First National Bank v. Badger Lumber Co.
The First National Bank of Trenton v. The Badger Lumber Company
Headnotes
Summary
Syllabus and headnotes are prepared by the reporter or publisher, not the court, and are not part of the opinion.
Opinion of the Court
Text extracted by OCR from a scanned original; check the original for exact wording.
Smith, P. J.
— The plaintiff is a national bank and the defendant a business corporation. The general business office of the latter is at Kansas City, though it has a lumber yard at Trenton which at the time-the transaction took place out of which this action arose was under the management of one Hershe whose duties it seems were to use his best endeavors to make sales of lumber furnished by defendant, make collections, pay the necessary expenses of the business there,, make daily reports of the business to the general office, make deposits of money collected in the local banks, and check out the same in the name of the defendant.
Hershe made two notes in the name of the defendant which he paid before he made the one of which we. shall have occasion to presently speak, but whether the-defendant knew of these transactions is not shown by the evidence. Hershe fell behind with the defendant in respect to the faithfully accounting for all moneys-received by him in his capacity as agent for the defendant. To cover up his defalcations he made in the name of the defendant a note to the plaintiff bank in which he had been depositing the moneys of the' defendant for the sum of $500, which the defendant refused to pay at maturity, or at all, on the ground that Hershe had no authority to make and sign the same for it. It does not appear that the plaintiff had knowledge of Hershe’s want of authority to do this. It seems to have loaned the money on the credit of the defendant. Indeed there is much evidence adduced from which this might possibly have been inferred; but however this, may be the. plaintiff seems to have conceded after the defendant’s refusal to pay the note that Hershe'had not *331 the requisite authority to make the note, and so sued the defendant for the return of the money borrowed on its. note. It appears further that Hershe received'for the note so made to plaintiff a draft for $500 on the Bank of Commerce of Kansas City which he sent to the defendant who collected the same.
The defendant not only refused to pay the note but to return the amount thereof which it received after becoming acquainted with all the facts. The trial court in effect declared that the defendant incurred no-liability to plaintiff in consequence of these facts. It repudiated the unauthorized act of its agent in signing the note but ratified the transaction to the extent of retaining the proceeds of the discount after becoming aware of all the facts. This of course the law does not tolerate. A party under such circumstances cannot repudiate that part of an unauthorized transaction of an agent which is unfavorable to him and adopt that part which is favuorable. Nichols v. Kern, 32 Mo. App. 1 ; Ruggles v. County, 3 Mo. 497 ; State ex rel. v. Harrington, 100 Mo. 170 ; Mechemon Agency, sec. 148, and authorities cited in note 1. He must approve and ratify it entirely or not at all.
Although the defendant did not authorize its agent to borrow of the plaintiff said sum of money and was ignorant of the fact that he had done so when the said sum was paid over to it, yet if after defendant ascertained the fact that its agent had borrowed said sum on its credit and that he had paid over the same to it, then upon every principle of right doing and justice the debt became its own as much so as if it had in the first instance authorized its agent to procure the loan of the plaintiff. Under all the circumstances it would be more reasonable and equitable to hold the defendant to an agreement which it' ignorantly ratified than that the plaintiff who was acting in good faith should be sub *332 jectedto loss. Ruggles v. County, 3 Mo. 497 ; Norton v. Bull, 43 Mo. 113 ; Watson v. Bigelow, 47 Mo. 413 ; Carson v. Cummings, 69 Mo. 325 ; Fowler v. Bank, 22 N. Y. (Sickels) 138; Davis v. Krum, 12 Mo. App. 279 ; Mechem on Ageney, sec. 113-116-148; Herman on Estoppel & Res Adjudicata, sec. 1073-1074.
The defendant should upon repudiating the unauthorized act of its dishonest agent have returned the fruits of the latter’s crime which had come into the possession of the former, though innocently so. When defendant was advised of the fact that it had money in its possession which it had received from its agent and which had been obtained by him in its name and upon its credit by fraud, the least that it could have done would have been to make restitution to the rightful owner. The defendant by retaining the fruits of Hirshe’s crime after acquiring full knowledge of the unauthorized transaction made that transaction its own. Davis v. Krum, 12 Mo. App. 279 ; Mechem on Agency, supra. The court erred in directing the jury that under the evidence the plaintiff could not recover.
The judgment of the circuit court will be reversed and cause remanded' to be proceeded with in accordance with the views we have herein expressed.
Gill, J., concurs in separate opinion, Ellison, J. dissents.
Concurrence
Text extracted by OCR from a scanned original; check the original for exact wording.
Gill, J.
(concurring.) The case as gathered from the record is simply this: Hershe was from October, 1887, to August, 1891, the agent or manager in charge of defendant’s lumber yard at Trenton. During that time Hershe in the name of his principal kept an active bank account, first, with Shanklin & Austin, and then with the Grundy county National Bank, and frequently during all that time borrowed on account of said principal various sums of money from said banks by overdrafts. In July, 1891, Hershe, in the name and behalf *333 of the said Badger Lumber Company, borrowed $500 from plaintiff and gave the note of his principal therefor. This money was at once turned over to said lumber company and they used it as their own. Subsequently Hershe was discharged, defendant refused to pay the note on the ground that Hershe had no authority to execute it, and the plaintiff brought this action tendering the note in court and ashing, judgment for the said $500 which Hershe had procured from it and given over to defendant.
In my opinion the trial court erred in giving a peremptory instruction for the defendant. In the first place I think there was evidence tending to prove that Hershe was authorized to borrow the money in controversy. The testimony shows that for more than two years prior to this transaction he had on divers occasions secured in the name of the defendant advancements from the banks at Trenton, and the evidence tends to show that of this defendant had full knowledge. And in the second place whether Hershe had such authority or not there is conclusive proof that this money so borrowed from the plaintiff was turned over to the defendant and they have used it as their own, and refused to return the money after being advised of the fact. They cannot deny Hershe’s authority to borrow and at the same time hold on and appropriate the proceeds of such borrowing. The case of Watson v. Bigelow, 47 Mo. 413 , settles this feature of the controversy against the claim of the defendant.
Ellison, J.
— This action is for money had and received of plaintiff by defendant. The statement of the petition and the case as made is a concession that the agent had no authority to execute the note.' I think the petition and the testimony refute the idea that defendant borrowed any money of plaintiff. To *334 borrow is to. contract. There is no attempt to show any dealing with this plaintiff by defendant’s agent ■except in the single instance, over which this controversy has arisen, and in this instance the agent falsely represented or assumed authority to borrow for defendant and to execute defendant’s .note. There is but the isolated transaction. The case then has nothing to support it unless it be ratification and I think has not ■even this to rest upon. Keeping in mind that this action is not based on a contract of any sort, but is for a sum “had and received of plaintiff’s money without any consideration therefor; ’ ’ and that the case as made concedes there was no authority to make the note or to borrow the money at all, the act claimed to be ratified is necessarily only the act of the agent in receiving of plaintiff the money or the draft for the money. But there is no evidence whatever that defendant knew that the money came from this plaintiff. Defendant must have known this in order to be bound by ratification. Ratification presupposes a knowledge of the act ratified. Winsor v. Bank, 18 Mo. App. 665, 675 . But defendant retained the money after knowledge. Still this case should not be placed with that class of cases declaring that if the principal retain the fruits of a transaction done by his agent after he becomes aware of how such fruits were obtained he will be held to have ratified the act. This case belongs entirely to another class. The money which is here sued for was not paid or turned in to defendant as defendant's money or as money which had arisen-on a/ny of defendant's transactions. It was paid by the agent and received by defendant as the agent's money in discharge of his debt. The money was received in payment of what was due to defendant from its agent, for collections made or to cover his defalcation — I assume this to be practically conceded. Defendant knew nothing of what was after- *335 wards disclosed at the trial and only received from the agent a debt he owed it. In snch case defendant may retain the money without thereby ratifying the conduct -of the agent. This has been expressly so ruled. Bohart v. Oberne, 36 Kan. 284 ; Baldwin v. Burrows, 47 N. Y. 211, 212 ; The Penn, etc., Co. v. Dandridge, 8 Gill & J. 324. Indeed, the case is no more than this, that defendant’s agent owed it money. He obtained the sum necessary to pay it by the fraudulent use of its name, without its knowledge or consent. Defendant received the money as was its right. Money is current and passes from hand to hand without the necessity of inquiry or responsibility upon the receiver to the .source from whenqe it comes. Defendant is no more liable to this action for the money received than if it had been obtained of plaintiff by the fraudulent use of any other name.
But aside from this consideration as before intimated the case as presented, in my opinion, rebuts all idea of contract between the parties by ratification or otherwise. I think the action of the trial court should be affirmed.
How later courts describe this case
No later court has written an explanatory parenthetical about this case yet.
Cited by 6 cases
View all citing references →Relies on it most ⓘ
Citing references are not a citator: they show that a later opinion cites this case, not whether it followed, distinguished, or overruled it. Check negative history before relying on this case.