Wellston Trust Co. v. Am. Surety Co. of N.Y.

• Decision Date: 05 February 1929
• Docket Number: No. 20407.,20407.
• Citation: 14 S.W.2d 23
• Parties: WELLSTON TRUST COMPANY, A CORPORATION, RESPONDENT, v. AMERICAN SURETY COMPANY OF NEW YORK, A CORPORATION, APPELLANT.<SMALL><SUP>*</SUP></SMALL>
• Court: Missouri Court of Appeals

14 S.W.2d 23

WELLSTON TRUST COMPANY, A CORPORATION, RESPONDENT, v. AMERICAN SURETY COMPANY OF NEW YORK, A CORPORATION, APPELLANT.^*

No. 20407.

St. Louis Court of Appeals. Missouri.

Opinion filed February 5, 1929.

Appeal from the Circuit Court of St. Louis County. — Hon. G.A. Wurdeman, Judge.

AFFIRMED.

Bryan, Williams & Cave for appellant.

(1) The court erred in overruling the instruction in the nature of a demurrer to the evidence offered by defendant at the close of the case and in entering judgment for plaintiff and against defendant, for the following reasons: (a) At the time of the loss here in question Mr. McKee, the man in possession of the stolen money, was acting as the agent of the Peoples Motorbus Company and not as the agent of the plaintiff, and the money stolen was the property of the Motorbus Company and not the property of the plaintiff, and the loss was, therefore, not covered, or intended to be covered, by the terms of the bond. Bank v. Bell, 128 Wash. 523; Morse on Banks & Banking, sec. 168, Clause f (6 Ed.); Fidelity & Deposit Co. v. Colby, 148 N.Y. App. Div. 363; Demarest v. Holdeman, 34 Ind. App. 685; Gonder v. Bank, 259 Pa. St. 197. (b) The bond, unless it otherwise expressly provides, which it does not, is to be construed as having been executed by the parties with the intent of covering and indemnifying the plaintiff against loss while engaged in carrying on its business in the normal way and in compliance with the law and with its charter power and not as an attempt by plaintiff to indemnify itself from loss while engaging in a contemplated conduct of its business in a wholly unusual way and in violation of the law. When so construed the bond does not cover the instant loss. Glover v. American Casualty Co., 130 Mo. 173; Wiggins Ferry Co. v. Railroad, 128 Mo. 224; Bank v. Flanagan Mills et al., 268 Mo. 547. (c) The receipt by persons generally in the employ of the Wellston Trust Company, plaintiff, of money from time to time, at the office of the Peoples Motorbus Company, if intended as an attempted acceptance by the Wellston Trust Company of such moneys as a deposit before they reached plaintiff's banking house, was a direct violation of section 11737 of the Revised Statutes of Missouri, which provides that "No bank shall ... receive deposits or pay checks except in its own banking house." The Wellston Trust Company was engaged in the doing of an illegal, unlawful and ultra vires act, and even if the bond in question were intended to cover a loss under such circumstances, it would be void as an attempt by plaintiff to indemnify itself from possible loss arising out of a contemplated violation of the law by plaintiff. Brandt on Suretyship, sec. 11, p. 14; Stearns on Suretyship, sec. 156, p. 264; Daniels v. Barney, 22 Ind. 207; McCanna v. Trust Co., 76 Fed. 420; Thorne v. Ins. Co., 80 Pa. St. 15; Western Indemnity Co. v. Craft, 240 Fed. 1; Harrington's Admr. v. Crawford, 136 Mo. 467; Columbia Co. v. Holdeman, 7 W. & S. 233. (d) The bond in question should not be construed as intending to cover the loss of money under circumstances such as disclosed here, for the bond would never have been written had it been disclosed to defendant that the Wellston Trust Company was contemplating receiving deposits at places other than its banking house, and of claiming that the bond covered any loss sustained while so engaged in such illegal business. This method of conducting business greatly increased the hazard of loss, and the premium for the bond, if it could properly have covered such a loss, would of necessity have been higher. The bond itself clearly provides that the plaintiff should have only one office and that if more than one office, then for an additional premium.

Marion C. Early and Ivon Lodge for respondent.

(1) Defendant's contention that plaintiff's cashier was not acting for plaintiff at the time he was robbed is not well taken, for the plaintiff acquiesced in and ratified the action of its representative in calling for the sacks containing money for deposit. 7 C.J. 637 Bank v. Gibbony, 43 Ind. App. 492; Popisil v. Hajicek, 190 Ill. App. 638; Brandt on Suretyship (3 Ed.), par. 15; 2 Michie on Banks and Banking, p. 904, par. 121; Pendleton v. Bank of Kentucky, 1 T.B. Monroe (Ky.) 171; 1 Morse on Banks & Banking (6 Ed.), sec. 168, par. G. (2) The action of the plaintiff Trust Company in permitting its representative to call for the sealed sack containing money for deposit was not a violation of sec. 11737, Revised Statutes 1919, designed to stop the establishment of branch banks. Bank of Tupelo v. Stamm, 281 S.W. 110; Potter v. Bank of Ithaca, 7 Hill (N.Y.) 530; Marvin v. Kentucky Title Co., 291 S.W. 17; Bruner v. Shelbyville Bank, 134 Ky. 283, 120 S.W. 345. (3) Even if the plaintiff had violated section 11737, Revised Statutes 1919, in permitting its representative to call for the deposit, the State of Missouri in an action brought by its Attorney-General alone can raise that question. It cannot be raised as a defense to the present action. Bank of Tupelo v. Stamm, 281 S.W. 110; Hill v. Bank, 145 Mo. 218; First National Bank v. Shewalter, 153 Mo. App. 635; St. Francois Co. Bank v. Hawn, 296 S.W. 1052, and cases therein cited; Morehead Banking Co. v. Tate, 122 N.C. 313.

SUTTON, C.

This is an action on an insurance policy. The pertinent provision of the policy is substantially as follows:

"The American Surety Company of New York, in consideration of an annual premium agrees to indemnify Wellston Trust Company, hereinafter called the insured, against the direct loss sustained of any money or securities, or both, in which the insured has a pecuniary interest, or held by the insured as bailee, trustee or agent, and whether or not the insured is liable therefor, through robbery, larceny, theft, or hold-up by whomsoever committed while such money or securities are in transit within twenty miles of any of the insured's offices and in the custody of any of its employees."

In the afternoon of September 7, 1926, while the policy was in force, George Blackford, who was at the time and had been for several years in the employ of plaintiff, went with Harry A. McKee, the plaintiff's treasurer and cashier, to the office of the Peoples Motorbus Company in Wellston for the purpose of receiving money belonging to the motorbus company to be taken back to the bank. They got three sacks of money from the motorbus company, and Blackford entered the items in the motorbus company's pass book. They then started back to the bank with the money in an automobile, and, while so engaged in transporting the money to the bank, they were held up, and the three sacks of money were taken from them. The sacks contained respectively $1498.75, $1217.80, and $1566.90. These items were entered in the pass book separately. Duplicate deposit slips were made out for each of these items. One copy of each duplicate slip was retained by the motorbus company, and the other was put in the sack containing the money represented by the deposit slip. These duplicate slips were prepared by the employees of the motorbus company. It was, however, the usual practice of the customers of the bank when making deposits to prepare the deposit slips. The motorbus company had been making deposits with the plaintiff bank for a year and a half prior to the robbery. The deposits were sometimes made at the banking house, and at other times were received at the office of the motorbus company by the cashier or other employees of the bank sent to the motorbus company by the bank to receive the deposits. The pass book of the motorbus company was the same kind generally used by the customers of the bank. The pass book in which the deposits were entered on the day of the robbery was the same pass book in which its deposits were entered when made at the banking house. The practice of receiving the deposits of the motorbus company at its office in the manner the deposits were received on the day of the robbery had obtained for a year and a half, with the knowledge of all the active executive officers of the bank. On some occasions the manual act of entering the deposits in the pass book was done by the cashier, and on other occasions by some other employee, of the bank. The form of deposit slip that was used by the motorbus company was the same form that was generally used by all the depositors of the bank. The motorbus company had only one pass book, and its deposits were entered in this pass book whether the deposits were made at its office or at the banking house. The account of the motorbus company with the bank was the only account as to which the practice obtained of receiving the deposits outside the banking house. It was the practice, when deposits were received at the office of the motorbus company, to enter such deposits to the credit of the motorbus company in the deposit record of the bank when the deposits reached the bank. When this was done, no receipt or other acknowledgment or evidence of the deposits was sent by the bank to the motorbus company. The only evidence of the deposits held by the motorbus company was such as it received from the agents of the bank at the office of the motorbus company. On the day following the robbery, plaintiff entered in its deposit record a credit to the motorbus company for $4283.45, this being the amount of money received at the office of the motorbus company by the plaintiff's agents and taken from them in the robbery, and afterwards paid out that amount on the checks of the motorbus company.

The trial of the cause, which was had before the court, without a jury, resulted in a judgment in favor of plaintiff for $4432.91, which is the amount of the loss, with interest, and defendant appeals.

Defendant assigns error here for the refusal of its instruction in the nature of a demurrer to the evidence. As ground for this assignment defendant urges that the cashier of the plaintiff bank was...