179 Mo. 648 | Mo. | 1904
— This is a suit for damages, founded on alleged fraudulent misrepresentations. It is what is commonly called an action for deceit. Plaintiff is a national bank at Rock Island, Illinois; the defendant a Missouri corporation located at Kansas City, and engaged in the business generally conducted by trust companies, which includes the buying and selling
AMERICAN NATIONAL BANK.
Kansas City, Mo., Aug. 20th, 1898.
Mr. C. Hellpenstell, Cashier, Rock Island, Ills.
Dear Sir: — I told you yesterday I would write you in regard to cattle commission firms. Before giving you a list I will say, while we do not discount the value of a good endorsement, in a good, stiff firm, we figure more particularly on the value of the cattle actually covered by the mortgage in each case, and the general reputation and standing of the farmer or feeder who makes the paper. As you know this business is not a new thing and the business is as well established in this section as loaning on stocks and bonds in the east. The different commission houses have their regular line of customers in these farmers and feeders as a bank has in its correspondents; and in this way, being regular customers, we local banks become to know in some measure the value of these individuals, knowing many of them personally.
As regard to the different firms’ endorsement we would say that the larger firms are usually on the back of a proportionally larger amount of paper ihan the firms of smaller capital, so that, in many cases, the paper of the smaller firms are as much in demand as the larger, because the security (number and grade of cattle for a given loan) is as good or better. However, the mere endorsement of some of the firms here is within itself perfectly good.
[Here follows a list of names of fourteen commission firms, in which is A. X Gillespie & Co.’s.]
We local banks get a great deal of first class cattle paper from our corresponding banks in the country, especially Kansas, Missouri, Texas, Indian Territory and Oklahoma, bearing their endorsement, which is good paper.
There is plenty of this paper out here for us all, so I will be pleased to do anything for you I can at anytime, by way of advice, selection of it, or even the purchase of it for you, for there are about a half dozen eastern banks that I now buy paper for, and have done so in some cases two or three years.
*654 However, as I told you yesterday, I am a stockholder and director in The Central Trust Company of this city, which is making a business of handling this paper, buying it for itself and also for its connections, and I would be pleased for you to deal with them, unless you have some preference elsewhere. I. will have them write you and submit you offerings, if agreeable. Yours, etc.,
J. R. Dominick.
The first two letters from the defendant were in the nature of solicitations for the plaintiff’s custom and were as follows:
Kansas City, Mo., Aug. 22, 1898.
Mr. C. Hellpenstell, Cashier Peoples National Bank, Rock Island, Ills.
Dear Sir: — Mr. Dominick, Cashier of the American National Bank, says you buy considerable cattle paper in this market, and suggests that we correspond with you. in regard to it.
We handle a great deal of this paper. In fact we make a specialty of it, buying it for our own use and placing it with our connections. We buy it outright and carry it until it is sold, and when sold we either endorse it or not, as is preferred by the purchaser, making a difference of one per cent in the discount rate where we endorse it. We are familiar with the standing of the different commission firms here at the stock yards and are in touch with them and examine carefully all papers taken. Since we have commenced business we have never had a* note to run past due a day.
Our company is now increasing its capital stock to $100,000, $85,000 of which has been paid in.
We carry accounts with the Produce Exchange Trust Company, New York City, American Trust & Savings Bank, Chicago, and American National Bank, Kansas City, to whom we respectfully refer.
At the present time, our discount rate to you would be six per cent without indorsement, or five per cent with it. All paper could be sent to you, subject to inspection, and if not found satisfactory you could return it. When paper matures we would like for it to be sent to us for collection, and remittance would be made free of charge, either direct to you or placed for your credit wherever you direct.
We enclose statement of the company from April 11th to June 30th, showing progress made during that time. Since then our business has been equally satisfactory.
Yours very truly,
THE CENTRAL TRUST COMPANY OP KANSAS CITY.
By J. C. Hill, President.
*655 Kansas City, Mo., Oct. 17, 1898.
Peoples National Bank, Rock Island, Ills.
Gentlemen: — We own and offer for sale some choice, well se* cured cattle paper. Said paper is well secured by mortgage on cattle, given by good parties and endorsed by live stock commis. sion houses of "this place. We offer these notes with or without our endorsement, making a difference in rate of one-half per cent. We buy the paper on the Stock Exchange here and use our own capital, investing in none but that which we think is perfectly safe; hence, we are willing to back the paper with a slight difference in rate.
In case you wish any investments of this character we will take pleasure in submitting some to you. Should you accept any of our offerings, you can do so with the understanding that if upon investigation you find any of the paper unsatisfactory we will replace same with other paper satisfactory to you, or we will reimburse you in full relieving you of the paper and allowing you in* terest for the time you carried it, at rate you take it from us.
Would be glad to do some business with you in this way: Hoping to have a favorable reply, I am,
Yours truly,
R. K. Wooten, Jr., Secretary and Treasurer.
Plaintiff made no reply to either of these letters.
On November 14,1898, defendant wrote the following:
Kansas City, Mo., November 14, 1898.
We submit below a list of papers and securities which we offer at six and one-half per cent without our guarantee and at six per cent-with our guarantee, subject to previous sale. . . .
No. 6. Note of J. S. Baumbaugh, due March 2nd, 1899. Endorsed by A. J. Gillespie Com. Co., secured by a mortgage on 200 head of 3 year old Panhandle steers, average weight 800 lbs; 600 bu. corn and 300 tons of cane and kaffir corn; cattle are on full feed in Marion county, Kansas. Amount of note $5,200.
Yours respectfully,
R. K. Wooten, Jr., Secy, and Treas.
Without answering that letter the plaintiff had the following correspondence with Mr. Dominick, cashier of the American National Bank, with whom the plaintiff’s cashier was personally acquainted:
*656 Rock Island, 111., November 16, 1898.
Mr. J. R. Dominick, Cashier, Kansas City, Mo.
Dear Sir: — We are in receipt of an offering sheet from The Central Trust Company which I enclose herewith. Should you be able to give the papers No. 2 and No. 6 your moral endorsement would ask you to have the same forwarded to us for discount. Please let us know if you are personally acquainted with any of these, and if not, you are perhaps in the position to recommend to us some good and desirable papers.
Tours very truly,
C. Hellpenstell, Cashier.
Kansas City, Ma, Nov. 17th, 1898.
Mr. C. Hellpenstell, Cashier, Rock Island, 111.
Dear Sir: — Tours of the 16th is received. I consider the loans selected by you on the enclosed list perfectly good — in fact, I think all' the paper offered on the list good. I would not be afraid to accept it myself.
I have, therefore, told the Central Trust Company to forward the paper to you. I think you will find the Central Trust Company nice people to deal with. I know them to be straight and conservative.
At any time you want paper and will write either to them or to me, stating the amounts, the order will be carefully and painstakingly looked after. I am sure I would try to do so.
Yours, etc.,
J. R. Dominick, Cashier.
Mr. Dominick besides being cashier of the American National Bank was a stockholder and director in the defendant trust company and the plaintiff knew it.
The following letters which closed the transaction next passed:
Kansas City, Mo., Nov. 17, 1898.
Peoples National Bank, Rock Island, Ills.
Gentlemen: — We are instructed by Mr. J. R. Dominick, cashier of the American National Bank, that you accept our number 2 and 6 of Nov. 14 offering. We enclose the two notes as ordered, and have discounted the St. Amand & Wyatt note, $7,395.93, at 6 1-2 per cent for 164 days, amount $219, leaving net $7,176.93.
The J. S. Baumbaugh note for $5,200 at 6 1-2 per cent for 104 days $97.64 leaving net $5,102.36. The $5,102.36 and $7,167.93 make a total balance due us of $12,279.29. To cover same please remit Commercial National Bank, Chicago, Ills., for our credit, notifying us of the amount. If it is not convenient for you to remit Chicago, Kansas City Exchange will do us just as well.
*657 We think you will find both nice pieces of paper. We will forward you recorder’s certificate against the mortgage of St. Amand & Wyatt as soon as received by us. Both of the original mortgages were filed with the recorder of deeds in the different counties and have the required amount of revenue stamps upon them.
We thank you very kindly for this order and hope to merit a continuation of your favors in this line in the future. We investigate all-paper taken by us thoroughly; invest our own money and do not take anything except that which is well secured and endorsed by good parties.
We will send you our offerings from time to time, and at any time you see fit to accept any of them, you can do so with the understanding that you are to take and pay for same, and are to have a reasonable time within which to investigate and if after thorough investigation you are not satisfied, we will furnish you other paper instead or reimburse you in full, relieving you of the paper, allowing you interest for time carried at rate you take it from us.
Would be glad if you would investigate us that you may know with whom you are dealing. Our correspondents are Produce Exchange Trust Company, New York; Commercial National Bank, Chicago, Ills.; American National Bank, this city.
Yours very truly,
R. K. Wooten, Jr., Sec. and Treas.
Rock Island, 111., Nov. 19, 1898.
Central Trust Co., Kansas City, Mo.
Gentlemen: — I acknowledge receipt of your favor of the 17th inst., with note of St. Amand & Wyatt, $7,395.93; also note of J. S. Baumbaugh for $5,200 which we have discounted according to your figures. As per instructions we remitted to-day to the Commercial National Bank of Chicago the net proceeds of the same, which was $12,279.29. If you have some extra good papers to offer kindly submit them to us.
Yours very truly,
C. Hellpenstell, Cashier.
The whole transaction is contained in those letters. It turned out that the maker of the chattel mortgage, J. S. Baumbaugh, had never owned any cattle filling the description, and the mortgage was therefore worthless. The maker and endorser of the note became insolvent and therefore the note became worthless.
The evidence showed that notes of this kind, that is, purporting to be secured by mortgages on cattle then in
The commission merchants had their transactions usually directly with the cattle raisers, and the banks with the commission merchants. The commission merchants, being brought into personal relation with the farmers and the men who raised cattle and brought them to market, came to know the business character and financial standing of their customers. In like manner the banks in their dealings with the commission merchants came to know them and to form an estimate of their business characters. When paper of this kind was offered to the banks for discount they took into consideration the character of the commission merchant who offered it, and that being satisfactory inquired of him concerning the character of the farmer or cattle owner whose note was offered. If the information received from that source was satisfactory the paper was accepted by the bank. In such transactions the banks did not send inspectors out in the county to find the cattle and verify the recitals in the mortgages. The plaintiff bank had been in the habit for sometime before of buying this kind of paper from the banks in Kansas City, and handled a considerable quantity of it.
In this case the note in question accompanied by a duly certified copy of the mortgage was offered for discount to the American National Bank by the A. J. Gillespie Commission Company, a concern with a paid-up capital stock of $100,000, then in good credit, and well known to the bank. The president of that company, who was also well known to the bank, and who had- formerly been a banker in Kansas near where Baumbaugh, the maker of the note and mortgage in question lived, and who knew him, informed the bank that he was a farmer and a man of good standing and good character. On
There was a very close relation between the American National Bank and the defendant, the Central Trust Company, all the officers of the bank being directors in the trust company. The bank sold the note to the trust company, and the trust company sold it to the plaintiff. The copy of the mortgage was delivered with the note to the plaintiff.
The evidence showed that Baumbaugh was, as represented, a reputable farmer owning a farm of 160 acres in Kansas, and up to this time his name was untarnished. But he had a son-in-law named Gillett, who was a courageous speculator in cattle, and in whom Baumbaugh seemed to place great confidence. About November 2, 1898, Gillett told Baumbaugh that he was purchasing 5,600 head of cattle in Oklahoma, a part of which he was going to bring to his farm in Kansas and feed them there for market, and requested Baumbaugh to execute certain notes and mortgages securing the same on these cattle to be so placed on his farm. Baumbaugh did as requested without waiting for the cattle to arrive. Gillett took the notes and mortgages, and after having had the mortgages registered- according to the law of Kansas, went to Kansas City and placed the notes, with copies of the mortgages, in the hands of the Gillespie Company, to sell, representing to that company that the cattle called for by the mortgages were in place as represented. Gillett was then well known in the trade and up to that time no imputation rested against his name. But Gillett never bought the 5,600 head of cattle, and therefore there was never anything for the mortgages to take effect upon. The officers of the plaintiff bank testified that in buying the note they relied solely on the representation made in the letters of defendant in relation to the security. As against that evidence defendant referred to the letter of plaintiff to the cashier of the American
The case was tried by the court, jury waived. At the close of the plaintiff’s ease, the defendant asked an instruction in the nature, of a demurrer to the evidence, which the court refused, and defendant excepted. After all the evidence was in the court rendered judgment for the plaintiff for the amount of the note and interest. Prom that judgment the defendant has appealed.
I. The first- point presented in the brief of the respondent is that the record shows nothing for this court to review, because, since it is an action at law tried by the court without a jury and no instructions asked or given, this court can not say on what theory the judgment of the trial court rested; citing, Miller v. Breneke, 83 Mo. 163; Bethune v. Railroad, 139 Mo. 574; Wischmeyer v. Richardson, 153 Mo. 556.
The decisions in those cases are to the effect that in an action at law tried by the court without a jury the appellate court will not weigh the evidence, as in an equity case, but will review only questions of law. There was no instruction asked in this case except one in the nature of a demurrer to the evidence which the court refused. Exception to that ruling was duly preserved. Therefore the ruling of the court on that instruction is properly before us for judgment.
II. To judge whether there was any evidence in the ease to sustain the cause of action stated in the petition, it will be necessary to bear in mind what the gravamen of the action is. It is thus stated in the petition: “Plaintiff further states that each and all of said written statements and representations regarding the security
The plaintiff does not bottom its case on the mere fact that the representations as to the security were not true, as it would have done in a ease arising out of a contract of guaranty, but upon the wrongful conduct of the defendant in making a positive statement which was not only untrue but of the truth or falsity of which the defendant had so little, if any, information that its act in making the statement was reckless and in utter disregard of whether it was true or false, and not only that, but that it was made while the defendant was conscious that it did not'know that it was true, and finally, that it was made with a knowledge that it was untrue. In the brief for respondent it is said: “We direct attention to the evidence showing (1) the defendant made the misrepresentations knowing it was without knowledge of their truth or falsity, and (2) that it had no information sufficient to justify a belief in their truthfulness, and (3) that defendant did not in fact believe the representations to be true. That is the plaintiff’s case.”
If, therefore, beyond showing that the statement was untrue, the evidence goes no further than to show that the defendant bought the paper in the market at the usual banking discount, having first taken the care that a bank accustomed to handle such paper usually took to satisfy itself that.the security was as represented, and then, without further investigation or further information, sold it to the plaintiff, describing it as it appeared on its face to be, offering to endorse it for a half of one per cent if the plaintiff so preferred, then can it be said that the defendant’s conduct in the
The language above quoted in the brief for respondent is from the opinion in Buford v. Caldwell, 3 Mo. 477. In that case the defendant had sold some land to the plaintiff and had, during the negotiations, pointed out to the plaintiff certain houses and other improvements, and represented that they were on the land he was offering to sell, which proved to be untrue. The court said: “It may be reasonably presumed that Caldwell, before he built his house or cleared his field, ascertained the lines of the survey, and should have been trusted in representing that they had been made upon the tract, and were included within the lines of the tract of land sold to Buford. A man of ordinary prudence would have ascertained the truth, and the law will presume that he had done so. Under such circumstances, to state what is not known to be true, is just as criminal in the eye of the law as to state what is known to be false. . . . But of a thing equally known to both parties, or about which both parties had equal means of information, and in regard to which they are equally negligent, neither law nor equity «will afford relief. ’ ’
What is said in that case can not be construed to mean any more than that if the facts are of such a nature as that a man is presumed to have personal knowledge of them and is presumed to know that the person with whom he is dealing relies on him for information, he is as guilty if he makes a false representation concerning
Therefore, when the defendant in its offering sheet described the Baumbaugh note as secured by mortgage on 200 head of cattle, the nature of the case forbade the presumption that the defendant was undertaking as of its own knowledge to verify the truth of that statement and no one knew better than the plaintiff that no such personal knowledge was implied and no such verification intended. The offering sheet was only designed to describe the paper as it purported to be, and the plaintiff presumably knew it.
In Dulaney v. Rogers, 64 Mo. 201, relied on by re
Hamlin v. Abell, 120 Mo. 188, is also relied on as a support for plaintiff’s proposition. But the facts of that case distinguish it from this. The representation there made was that the notes offered for sale were well secured by collaterals, when in fact there were no collaterals. The usual mode of business of hanks and brokers handling commercial paper secured by collateral, is that the collateral accompanies the paper offered for discount and is delivered with it when accepted. The personal knowledge, therefore, that a hank or broker would naturally be presumed to have in regard to collateral securing such paper is very different from that which a. bank would he presumed to have in regard to the actual existence of cattle in a distant locality called for in a mortgage.
We have nothing to take hack from what was said by this court in those cases; the law was correctly declared as applied to the facts then being considered, hut
The court erred in refusing the instruction asked by defendant in the nature of a demurrer to the evidence. The judgment is reversed.