*1 Argus et Arndt v. Cox and Olivia F. Arndt ex A. The State rel. Appeals. Judges Springfield (2d) 38 S. W. al., 1079. May 21, One, 1931.
Division *2 for relator. F. TV.Barrett
Farrington respondents. & Curtis for *3 STURGIS, original C.—This is an in this proceeding purpose having for the certiorari quash this court judgment Springfield in the ease of Arndt (2d) Frye, S. W. 920. brought The ease in was a suit by plaintiffs depositors 'Arndt as in the failed Bank of Battlefield *4 - against Frye, president the defendant William of the failed bank, him deposit plain- collect amount of the lost to such brought tiffs of reason the bank’s failure. That suit was county in tried the Circuit Court Greene was of on the based provisions 11763 11764, (now of Sections Revised Statutes 5381, 5382, 1929). R. S. Secs. The first of forbids one sections these president or other officer of state bank to or assent to the receive reception knowledge in deposit of a such bank he “after shall have ’’ circumstances, of the fact that it is failing insolvent or in and makes violating provisions individually the officer re- such of the statute sponsible in a deposit civil so The second action for the received. n and, joint one of several provides the sections for mentioned liability agents assenting charged of the officers and of the bank with to the reception provision of such deposit, with the further failing “the fact that in circumstances such bank was so insolvent or at so reception deposit charged the time of to have been of the knowledge assent such of prima-facie shall received ’’ charged therewith. so part the officer deposit to such proper petition aon in the circuit court tried That case was in- inwas fact bank not the of whether or issues raising the answer re- deposit was the time the at failing circumstances inor solvent knowledge such had defendant so, whether and if ceived, knowledge. trial such deposit to the and assented condition defendant and held plaintiffs jury, sitting as found court, Appeals Court Springfield duly taken the appeal but on an liable, holding that under it, remanding without judgment reversed decision liable. The was not the defendant proven and facts the law in Frye, now called Arndt v. case of in this Appeals here instead 920, is referred (2d) 20 S. W. reported question, re- proceeding present In full. same copying that, are respondents suit plaintiffs are the
lators judg- opinion and whose Appeals, judges honorable for review. are ment here The relators do not controvert the correctness of the rule that calling Appeals
certiorari cases a decision of the Court ~f being controlling in conflict with a decision of this court, this court in such review will treat as correct the evidentiary facts as found and stated the Court of Appeals and will not search out the record filed in the Court of evidentiary correctly to ascertain if the facts are stated in opinion. Reynolds, 219, State ex rel. v. 289 Mo. 233 S. W. rule, evidentiary where the court said: "Under our we take the facts In the for the facts in the case." going lengthy detail, say Without into we will the evidence country shows that the Bank of Battlefield was a small bank with a capital $10,000. The bank failed and went into the hands of August 25, Roy the Commissioner of Finance on 1925. Neff was cashier, charge, in active and tended to all the detail business of the bank, including keeping books, making statements, the financial directors, Frye president, etc. The board of of which defendant was month, met once a but did little more than review the loans made Frye farmer, the cashier. Defendant was a well-to-do owned five bank, president, shares of stock in the was its but was at the bank only occasionally, part management, took no in its active and was bookkeeping experience without and had no in active banking. largest depositors He was one of the when th& bank failed *5 recently deposits. cashier, Ne~, and had made substantial The and majority his father-in-law owned the of the stock of the bank and the doubting integrity. record shows no reason for his The immediate closing discovery- by cause of the of the bank was the and confession examiner, purpose making Neff to a bank there for the an ex- affairs, $24,000 amination of the bank's that he had embezzled of the by it up and had covered false bank’s assets in entries books method of embezzlement the bank. His was to take out for his own day deposited part day of the cash after use and enter on the books actually only paid the amount bank into the bank’s safe. He showing kept private book the true facts. He was convicted for penitentiary. and went to period embezzlement this The of time by his is not shown definitely, covered embezzlements but the bank periodically examined bank examiner who before was closed any shortage in failed to discover his accounts. The financial state- published made and every of the bank about ments six showed months surplus. to and with a the bank be solvent Of course state- these prepared the cashier were based on his books, ments false and while assets, as to the bank’s showed liabilities much correct less than the According published to the truth. last statement of the bank made before it was some two months closed the Bank Commissioner, bank, $150 loans and in the assets overdrafts amounted to $37,587, plus banks, the cash hand in liabilities, and other capital surplus, consisting stock deposits, exclusive bills small) (quite $30,319. payable and rediscounts amounted to The deposits, bank, as this statement and the books of shown only $13,596. In reality, amounted to on account of the cashier’s (bills embezzlements, deposits $40,000. were near The bank owed rediscounts) (notes payable $16,722, of the assets but an amount security. receivable) pledged in this collateral excess of amount was as Practically the same condition of the assets and liabilities of the bank appeared published books and the statements the bank’s years preceding To one who the two or more the bank’s failure. consequent had no of the cashier’s embezzlements taking pledged books, appear that, falsity of the bank’s would of the bills being substantially worth amount collateral as *6 n Oi ordinary course of v. Lively, the usual business.” [State 80; 279 414, Burlingame,
311 S. W. v. 146 76, 207; Mo. State Mo. Darrah, 152 State v. Mo. is that condition “Insolvency .of 522.] in which merchant or business man is affairs unable to meet his obligations they mature in usual of business.” the course [2 quoted in Banking, 1035, Poole, Banks and v. 220 Morse on White (2d) 982, capital Akin 9 W. App. Hull, Mo. v. S. The 688.] obligations bank surplus stock and of a are not mature and 313 paid Lively, business. v. must the usual course of be [State 414, 76, Mo. 279 S. W. 80.] evidentiary opinion,
On other facts forth in these and set the there correct, which we must take as the Court of held that finding Bank Battle- was on which to base a that the no evidence deposits in 1925 were in fact insolvent when the sued for field was leaving amount of the cashier’s received, out of the calculation the embezzlements; any nor there substantial evidence to warrant a was insolvency finding had when that the defendant court’s for were received into the bank. The deposits the sued ‘‘ holding words: this matter these Instead of with reference to (Bank embezzlement, Battle- being insolvent, independent of the field) condition, bank examiner excellent would have been in absolutely been no embezzle- right in his conclusion that had there was . necessity . . closing bank. ment, have no would been there everything in these charge appearing with notice of If defendant we charge him certainly statements, and cannot (published) we bank, condition of the anything to show the notice of else tended plaintiff failed to show that defendant must still that the we conclude prior to at time any knowledge of the bank’s had when the embezzlements August, the date of examination embezzlements Until discovered. of the cashier were these anybody nothing give notice to there was discovered by the cashier had kept insolvent, for if books bank was in fact not insolvent.” bank, it was correctly the condition stated evidence, considering therefore, all Appeals, after The Court finding for support a evidence to no substantial held that there was plain- facts presented, law, on plaintiff, that as a matter of court to right appellate The not entitled to recover. tiff was without this court questioned and decisions cannot do this invokes relator position. might to sustain number be cited evi- is substantial that when there established, rule, equally well will appellate court, finding the trial dence to sustain the the correctness determine weigh evidence examine' and v. 94; Jordan S. W. Dunham, 297 finding. of such [Maxwell for the applicable, are not decisions Davis, Mo. Such 599.] come weigh here court did not reason that the conclusion different from jury that of merely judge, trial but determined, law, as a matter of that there was no substantial evidence supporting finding judge. of the trial
We take only the relator concedes that the presented *7 by and to be considered this court on proceeding by a certiorari to bring up for opinion review an Appeals the Court of is whether or not the Appeals Court of opinion has in its to follow or refused by be previous ruling bound the last question court on this some vital case, to the say, opinion that is to whether the of the Court of Appeals question in rulings creates a conflict between its in in- the stant a previous case and ruling question of this court on the same of law. implies This that by the facts ruled Appeals the Court of essentially are the same and not principle different in from the facts ruled this court. Trimble, 1295, ex rel. v. 315 Mo. 290 [State S. W. Cox, 373, applicable State ex rel. v. 274 W. here, S. is 115.] court objection the said: places there “The relator main to its opinion the of the Appeals Court of of the on its construction facts. It is way claimed that happened the accident could not have in the plaintiff the did; jury required Smith it claimed that the was not to find certain facts which relator thinks should have found been in order recovery. points to authorize These are which are not passed considered or in- upon Appeals; Court of we will not the quire they presented Appeals for whether to the Court of consideration, susceptible or the is of the construc- whether outset, tion for it the claimed the relator. As we said at we pronounced by Appeals are .limited to the law the Court of enlarge in to facts stated hold would be To otherwise opinion.' go beyond province of a writ court, the burdens of far this of certiorari.” in Appeals is opinion of the Court of
The relator insists that the 11764, Revised Sections statutes, contravention of the being of the suit of 1919, the basis Statutes heretofore mentioned as give such opinion fails to Frye, that such Arndt v. or at least any statute proper construction full force and effect. The statutes Appeals as of this province of Court within the is as much construing statute Appeals court, of the Court of opinion and an question in be called and effect cannot giving it a certain force given facts case on similar in some court has certiorari unless this Ap- Court of construction statute a definite the same Nor we concerned are to follow. ease refuses peals in the instant has Appeals Court fact, that another fact, if it be a with the than the one now construction a different placed on the statute that of the insists question. relator because This is said conflict with the is in now Springfield 1021, 272 W. decision S. App. 220 Mo. Poole, of White case however, agree, not We do Appeals. City Kansas case case present any conflict there is that that point in conflict is not Certainly it v. Poole. White in the mentioned failing circumstances knowledge of knowl constructive distinguished from knowledge as is actual statute to inattention negligence or arising from edge ‘' course, the that, Of said there bank; for affairs business knowledge provided but knowledge, actual statute (or proven) may inferred be fact, other like knowledge, further goes even present case circumstances.” facts and sufficient negligence degree of that holding respect said knowledge, any actual ground, without liability fix upon lawin to fraud amount would negligence as gross be “such Mo. Hill, 155 Utley v. citing creditors,” other depositors “Of 270: page is at case said in actually 232. What this held that intended be understood course, it must conditions, *8 and circumstances facts, eyes to his shut can a director had if he seen have must he know what not say did he and then wilful and fraudulent would be conduct senses; for his used record.” by this presented is condition duty. No such of disregard judges respondent is “the error that assignments of One relator’s of liability, must officer, fix to knowledge anof holding that erred in might be what or known have should he what that and absolute be a miscon- think, is This, we considered.” be not should inferred Appeals of the Court What question. in of the decision struction liability is insolvency which on knowledge of that is holds knowledge— constructive of knowledge, instead actual is predicated The ought to know. what he than rather does know one what liability of “The basis Appeals is: of language used failing or insolvency knowledge is actual by the statute fixed received. deposits were the time of the bank at condition or officer an liability upon fixing provision no makes statute his performance in the negligence by reason bank of a director courts, in may be, but negligence gross that how matter duty, no amount as to gross so negligence is that if said instances, have some had though he even responsible will held be law, then he in to a fraud actual unless that means . All of . knowledge. . actual no his that ground liable be held shown, he cannot knowledge his that be shown fault, unless own was his knowledge lack as inexcusable knowledge so lack Ms gross and so was negligence creditors other depositors against in law fraud to a amount to the bank.” the rul- with accord in of, but in contravention ruling not This the court 258, where 232, Mo. Hill, 155 v. Utley in ings of this “First, in question; this negative in the answers propounds 2760, 1889, depositor an action under section Revised Statutes against bank, reception of a who assent to tbe directors of de they knowledge that bank is posits have insolvent or after individually failing circumstances, responsible such directors are deposits, case, they appears, unless whole for such they they knowledge, appears liable if it had or are actual bank, negligently ignorant they in that of the condition of the could they neglected investigate to if had not ascertained its condition have bank, they charged so keep posted or to the affairs of the are managing they duty of the business of the bank that law with the ignorance charged, knowledge, estopped plead to and are are Utley answering question, v. In this court its condition?” Hill, previously ruled Bank v. pointed Hill out it had recovery against by depositors 396, l. could be no Mo. c. that “there negligence directors in because of the of the directors a bank bank,” Spaunhorst, 67 and in Fusz v. managing the of the affairs individually to de not liable Mo. l. c. that “directors were further' non-feasance,” the court said: and then positors for mere guilty, punish the not statute) reach and (the “It was intended good directors, perfect who disgrace acted to ruin the honest Appeals does knowledge.” The Court of guilty and without faith liability fix necessary guilty not hold that the actual circumstances. fact, facts and proven, from the cannot like other trial, whether produced at hold is that the What it does knowledge of show circumstantial, actual sufficient direct in so hold Frye, and part of defendant the bank’s fact, this court Utley Hill, supra. In ing conflict with does not exactly thing. the same held in that reviewed the evidence ease question in con- now Nor *9 case and it criminal is a 479. That Buck, Mo. v. State flict appli- of law contends, that rules true, may as relator elsewhere In the civil cases. always applicable to are not criminal eases cable to statutory the constitutional and held valid court Buck case the evidence prima-facie bank’s failure making the fact the provision of the bank’s was received deposit insolvency time at the the of its “It said: in that case court fact. The such knowledge of officers’ deposit de- until date of the the only one month about was strong a itself had This of its doors. and closed bank failed fendant’s circumstances, if not failing inwas the bank tendency show to received, law was insolvent, deposit time the at the in fact evidence of prima-facie recently thereafter failure so its makes or in insolvent it was officers of its part knowledge upon the unjust unconstitu- nor time, neither is failing at circumstances deposit under money receiving on To make ... tional. part the knowledge prima-facie circumstances failing was then or in bank that it circumstances owner of the guaranty. a party no constitutional It leaves thus solvent, violates ample opportunity to The with the bank make his defense. connected own behalf and can never be difficult party a witness his it can be really If him facts are. the bank has been to show what the knowledge officers, 'without its clerk, trusted robbed some correspondents brought unexpected failure of its have or sudden or condition, failing such and other matters of about or its Receiving money explanation. on de are of easy like character failing insolvent, knowing bank was in circumstances or posit, that the justification unlawful, for which proof of excuse was itself justify himself, if defendant, and he fail to excuse was on the proof is not implies . . . burden of law a criminal intent. The prima-facie really changed. State make a The statute enables deposit the bank. But the defend proof of the and failure of case attending failure, any facts can circumstances ant show the liability, case, and then on the whole tending him from to exonerate guilt beyond his a prosecution to establish the burden still rests on the with which presumption . . of innocence doubt. reasonable shifts, through with him rests clothed, is and which never defendant State, case made out out, notwithstanding prima-facie go will a prima-facie ‘A case not warrant still further. must ” Rep.W. also State Rector, 23 S. See conviction.’ v. [State 1074.] 865, 879. Sanford, 317 Mo. one, it action, present like doubtless applied As to a civil requiring plaintiff prove of criminal law true that the rule beyond apply, guilty doubt would not a reasonable defendant presumption of civil clothed with the defendant a action action, cases; yet in a civil remains that innocence in criminal but it as a complete make defense action, may criminal defendant in a verdict, him notwith- by disproving knowledge, entitling to a directed plaintiff prima-facie a case standing the fact that makes right has insolvency, appellate by showing the bank’s whether there fact, is called on to rule to so rule. In when a court finding, it makes no support a certain evidence sufficient to in criminal weighs the evidence the-rule difference whether pre- “beyond or the civil rule a reasonable doubt” cases of tending to no evidence If there is ponderance the evidence. 'up measure to either fails to fact, proof then the of it establish nothing weigh either or measure standard, or rather there ease, supra, Buck therefore, said When, the court standard. *10 it can never be in his own behalf party can be a witness “The really bank has If the are. for show what the facts him to difficult knowledge of its clerk, without by the robbed some trusted been a make etc.,” certainly the defendant could officers, that meant prima-faeie complete entitling defense to the ease him to a directed verdict, very in and mentions that connection the defense that was here, to-wit, made that the bank was “robbed a trusted by clerk, knowledge without the of its officers.” asking
If
relator is
rule that in
civil
a
case where the
plaintiff
prima-faeie
knowledge
makes a
case of
part
on the
of the
bank officer
showing
the bank’s
at the time
deposit made,
question
knowledge
regard-
the
of
jury,
is
the
is for the
unequivocally by
less
the fact
has
of
that defendant
shown
his evidence
knowledge
he
not
such
insolvency,
that
have
of the
did
we decline to
correctly
respect
so rule. The
has
stated
relator
the law in this
in his
says:
application
certiorari,
for writ of
wherein he
“If we under-
presumption provided
stand
law
we think
correctly,
that the
for
effect,
in this
has the same
and is treated
statute
the court in
manner,
presumptions in
cases,
e.,
the same
as other
civil
i.
when
plaintiffs
comply
proving
with
statute
that the bank
in
a
failing
deposits
made,
prima-
condition at
time the
then a
plaintiff,
nothing
case is
for
faeie
made
and that with
further
plaintiff
It then
would be
to -a directed verdict.
devolves
entitled
knowledge
upon the defendant to
that
did
have actual
show
he
deposits.
reception
that he did not assent to
of the
When he has
destroyed
either,
presumption provided
done
for
statute
plaintiff
presumption,
upon
as a
devolves
to come
then
knowledge
part
proof
with
actual
on the
forward
additional
of the
nothing
so, and with
the officer as to these facts.
If he does not do
to a directed verdict.” The
further,
defendant would be entitled
opinion
Appeals
accord
the rules
the Court of
thus
law
stated.
well ruled
the ease
principles applicable
case are
to this
incorporates
opinion
which
Horton,
287 Mo.
Downs
in the same case.
In
Springfield
of the
promissory
on
note. The
plaintiff
that case the
sued the makers
procured
fraud,
defendants
that the note was
made the defense
affirmative defense
plaintiff'
admitted,
up
which
then
but set
as an
good
without
value in
faith and
plaintiff
purchaser
that
was a
knowledge
statute, proof or admission
of the fraud. Under the
plain
prima-faeie evidence
note is
with fraud is made
tainted
purchasing the note
knowledge
tiff had
of the fraud at the time of
have had no
showing himself to
plaintiff
and casts on
the burden
knowledge
knowledge.
The court there held
knowledge,
is actual
plea
being purchaser in due course
defeats the
pursuing
making inquiry distinguished
negligence as
case here.
inquiry, the-
putting
person
facts
a reasonable
prima-faeie case
notwithstanding The court there held that
fraud,
procured by
of a note
part
purchaser
*11
if
knowledge, yet
disproving
of
himon
cast
burden
and the
convincing
un-
and
cogent,
clear,
is
point
this
on
evidence
plaintiff’s
contrary other
to the
evidence
is no substantial
there
contradicted, and
presumption
the
case, then
prima-facie
the
to make
takes
what it
than
overcome
completely
knowledge was
of
evidence
prima-facie
says
there
court
The
verdict.
ato
directed
entitled
was
plaintiff
plaintiff’s
of
case
prima-facie
the
made
has
defendant
after
that
facts
the
all
gives
evidence
then
plaintiff
knowledge: “The
presump-
paper
the
acquired
which he
under
circumstances
is such
plaintiff’s evidence
that
assumed
Let it be
flight.
tion takes
only
that a fair-
inference
is the
notice
want
good
of
faith and
his
that
defendant,
upon
devolves
it then
it,
draw'
could
person
minded
him,
prove
to
upon
generally
resting
proof
of
the burden
under
fraud
knowledge of the
actual
tending
plaintiff’s
to show
facts
specific
offers
defendant
that
assumed
further
it be
Let
faith.
bad
or his
any evidence
offer
failed to
has
clearly he
evidence, then
no such
the
notice
had
plaintiff
that
of
defense
affirmative
of his
support
pleadings,
on the
plaintiff,
the
paper, and
took the
he
w'hen
fraud
governing
principles
.
.
.
The
verdict.
ato
directed
is entitled
trial,
aof
progress
during the
of evidence
burden
shifting of the
the
evidence
as the
disappear
that rise
presumptions
the
reason
instruments.
negotiable
suits
peculiar
not
forward, are
goes
general application.”
They are
contrary
the
therefore, rule
not,
did
Appeals
prima-
notwithstanding the
holding that
court
decisions
completely
evidence
defendant’s
the
plaintiff,
made
case
facie
was
there
ease
whole
ease,
that
destroyed
prima-facie
the
had
defendant
finding that
a
supporting
no substantial
ques-
deposits
time
insolvency at
bank’s
were made.
tion
stated
contends, that the
may be, as relator
It
statute,
“Notwithstanding
it said:
when
broadly
too
matter
deposits
showing that
merely
be made
cannot
plaintiff
for
a case
must
There
failed.
afterwards
bank
made
were
a
in either
be made
jury can
a case
before
proof
additional
’’
substantial-
taken
the law
statement
This
civil case.
criminal
case, where
495, a criminal
Buck, 120 Mo.
ly from State
defendant
with
innocence
presumption
“The
said:
throughout, and
him
shifts, rests
never
clothed, and which
State, it must
by out
made
case
prima-facie
notwithstanding the
a
warrant
not
will
alone
case
prima-facie
‘A
go further.
still
”
State
requiring
rule
said
there
is also
It
conviction.’
abrogated
doubt
reasonable
beyond a
guilty
a
prove defendant
case,
criminal
in law
This
obtains.
statute,
still
but
by preliminary
this is a
However,
to civil action.
but’hardly applicable
general statement
of the law
the Court of Appeals and does not
apply to the facts of the case then under consideration. The court
was not called on to determine whether the plaintiff in the
case
Frye
Arndt v.
made a
case
a mere showing
deposits
made and the bank afterwards failed —that
proof
additional
was
*12
necessary
plaintiff
before
could have a
verdict
either a civil or
criminal case. The defendant invoked no
rule,
but assumed that
plaintiff had made prima-facie
by
case
proving the bank’s insolvency
at the time the deposits
made,
were
and on which he was entitled
to a verdict
more;
without
and the defendant
assumed
burden
showing
that he had no knowledge of such condition. What the
Court of Appeals was
on
called
to decide and did decide was that,
when defendant’s evidence was all in showing
ignorance
his utter
insolvency
bank’s
when
deposits
made,
were
and that the bank
was not insolvent except as the result of the cashier’s embezzlement
of its funds, which fact was not known or
suspected
even
defendant
anyone
else, so far as the
shows,
record
day
till the
the bank failed,
then there was no substantial evidence to support
finding
plaintiff
plaintiff
as
nothing
had
except
stand
—that
the presump-
arising
tion
from the bank’s insolvency, which completely disappears
light
in the
evidence,
defendant’s
nothing
there is
left to support
plaintiff.
a verdict for
The relator assigns error in that
respondents
erred
hold
ing that
legal
there was no
evidence that the bank was insolvent or
that the defendant so knew when
deposits
sued for were made.
opinion
in question, however, plainly shows that
the Court of
Appeals does not hold that there was no
evidence
the bank’s in
solvency when
deposits
were made. What the court holds is that
insolvency
bank’s
solely
was caused
by the embezzlement of its
funds
the cashier. This does not mean that certain notes and other
property of the bank
of no
value or of less value than same were
rated on the
books.
bank’s
To
insolvent,
be
the bank’s available as
sets would have to he
reduced
less than its liabilities, leaving out
capital
stock
surplus.
may
Also
agree
we
not
what
said in
opinion
past-due
any
paper
being
not
evidence of
insolvency, citing
Hull,
Akin v.
(2d)
S. W.
l.
690.
c.
In White
Poole,
thereon. In so that court not in previous . conflict with ruling of this court.
It improvidently follows that our writ was issued and should quashed. Ferguson Ilyde, It so ordered. GC., concur. PER foregoing adopted opinion Sturgis, C., CURIAM:—The as the All judges of the court. concur. L. Oil & Appellant, v. Wilma Stein, Battenfield Grease Com pany. (2d) 345. 39 S. W. One, May 21, 1931.*
Division *13 Term, 31, 1931; Opinion March at October motion filed *NOTE: May 21, Term, April 1931. rehearing at overruled notes $21,000 with amounting over payable, then the bank held notes liquidation of the bank deposits $13,500. On the to meet actually Finance, collected under the amount the Commissioner to some $35,000 in the bank amounted notes then held indebtedness $26,000, little, any, an amount if short of the bank’s of the bank. appeared as on the books capital stock, other than same in correct, will be found facts, Other which we as take Appeals, supra. of the Court of determining whether in Appeals held, effect, meaning failing within a bank is circumstances insolvent or considered surplus statutes, capital of our stock should with the think, accordance This, as debts of bank. we “failing circumstances” “insolvency” definitions of the terms ques- treating the statutes adopted courts and other ‘‘ inability debts pay Insolvency, applied banks, tion. means