Kitchens v. Teasdale Commission Co.

REYBURN, J. (after stating the facts as above). —1. Appellant contends that it should have been permitted to introduce testimony to prove that the directors ignored their duties, and for a considerable period permitted the cashier to have entire management and conduct of the institution, and thereby the hank became bound by his actions. Although the members of the directory of the bank may have been guilty of culpable negligence or gross neglect by their careless supervision of the business, and disregard of their official duties, and permitted Ritter to have exclusive management of its affairs, which might have rendered them responsible to creditors or stockholders for the losses ensuing, yet their wrongful actions and neglect of duty constitute no defense to this action available in behalf of defendant. This proceeding is for the recovery of funds, confessedly known by appellant’s officer, to have been the corporate property being then applied by its cashier to his personal speculations by draft upon its correspondents over his official title. By the medium adopted for the transfer of the money, defendant was apprised that Ritter by the abuse of his power as cashier was employing the funds of his principal in speculation on his individual account and in affairs which from their nature excluded the possibility of being concerns of the bank. That he was transcending the well known extent of his agency and using the money of his principal in his private transactions was manifest: in the unconcealed application of the funds known to he the bank’s property to Ritter’s individual affairs, there is no room for maintaining that the transactions were other than his own affairs not as cashier, but personally and individually. Appellant knew it was dealing with Ritter personally, and also knew the funds of the hank were used by him [469] for his own ends and that the funds were in course of deliberate misappropriation by betrayal of Ritter’s trust. It is true that the transmission of cash, by means of draft of remitting bank through its cashier, drawn, upon its depository correspondents at distant cities has, been adopted so universally in the commercial world, that such instruments partake of the convenience and characteristics of currency itself, but if currency of the defrauded bank had in specie been forwarded direct to appellant by the cashier Ritter for his own purposes, with notice or knowledge on part of the appellant of the ownership and rights of the bank therein, there could be no doubt of the obligation of appellant to make restitution of such sums, , and in legal contemplation the situation here displayed is substantially the same as such illustration. The same rule of law governs the agency of a cashier, as applicable to any other fiduciary relationship, and the right of recovery of the principal’s funds from the party obtaining them from the agent with the full knowledge of their misappropriation is too apparent to admit of reasonable debate. Nor is it clear that vigilance and due performance of their duty by the officers of the bank would have revealed the fraud being practiced, and the misappropriation of the funds by the cashier, as the record in the books of the bank of the drafts was falsified, and therein they purported to be drawn in favor of other payees than appellant. The legal principles governing the situation here presented have been recognized in this and other jurisdictions, and in other States decisions have been invoked upon facts strikingly analogous to those here exhibited. Lee v. Smith, 84 Mo. 304; Lamson v. Beard, 94 Fed. 30; Mendel v. Boyd, 91 N. W. 860; Anderson v. Kissam, 35 Fed. 699; Campbell v. Bank, 67 N. J. L. 301. 2. The appellant interposed as its answer a general denial and without amendment, tendered proof of a secured note given by Ritter after the last of the [470] drafts had been transmitted and of acceptance by the directory in settlement. No application to amend the answer was made, and such testimony was properly excluded. The evidence sought to be admitted was not proof of payment, but so far as imperfectly disclosed, might have established a settlement of overdrafts and in absence of even a synopsis in the record of the form of plaintiff’s statement of its cause of action, it can not be conjectured how the decisions appealed to by appellant aire pertinent. The case of State ex rel. v. Peterson, 142 Mo. 526, merely declares that a special plea of payment is not essential, when the allegation of nonpayment is a necessary and substantial averment to constitute plaintiff’s cause of action. 3. The testimony sought to be elicited from the banking expert, to the effect that it was a general custom for cashiers of banks to draw drafts upon their own banks in payment of their own indebtedness was not admissible. The drafts in question were not drawn in such form, and the line of inquiry not addressed to the state of facts developed, but if such custom prevailed and had been established, it would have been in violation of law and the legal consequence could not have been avoided, that the payee of such drafts would have been liable to repay to their actual owner such unlawfully diverted funds, under such facts as are disclosed here. The judgment was for the right party and is affirmed. Bland, P. J., and Goode, J., concur.