendant's...