Court Opinion

ID: 3521885
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:33:44.979096+00
Date Added: 2024-06-11T13:45:37.618920
License: Public Domain

ON MOTION FOR REHEARING OR TO TRANSFER TO COURT EN BANC.
The Committee has filed a motion for rehearing or, in the alternative, for transfer to Court en Banc, urging, among *Page 117 
other things, that Sec. 3225 is controlling. Each of the two issues discussed below is essential to the Committee's case.
[10] Section 3225 authorizes creditors to accept the check of a corporation, firm, or copartnership in payment of the debt of an officer, agent, or employee of the corporation, firm, or copartnership "unless . . . such payee or other person, at the time of collecting same, had actual knowledge that said check, draft or order was issued without authority of said corporation, firm or copartnership." The Committee says we overlooked that it did not have "actual knowledge" that Newco's check "was issued without authority," including Torrence's forgery of the signature of Newco's president thereon. Torrence acted for both parties. He had knowledge of all the facts, and no one but him had any knowledge of the facts. He collected the check, bringing the transaction within the exception stated in Sec. 3225. Direct personal knowledge is not required. It is a general rule of law that one may not lawfully use the funds of another to pay his individual debts; and prior to the enactment of now Sec. 3225 in 1917 (Laws 1917, p. 143) corporation checks when accepted in payment of the individual indebtedness of a corporate employee and [516] not in payment of the corporation's indebtedness were held to carry upon their face notice of their irregular and illegal character in the misappropriation of the corporate funds (an inference of fact) and the corporation could recover unless the party receiving payment established the employee's authority to issue the check in payment of his individual indebtedness. St. Louis Charcoal Co. v. Lewis, 154 Mo. App. 548, 551, 136 S.W. 716, 717; Reynolds v. Title Guaranty Trs. Co., 196 Mo. App. 21, 33(1), 189 S.W. 33, 36[1]; O'Bannon v. Moerschel, 204 Mo. App. 155, 157,222 S.W. 1035, 1036[1]. The legislative intent was to change the rule that the face of the check imparted notice or knowledge of its illegality. The word "actual" was used to do away with the prior inference of misappropriation arising from the face of the check. Its purpose was not to change the principles of law which impute notice to or knowledge of an agent to his principal. Torrence had actual knowledge of the illegality of the check, and it is this actual knowledge that is charged in law to the Committee. Consult Livermore v. Blood, 40 Mo. 48. Colby v. Riggs Nat'l Bk., 92 F.2d 183, stressed by the Committee, is readily distinguished on the facts. No agent of said defendant had actual knowledge of the essential facts and as we read the case it implies that knowledge of an agent is to be imputed to the principal.
[11] It is also claimed that Sec. 3225, being later, controls over Sec. 3039. Section 3039 makes a signature "forged or made without the authority" of the party wholly inoperative, but is specifically not applicable if said party be precluded from setting up the forgery or want of authority. We think Sec. 3225 applies to instances wherein *Page 118 
the individual drawing the check is authorized so to do but exceeds his authority by misappropriating it to pay his personal debts, and that it does not embrace the forgery of another's signature when such signature is essential to the validity of the instrument. It is not within the language of Sec. 3225 that parties seeking to protect themselves against peculations by requiring more than one signature to a check are to be penalized when one authorized to join in the execution of the check forges other signatures to give the check seeming validity. Section 3039 relates to the making of a negotiable instrument while Sec. 3225 relates to the misapplication made of an instrument legally executed. Section 3225 was not enacted to sanction forgeries.
The other points mentioned by the Committee are sufficiently covered in the opinion.
The motion for rehearing or to transfer is overruled.