224 Mo. 42 | Mo. | 1909
Suit for fraud and deceit. Defendant was vice-president of a corporation known as “Straborn-Hutton-Evans Commission Company. ’ ’ It will be called the “Company.” Plaintiff will be called the “Bank.” The bank bought at a discount from the company a note known as the Huntley note, for which it paid $5,856.49. Failing to collect from the payors or tbe indorser (tbe company), tbe bank sues to recover that sum from defendant. A jury being waived, the court gave judgment for $6,882.07 — -filing the following memorandum: “While a decision for the plaintiff in tbis case must necessarily result in great hardship to the defendant, yet it is the duty of the court to declare the law as announced by the Supreme Court of the State, and under the facts and the law as thus declared the judgment must be for tbe plaintiff.”
From that judgment, defendant appeals.
Tbe pith of tbe petition is that tbe bank was doing a general banking business at Richmond; that tbe company bad an office in Kansas City, Kansas, under tbe control of defendant, one of its executive officers; that tbe company on May 26,1903, “was in a-failing condition, all of which was well known to said T. S. Hutton;” that in September, 1901, William M. and Kate Huntley were tbe owners of 1180 bead of cattle ranging near Rush Springs, Indian Territory, and executed a chattel mortgage on them to secure to tbe company •their notes aggregating about $20,000; that subsequently such shipments were made of said cattle to tbe
In connection with that recital in the note inclosed with defendant’s letter, it is charged that several other notes were sold to the bank at the same time and that the letter states as follows: “You will note that all
It is next charged that by such statement in said letter, “defendant fraudulently intended to cause plaintiff to believe and did cause plaintiff to believe that said note was a renewal of unpaid indebtedness” secured on the 1180 cattle as recited in said note. It is next alleged that the bank relied on such fraudulent and false representations, pretenses and statements contained in said note “and set forth in said letter” and, believing the same to be true, bought said note “at the request of defendant and at his request paid” said sum therefor; that shortly thereafter the company “proved to be insolvent, and was at the time of said purchase and now is insolvent, which fact was and is well known to defendant.”
The answer was a general denial.
I. Error is assigned in admitting testimony. When plaintiff offered the deposition of one Huntley, counsel objected to the whole of it upon the ground that matters testified to by him are conversations with one Peery and the transactions between him and Peery are hearsay in character, etc. Then, this from the court: “I will pass upon the objections to the deposition when I pass upon the case.” At the conclusion of the reading of the deposition counsel moved to strike it out for the same reason. When the deposition of one Harness was read, this from counsel: “I want to make the same objection that I made to the deposition of W. M. Huntley;” and after Harness’s deposition was read, this: “I would like to interpose this same objection to all other depositions and the same motion at the end of each.” And when the deposition of one Burke was offered counsel said: “The same motion at the beginning and end as made to other depositions.” The record does not disclose any ruling made
Under such circumstances the assignment cannot be considered. This because: (1) In the first place, we are prohibited by statute from allowing an exception here not expressly decided below. [R. S. 1899, sec. 864.] (2) In the second place, even if we {ex gratia) should construe the judgment as, in effect, an adverse ruling on the objections and motions, yet such ruling would be correct because of the general form of objections and motions. If there be any proper testimony in a deposition a general objection to the whole is bad. In like case a motion to strike out is bad. Now, there was matter in all these depositions objectionable as hearsay and conclusions, but there were none not containing some proper testimony. Learned counsel should have segregated the good from the bad, leveled their objections specifically at the bad, earmarking it in some distinguishable way, obtained a ruling and excepted to thát ruling; or, failing to get a ruling, objected and excepted to such failure to rule. This they did not do.
There are other objections to testimony which, in the view we take of the case, need no attention.
The point is ruled against defendant.
II. It is insisted the abstract is fatally defective as follows:
(a) ;In that it does not show that the motion for a new trial was filed during the judgment term.
(b) Nor that the bill of exceptions was signed by the judge.
(c) Nor that a certified copy of the judgment and order granting an appeal was filed here.
As we grasp the gist of point d, it is a criticism on printing the whole hill of exceptions instead of making an abstract. But if the whole be printed, respondent cannot complain. The burden of such volume of record is on this court, not on respondent, in the first instance, and by rule 17 (whether wisely or not)' we permit the printing of the whole record in lieu of an abstract.
Point c is covered by our ruling in Coleman v. Roberts, 214 Mo. 634, and State ex rel. v. Smith, 172 Mo. 1. c. 458. We there, in effect, ruled that we would read into the abstract the certified copy of the judgment and order granting an appeal originally lodged here. Such certified copy was filed in this case. The point is disallowed to respondent.
The same disposition must be made of points a and b. This because we will take judicial notice of the sitting of the Jackson Circuit Court at terms prescribed by statute — i. e., when its terms commence. The record shows that the motion for a new trial was filed within four days of the judgment. From the date of its filing we judicially know it was not at the next term after judgment. The question then is: Had the court risen for the judgment term until court in course —was it in vacation when the motion was filed? The record affirmatively shows it was not in vacation. We find the following in the abstract of the record proper: “An entry of an order was made of record on said day by said court reciting the filing of said motion for a new trial.” The record proper shows that the motion for a new trial was “continued” to the April term. The April term, we judicially know, was the next term after the date of the filing of the motion. When the tabstract narrated that “said court” entered an order reciting the filing of the motion and “continued” the motion, those orders, ex vi termini, presuppose the
Touching the signature of the hill of exceptions: We find in the record proper the following: “defendant filed his hill of exceptions in said cause . . . and the said court then made and entered of record in said cause an order reciting the filing of said hill of exceptions . . . and said order further recited that said hill of exceptions he and the same was thereby made a part of the record in this cause.” We -find, moreover, that the signature of the trial judge is shown to be actually subscribed at the end of the hill. We do not agree with respondent’s counsel that a showing of the signature of the judge at the end of the bill stands on the same footing as narrations in the hill of record proper not belonging there. His signature belongs at the end of the hill and nowhere else. Record proper does not belong in the hill hut belongs elsewhere and those cases ruling to that effect are not pertinent to the point now up.
When an abstract asserts that a court of general jurisdiction solemnly made a hill of exceptions a part of the record of a cause, certain necessary implications are read into that matter. Such court is presumed to proceed hy right and not hy wrong, and its action is presumed to he preceded hy all antecedent steps making the action legal. The bill of exceptions could not legally he made a part of the record without it was settled, allowed and signed hy the judge. Therefore, when the court made it a part of the record it is equivalent to a statement that the proper precedent steps were taken to authenticate the hill and make it worthy of becoming part of the record.
The rules of this court are not administered except with reason. It would he self-stultification for us
The point is disallowed to respondent.
And in disallowing it we shall mete ont the same liberality in considering respondent’s brief. That brief, a paper book of 81 pages, is earmarked with industry and vigor, but is not constructed in accordance with rule 15 of this court. [Sullivan v. Holbrook, 211 Mo. 99.] From end to end it is a running commingling of facts, points and authorities, comment and argument, without distinguishing between one and the other. If such brief had been filed by appellant it would be discarded for appellate purposes under rule 15. This, because appellant carries the burden of showing error in the judgment. A respondent, however, can submit his cause without any brief if he so elect. In that condition of thing’s, it is manifest that the form of respondent’s brief is not of substance on appeal. Therefore, we will consider it.
III. No instructions were asked for plaintiff. One was asked for defendant and that in the nature of a demurrer. It being refused, defendant excepted. A proper consideration of that demurrer seeks the facts and determines the main proposition in the case.
In substance, the case on the facts is this: The Strahorn-Hutton-Evans Commission Company is a domestic corporation organized in 1895 and, until becoming insolvent in 1903, it had branch offices at Chicago, Illinois; East St. Louis, Illinois; Kansas City, Kansas, and Fort Worth and San Antonio, Texas. Each of those offices was in charge of an executive officer. During the times in hand Mr. Strahorn had charge of the Chicago office; Mr. Evans of that in East St. Louis; Mr. Simpson of that in Kansas City, Kansas, until January, 1903; and during the years 1900-01-02
The proof is all one way that Hutton had no charge or knowledge of the details of the business of the company at the Kansas City office for several years before January, 1903, but that such business affairs were in charge of Mr. Simpson, vice-president, as general manager. In January, 1903, Mr. Simpson sold out his large holding of stock in the company at 50% above par. At that time the undisputed testimony discloses that a Mr. Todd took his place as manager of the Kansas City office and was in charge on May 26, 1903. Whether Todd had been connected with the company there and familiar with the details of the business at that office is not shown ,• but as Hutton came from Texas and was absent much in 1903, it is fair to presume that Todd was put in as manager because of his familiarity with existing details of the business and because Hutton had not the details in hand and his time (as shown by the proof) was largely taken up elsewhere.
The company was capitalized for $200',000: It had a declared surplus of $100,000 in January, 1903, and its books showed an undivided profit at that time of an additional $60,000. It was doing a commission cattle business—buying and selling cattle on commission and on its own hook and loaning money on cattle (as well as to cattle dealers without security), widely over Missouri, Kansas, Oklahoma, Indian Territory and Texas. Its credit from 1895 to October, 1903, was A 1, but one or two cattle companies ranking commercially stronger.
In June, 1903, there was a heavy slump in the price of cattle. There is some evidence that the Southwest was afflicted with drouth, but, from whatever cause, cattle depreciated fifty per cent. The holders of cattle paper became uneasy. A panic grew and rapidly spread in the cattle business. Paper was called in by holders. Renewals were refused to cattle men. The marked dropped. Unable to weather the storm, in Oc
During its whole business dealing with the company the bank in purchasing paper never got any chattel mortgages, its officers never saw any, and never demanded any until after the insolvency of the company
On-the 25th of May, 1903, Seymore under instructions from the bank and as its cashier, appeared at the Kansas City office of the company and opened and conducted negotiations for six notes. There seems to be no dispute but what the negotiation was carried on with Todd and that the defendant was not a party to any of its details. As the result of that negotiation Todd dictated a letter under date of May 26, and that letter was brought to the defendant and signed
“Strahorn-Hutton-Evans Commission Co. “Live Stock Agent.
“Kansas City, Kansas, May 26, 1903.
“The Ray County Savings Bank,
“Richmond, Mo.
“Dear Sirs:
“In line with request of your Mr. Seymore, who called on us yesterday, we now enclose you herein, for discount, the following paper:
‘ M. L. Trout. . .$2611.85 Due Aug. 25 Dia. $ 39.18 Net $2572.67
J. W. Odom. . 904.65 Oct. 1 19.15 885.50
E. L. Brewster . 1032.95 Oct. 1 21.86 1011.09
Bonner & Lind. 1942.37 Nov. 6. 52.77 1889.60
C. G. Graham . 2201.15 Nov. 6 59-79 2141.36
K. & W. Huntly .6048.01 Dec. 3 191.52 5856.45
$14356.71
for which amount you may remit us in Kansas City Exchange, provided you find our extensions correct and satisfactory.
“You will note that all these are renewals except one note, for which ample provision is made in our form of mortgage, and all this paper will be met promptly at its maturity.
*58 “Thanking' yon, and hoping to hear from yon whenever we can serve yon at this end of the line in any manner, we are, Very trnly yours, “(Ends.) T. S. HtjttoN, V. P.”
The notes listed were discounted at once by the hank in accordance with figures shown in the last column. All of them were paid except $100 on the Lind note and the whole of the Huntley note. The president of the hank testified that the Huntley note was discounted on the strength of the representation made in the note and letter that it was secured on cattle.
Going back to the inception of the Huntley paper it seems the indebtedness originated in 19001. It then amounted to $26,000, and was secured on 1400 steers, cows, heifers, calves and hulls. The Huntleys lived in Indian Territory, the cattle were there and the business dealing was with the Kansas City office. Such things happened in connection with that deal that in September 21, 1901, the remaining cattle were rounded up1 on the range, counted and a new mortgage given to secure a reduced indebtedness, to-wit, $20,000, on 1180 head. That mortgage was taken under direction of Mr. Simpson, in charge of the Kansas City office,' and of Mr. Peery, the company’s field man in the Indian Territory, and is the one .in question. On dates immaterial here in 1901-02 certain shipments were made of the mortgaged cattle then marketable and the proceeds credited on the indebtedness. In December, 1902, something of a crisis seems to have been reached in the Huntley transaction. Mr. Peery, acting under orders of Mr. Simpson, opened up negotiations with W. M. Huntley to bring the cattle in to he surrendered under the mortgage then due. The record is silent as to where the Huntley paper then was. It shows that Mr. Peery did not have it. There .is testimony that the books of the company were destroyed by a
On the 29th. of April, 1903, Peery acting under the directions of Todd,- demanded a renewal of the balance left on the Huntley paper, and at that time Huntley, under protest, he says, but not under protest, Peery says, executed the following note which is the note negotiated a few/weeks later to the bank:
“$6,048.01 Kansas City, Kan., April 29th, 1903.
“On December 3rd, 1903, after date, without grace, I, we or either of us, promise to pay to the order of Strahorn-Hutton-Evans Commission Company, at its office at Kansas City Stock Yards, Kansas City, Kansas, six thousand forty-eight and 01-100 dollars for value received, with interest at the rate of ten per cent per annum from maturity until paid and ten per cent on the entire amount as attorney fees if placed |Ln the hands of an attorney for collection or suit is thereon.
*61 * ‘ This note is given in renewal of unpaid indebtedness, secured by a chattel mortgage on 1,180 cattle, given by us to Strahorn-Hutton-Evans Commission Company, dated September 21, 1901, filed for record at Ardmore, I. Ty., on the 27 day of Sep., 1901.
“Kate HttNtley,
“W. M. HttNtley,
“No. 13217. By W. M. HixNtley, Agt.
“Postoffice: Rush Springs, I. Ty.”
While dated at Kansas City, Kansas, the note was executed in the Indian Territory.
The Mr. Seymore who represented the bank in the purchase of the paper, has since died, and it is suggested in defendant’s brief that his death is the reason Todd, acting on behalf of the company, could not or did not testify.
At a certain time in October, 1903, rumor reached the bank that the company was in distress. Thereupon its president interviewed Hutton. Afterwards other representatives of the bank interviewed him. At the first interview nothing of material importance occurred. At the second time on inquiry as to the condition of the Huntley mortgage he, Hutton, stated in effect that the mortgage security was questionable on account of the freezing of cattle. Stress is laid on this admission. Counsel seek to give to it the significance that Hutton knew that fact in May, 1903, when the note was negotiated. At about the time of these interviews the creditors of the company had a meeting and by consent of them all, except one not disclosed, the affairs of the company were left in its charge, or really Hutton’s, to wind up. Plaintiff participated in this meeting and acquiesced in that course. There is undisputed evidence, as said, that Mr. Hutton then believed that, with careful management, all the obligations of the company would be met. Under this belief there was then placed on the back of the Huntley note a guarantee of the company that the note would
On the foregoing record, we observe:
(a) The charge, in the petition that the company on May 26, 1908, was in a failing condition and that such fact “was well known to said T. S. Hutton” is not sustained by the evidence. Contra, the evidence shows it was solvent and believed to be solvent, and its indorsements on discounted paper effective. Conditions leading up* to its undoing developed in the cattle market in the summer of that year.
(b) The charge in the petition to the effect that on April 29, 1903, the defendant, well knowing that the security of the chattel mortgage was no longer available but had been exhausted by sale, death, theft or by straying of cattle, did procure the Huntleys to execute their note of that date with intent to cheat and defraud, is not in anywise sustained by the proof.
The facts in this regard on this record are that the Huntley cattle were in a distant country; that in 1902 range fences were partly cut or thrown down where these cattle used; that they were herded in part by “riding the line';” that drouth prevailed; that the range was adjacent to great strips of open timber and unsettled country, some of which was inhabited by Indians and in proximity to the Port Sill reservation ; that the surrender of the cattle to Peery occurred in 1902 under Simpson, the predecessor of Hutton, and that Hutton had no personal knowledge of those facts at that time nor did he know in May, 1903, when the
It must he constantly borne in mind that plaintiff is not seeking to hold Simpson, Peery, Todd or the company itself for fraud. Therefore, we are not concerned with a cause of action in that behalf which may or may not exist as to the company, Todd, Peery or Simpson. Plaintiff is seeking to hold Hutton and may not transfer liability from each or any of the foregoing parties to him on that allegation without proof of his knowledge of or participation in what was done before he left Texas and became the ranking executive officer in Kansas City. The fact that Mr. Hutton in October, 1903, released' mortgages given by Peery, "White and Harness on cattle once covered by the Huntley mortgage does not tend to show his knowledge in December, 1902, or in May, 1903, of the Huntley and Peery transaction in the Indian Territory. It merely shows that at a certain time in the routine of business he made mortgage releases on payment. Nor, taking plaintiff’s evidence as true that Hutton admitted after the company became insolvent that many of the cattle under the Huntley mortgage had frozen, does such admission tend to show that either in December, 1902, or in May, 1903, he had such knowledge. It was natural that when the company got into distress and its assets and liabilities were under scrutiny he would inform himself on each item of liability or asset. So, the record wholly fails to show that Hutton had part or parcel personally in renewing the Huntley mortgage on the 29th day of April, 1903. His participation or knowledge in that behalf cannot be based on the bare fact that he was ranking executive officer in Kansas City. The details of the business of a great concern in charge of a manager like Todd and divided into departments, with its ramifications over a great territory as large as France, possibly, cannot be assumed as in the keeping
(c) The case then narrows itself to this: If Hutton is liable it is on the wording of his letter of May 26, 1903, as vice-president, and not because of any other specification of fraud in the petition.
(1) There is a promise in that letter to the effect that all the paper inclosed for discount would he met promptly at maturity. Something is made of that phrase by respondent’s counsel. It is suggested as an element in the fraud, or, if not an element, at least a hit of color painting the fraud a darker hue. But we know of no principle of law making a promise to pay a debt when due or an assertion that a debt will he paid promptly when due, an actionable element in fraud. Frauds, either in civil or criminal law, are not based on prognostications. Who may know what a day will bring forth? No man stands condemned in the law because hope springs in his breast or because out of the fullness of his heart his mouth speaketh in that regard. Therefore, the law does not interdict prophesying, the expression of sanguine business hopes and beliefs in events to come. The suggestion in hand comes with ill grace from the plaintiff. It jauntily took gainful chances, resting in futuro, somewhat on the very •edge of conservative banking; for it not only dealt in cattle paper but in a sense it dealt in paper cattle— “sight unseen” — cattle roaming in unknown far-away pastures, purporting to be owned by men unknown to the bank. Preliminary to investing, it clapped an eye on no hoof of cattle, hut its course of dealing with the •company must be held to have rested largely on the relation of indorser and indorsee. It took paper expecting the indorser would protect it in the first instance at least. Theretofore such paper had always been promptly taken up by the indorser and there is no testimony tending to show that defendant or
(2) Finally, we come to tbis proposition: Is defendant personally liable because of tbe statement in tlie letter that: “You will note that all these are renewals except one note, for which ample provision is made in our form of mortgage. ” Counsel argue that taking that statement in the letter, in connection with the narration in the Huntley note inclosed, a case is made.
We do not think so. This because:
(a) The petition counts on fraud and deceit. In that form of action the scienter is an indispensable element. The petition therefore alleges guilty knowledge in Hutton—knowledge that the narrations in the Huntley note were false and an averment is made that his letter of May 26, 1903, was intended to make and did make those false narrations effective. As we have seen there was an utter failure of proof on the scienter strictly speaking.
(b) But counsel say (and this proposition may be conceded to them) that there may be such recklessness in stating facts as takes the place of actual guilty knowledge, stands as and for a technical scienter, and amounts to fraud and deceit. In this behalf they argue that the narrations in the Huntley note, coupled with the statement in the letter, amount to an assertion that the inclosed note was actually secured by 1180 cattle at the very time and that, conceding Hutton was ignorant of the facts, yet his statement of fact, as a fact, being itself false, amounts to proof of the allegation that he ‘£ falsely and fraudulently represented the said note was secured on 1180 head of cattle” and “falsely and fraudulently pretended that said cattle were then at or near Rush Springs, Indian Territory, and subject to said mortgage.”
Attending to this view of the case, what does the
But admitting, for the purposes of the argument only, that the words complained of in both the letter and the note should he construed together, yet, in that view of it, it is pressing the matter too hard and too far to say that the note and letter (read as one) assert that the very note inclosed was at the very time of writing the letter secured by any particular number of cattle then at any particular place in the Indian Territory. The language of the note is: “This note is given in renewal of unpaid indebtedness, secured by a chattel mortgage on 1180 head of cattle, given by us to Strahorn-Hutton-Evans Commission Company,
Observe, we are dealing with the naked language of the note and letter. We do not care to go outside that naked language. This, for the reason that plaintiff bank did not go outside — it asked no explanation of the meaning of the letter or note. Being charged
If we were to hold (which we shall not, in this form of action counting on actual fraud) that Hutton was charged with notice of what the hooks showed had become of the whole 11801 cattle, yet that does not fasten such recklessness upon him as would amount to proof of the scienter and therefore of fraud; for there is no pretence any of the company’s hooks"showed that the whole herd had been turned over by prior shipments and by the Huntley and Peery transactions in December, 1902. It would be a novel proposition in ethics and a most anxious and vexing precedent in commercial law to hold that Plutton, ignorant of the facts and innocent of wrongful intention, could he held so reckless as to he guilty of fraud in stating what he personally did not know to he true, when, in the usual course of the company’s business, a trusted employee (presumably familiar with all the facts) prepared a statement for him to sign and which he did sign in good faith relying on such employee.
We shall not swell this opinion by extended excerpts from decided cases, but content ourselves with quoting from the syllabus of a leading case decided in the House of Lords, and which, as pointed by learned counsel, met the approval of this court in Bank v. Byers, 139 Mo. l. c. 653. The case referred to is Derry v. Peek, 14 App. Cas. (L. Rep.) 337. The syllabi correctly formulate the propositions ruled and are apposite and lucid statements of acceptable law—in part reading as follows: “In an action of deceit, the plaintiff must prove actual fraud. Fraud is proved when it is shewn that a false representation has been made knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false. A false statement, made through carelessness and without
The doctrine of the Derry case accords with the doctrines of this court [Fusz v. Spaunhorst, 67 Mo. 256; Bank v. Trust Co., 179 Mo. 648; Bank v. Hill, 148 Mo. 380; Utley v. Hill, 155 Mo. 1. c. 251 et seq.; Bank v. Byers, supra.] And, applying that doctrine to the facts here, we must acquit defendant of actual fraud or of such recklessness in statement as supplies proof of the scienter and amounts to such fraud.
Says Bleckley, C. J., in Hull v. Myers, 90 Ga. l. c. 677: “Good sense, good morality and good law are one and the same so long as they are not sundered violently by legislation or ignorantly by judicial error.” And, in our opinion, it is good sense, good morality and good law to rule as announced.
It is settled law that an agent, such as Hutton was, is not liable to third persons for mere negligence in non-feasance. In such cases the rule is.: Let the master answer (respondeat superior). But no agent masquerading under the cloak of a corporate name may escape liability for an actual fraud working an injury to a third person. The general rule is that in matters ex contractu a third person dealing with the known agent of another, whether that other be a person or a corporation, is deemed to deal (not on the credit of the agent, but) on that of the principal. If that rule' does not obtain in a given case it is because fraud avoids the rule and thereby the door to liability swings wide open to an action ex delicto.
Now, fraud is commonly deeply hid away. Often •it can only be got at by inference. It is scarcely ever proved by admissions; for it blows ño trumpet. One cannot put his finger on it and say: Lo, here it is!
In this connection it is argued that we axe bound by the findings of fact made by the trial court in a law case. That is sound doctrine, when applied to a proper case. But in the case at bar fraud is predicated of the written narrations in the note and letter. Conceding that the trial court had the right to interpret the note and letter, yet (whatever the rule in weighing oral testimony) he occupies no position superior to the appellate court in interpreting writings.
Learned counsel for defendant argue at length on the Statute of Frauds. [R. S. 1899, sec. 3422.] They say that a proper construction of that statute on techni
.This case was submitted in Division and came into
Banc on dissent. On re-argument in Bane the foregoing divisional opinion by Lamm, J., is adopted by a majority of the brethren.
The premises considered, the judgment is reversed. It is so ordered.