Winfield National Bank v. Railroad Loan & Savings Ass'n

The opinion of the court was delivered by William R. Smith, J.: It is objected that the petition failed to state a cause of action because it contained no averment that plaintiff paid the claim of the Barnard Machinery Company. Plaintiff in error contends that the mere fact that a judgment was rendered thereon against the contractor, Lockwood, and declared a lien on the elevator property superior to that of plaintiff’s mortgage, was insufficient to show damage to the latter in the amount of such lien. Plaintiff below assumed the distribution of the amount it loaned to the Hutchinson Feed and Grain Company. The claim of the Barnard Machinery Company was provided for, and the money necessary to pay it was sent to the Winfield National Bank and the purpose of its transmission understood fully by the latter. It converted the amount to its own use. The loan association by its agreement to pay the several claims against the property that might ripen into liens became liable to the Barnard Machinery Company for the amount of the latter’s demand against Lockwood. It attempted to pay it through the agency of plaintiff in error. The [589] proceeds of the draft sent to Winfield belonged to the loan association. After converting a portion of it defendant could not defeat this action by asserting that plaintiff might have collected the amount the former withheld by foreclosing the mortgage on the elevator, thus causing the mortgagor to suffer for the wrongful conduct of the Winfield bank. It is no answer for it to say that the loan association might have collected the amount of the claim from some other person. The purpose the loan association had in distributing the money was that its mortgage might be a first lien on the property mortgaged. This purpose was defeated by the defendant bank. The action was not begun prematurely. The contention that the statute of limitations barred a right of recovery cannot be sustained. Plaintiff below pleaded all the facts. A cause of action founded on an implied contract was stated. (K. P. Rly. Co. v. Kunkel, 17 Kan. 145; Smith v. McCarthy, 39 id. 308, 18 Pac. 204; Guernsey v. Davis, 67 id. 378, 73 Pac. 101; Missouri Savings & Loan Co. v. Rice, 28 C. C. A. 305, 84 Fed. 131; Pom. Code Rem., 4th ed., §§453-559.) The bank received and appropriated the money less than three years before the petition was filed. Counsel insist that the only misconduct complained of on the part of the bank was its failure to return Lockwood’s affidavit, as evidenced by the letter transmitting the dráft and affidavit. Its default was more than this. The affidavit was to furnish proof that the machinery claim had been paid. The only fund out of which it could be paid was in the hands of plaintiff in error. It was the duty of the bank to put Lockwood in a position where he could testify truthfully in the affidavit that the claim was out of the way of the loan company’s mortgage. This it did not do. The directions in the letter from the First National Bank of Hutchinson were to be acted on by the Winfield bank [590] in connection with the understanding it had with Lockwood that the claim in question was to be discharged. The court has given attention to the other claims of error presented by counsel but finds nothing justifying a reversal of the judgment. It is affirmed. All the Justices concurring.