Pemiscot County Bk. v. Tower Grove Bk. of St. Louis

OPINION. Taking up the draft for $2784.04 and the action of the court in rendering judgment for the full amount of that, we think that the learned trial court was in error. The check given by Tindle for the draft went by mail from the defendant bank to the Pemiscot County Bank, with the request that it be paid. In return the Pemiscot County Bank transmitted by mail to the defendant bank the draft drawn on the Security Bank and Trust Company of Memphis, Tennessee. By mail the Pemiscot County Bank transmitted that draft to the Memphis Company and it was duly paid. We can look on this transaction in no other light than as a transaction between the banks and it does not come within the rule relating to the issue of checks or drafts by a cashier in payment of his personal indebtedness. This personal indebtedness evidenced by notes, the notes secured by collateral worth something like $9000, it is true was a transaction in the name of Tindle but it represented notes of other persons that he had put up and which he had discounted when he obtained this money. While plaintiffs allege that the defendant never gave or paid to plaintiff or either of them anything of value or any valuable consideration for the draft, it had Tindle's check and the notes of various parties, discounted, it is true, by Tindle, and Tindle gave his check on the Pemiscot County Bank for that amount, which the defendant bank sent by mail to the Pemiscot County Bank. When in payment of that check the draft was transmitted by mail by the Pemiscot County Bank to the defendant bank, and was transmitted by the latter to the Memphis Trust Company, on which it was drawn, and paid by the latter, the defendant, also by mail, surrendered the collateral which it held. All this was a matter in due course of business between two banks.

In Campbell v. Manufacturers National Bank, 67 N.J.L. 301, l.c. 303, it is held:

"To make the acts of the cashier valid (in issuing a draft), the transaction in which the draft is delivered must be a bank transaction, made by the cashier, within his express or implied authority, in the conduct of the business of the bank. So long as a person deals with the cashier in a matter wherein, as between himself and the cashier, he is dealing with, or has a right to believe he is dealing with, the bank, the transaction is obligatory upon the bank.

"The cashier is presumed to have all the authority he exercises in dealing with executive functions legally within the powers of the bank itself or which are usually or customarily done, or held out to be done, by such an officer.

"But the test of the transaction is whether it is with the bank and its business, or with the cashier personally and in his business (citing cases).

"As to the former, all presumptions are in favor of its regularity and binding force."

This case is cited with approval by our Supreme Court in St. Charles Savings Bank v. Edwards, 243 Mo. 553, l.c. 567, 147 S.W. 978.

There was nothing in this transaction with respect to that draft, beyond the fact that it was drawn in payment of the cashier's secured obligations, that can in any way carry notice or knowledge to the defendant bank that it was other than a regular bank transaction. While a principle announced as in the Edwards Case and others of like character, may be entirely correct, in its application we must not lose sight of the facts to which it is to be applied, as said by our Supreme Court in Bender v. Weber, 250 Mo. 551, l.c. 561, 157 S.W. 570: "In the next place, a good rule, of every day service, is that judgment of appellate courts on one state of facts may not be applied automatically to another state of facts, but, contra, the general language in decision must be read in the dry light of the very case held in judgment, and not otherwise. [State ex rel. v. St. Louis, 241 Mo. l.c. 238, et seq.]" [See 145 S.W. 801.] The latter case cited by Judge LAMM, is very full on the same proposition. The case at bar has none of the elements which appear in the Edwards case, supra, St. Charles Savings Bank v. Orthwein Investment Co.,160 Mo. App. 369, 140 S.W. 921, and some other cases relied on, where the person collecting on the cashier's draft knew that the cashier was speculating in the market on his own account, and that they were his individual transactions in which a bank could not possibly be legally interested. The two cases cited were essentially cases where it appeared that the cashier had been speculating, gambling on the market. In the case at bar, however, so far as anything appears, regular commercial paper was discounted at the defendant bank by Tindle and the money paid over to him. When it became due he gave, first, his own check on his own bank then as cashier and in the ordinary course of business, issued this draft on another bank in favor of the defendant bank for the amount. This is entirely unlike the cases referred to, and in our judgment makes it a bank transaction between two banks. The check Tindle gave for the notes he had put up, for which the defendant bank held collateral, was on his own bank, it is true; but that fact in itself and under the circumstances in this case carried no notice of any irregularity about it. [St. Charles Savings Bank v. Edwards, supra.] It would be a curious proposition if the cashier of a bank did not have his own funds in his own bank. There must be something more than the mere fact that he drew his check on his own bank to make that check void. Here the cashier drew his own check on his own account in his own bank, in connection with a transaction that so far as defendant bank could know or was charged with knowledge, was entirely regular. This is particularly so where the defendant bank held collateral for the debt which the check was intended to pay. There was nothing in it, under the facts here present, to carry any notice to the defendant bank of any irregularity in it. So that we think the trial court was clearly wrong in rendering a judgment against the defendant bank on that draft.

With reference to the draft for $3060.88, we are compelled to hold that the learned trial court was in error in finding against defendant on that draft for any amount. The defendant bank had in its hands notes to which Tindle was only indirectly responsible by being a member of the firm to whose order they were issued and for whose benefit they were discounted. It is true that Tindle was a member of that firm, but he had two other partners and there was nothing irregular whatever in that concern — a partnership — putting up its notes, having them discounted by the bank, and if it allowed Tindle to receive the proceeds of the discount, the defendant bank was not concerned. The fact that the proceeds of the discount were paid to Tindle is of no substantial import. It was a regular business transaction, conducted in the ordinary and usual way and there was nothing whatever in it to convey or intimate in any way to the defendant bank that Tindle, when he discounted these notes for his concern, was dealing on his personal account any further than he was also a member of that firm. It is rather curious to note that the learned trial court did, in a measure, recognize this draft as valid, for it refused to hold defendant for all of it. When these notes of the Concord Mercantile Company, which had been discounted for it by Tindle, were about to fall due, Tindle wrote to the defendant bank asking that they be sent down to Caruthersville for collection. Defendant bank sent them, not to Tindle's bank but to another bank at Caruthersville. Not receiving payment for them, its president went to Caruthersville, took the notes from the bank to which they had been sent and, in the ordinary course of business, presented them at the Pemiscot County Bank in its banking house, the bank open for business; presented them, not to Tindle personally, as it appears, but to an assistant cashier there. There being a question between Tindle and his partners in the Concord Mercantile Company as to who should adjust and pay off this indebtedness, Mr. Schmoll saw all of them. The partners arranged it among themselves, so that one of them gave his check on another local bank for his proportion of it, less $500, which he had before then paid over to Tindle, on Tindle agreeing to make that good. Tindle thereupon gave his check for this $500, and also for $1280.44, his proportion of the indebtedness evidenced by his company's notes, and the other partner, Johnson, gave his check for $1280.44, his proportion. How it is possible to arrive at a conclusion on this state of facts, that there was anything unusual about this transaction, or anything calculated to put the defendant bank on notice that Tindle was improperly using the funds of the bank in payment of his own indebtedness, does not seem to us to follow from the transaction. It was in evidence that Tindle had frequently overdrawn his account, and evidence to the effect that he had done so with the knowledge of his fellow directors and officers of the bank. It was in evidence that about the time he issued these checks, which were taken up and absorbed by the draft, they could have been met by deposits which he had subsequently made in the bank to his own account. So that the Pemiscot County Bank had funds of his on hand, according to this evidence and as shown by its books, with which these drafts could have been paid. The fact that it afterwards developed that Tindle was indebted to the bank in a large amount, does not do away with the fact that at or about the time when he made his checks and this draft, he had ample funds out of which to pay them deposited in the Pemiscot County Bank. That he had made such deposits is not contradicted.

The evidence further shows that for years Tindle had been the sole manager of the concerns of this bank. As far as the minutes introduced in evidence show, the attention of the other directors of the bank and of its officers to the affairs of the bank, was of the most casual, perfunctory character. They left everthing to him; they knew that he had overdrawn at different times; they knew he had been in the habit of issuing checks on his bank in payment of his own indebtedness and using the bank's draft on them. So that our conclusion is that the learned trial court fell into error in awarding any judgment on this draft for $3060.88 against the defendant. The learned trial court was entirely right in excluding from the judgment the amount of the Johnson check. That much of his action is approved. His action in awarding any judgment against defendant on either of these drafts, is disapproved.

We have not here noticed the transfers of property by Tindle and his wife to Cunningham for the Pemiscot County Bank. Nor did the learned trial court in any manner cover this feature of the case in his statement of facts, was a material and constitutive issue.

A finding of facts which does not embrace all the constitutive facts is open to attack in the appellate court. [Fahy v. Springfield Grocer Co., 57 Mo. App. 73.] All the constitutive facts, separately from the conclusions of law, must be stated so that exceptions may be saved thereto. [Cochran v. Thomas,131 Mo. 258, 33 S.W. 6.] Among the points made in the motion for a new trial and on the assignments made by counsel before us this point is covered. Counsel for the appellant Tower Grove Bank also specifically complain that there was nothing but a general judgment here and no judgment such as required by the statute.

In Cochran v. Thomas, supra, it is said (l.c. 268): "We are of the opinion that under this provision (referring to the section above cited) the court is required to find and state in writing, not only every constitutive fact in issue to which his attention is directed, but also separately the conclusions of law thereon in order that exceptions may be taken thereto."

It is true that in the case at bar no declarations of law were asked or given, and in the Cochran Case our Supreme Court holds that failing to make such request a general finding for one party is equivalent to a declaration of law that upon all facts found such party is entitled to recover is sufficient to support the judgment. But the case at bar goes further. Here there is no distinct finding of many of the constitutire facts in the case, and for that reason we think the finding of facts is insufficient and would warrant a reversal of the judgment and a remander of the cause.

Our own view of it is, that the defendant bank was certainly entitled to participate in the amount realized on these properties and the trial court should have found one way or the other on this.

The point is made and very strongly argued before us, that as this case was determined by the trial court September 17, 1917, when the Act of April 17, 1917, was in effect, namely, June 18, 1917, (Laws 1917, p. 143), that this case should have been determined by the trial court and should be determined by us in the light of that act. We do not consider it necessary to pass on that phase of the case. If the judgment was reversed and the cause remanded on a new trial and a new trial had, the question might come up as to the effect on this action of that act. On this we express no opinion.

The action of the circuit court in rendering any judgment against defendant on either cause of action is reversed and the cause remanded with directions to enter up judgment for the defendant on both counts of the petition. Allen and Becker,JJ., concur.