Court Opinion

ID: 8263412
Source: CourtListenerOpinion
Date Created: 2022-10-16 15:57:48.973528+00
Date Added: 2024-06-11T16:43:15.400723
License: Public Domain

On Rehearing.
PER CURIAM.
On motion for rehearing in this ease, respondent’s counsel insist that it should not be held to pay the checks involved for the reason that O’Kelley had embezzled from respondent to the amount of $3,200, citing in support of that contention Bank v. Schaumberg, 38 Mo. 228; Bank v. Lowell, 109 Mass. 214; Bank v. South Hadley, 128 Mass. 503, and the dissenting opinions in Bank v. Lumber Company, 54 Mo. App. 327; 60 Mo. App. 255. Counsel argue that we have either overlooked those decisions or have ignored the doctrine of law they announce, which is said to be exactly in point in the present case.
We did not overlook the cases cited, but in our opinion the rule of law declared in them had no application to the facts before us. Those cases dealt with facts in which the lack of authority on the part of the agent to do the act (namely, borrow money) on which it was sought to hold his principal liable was apparent or was conceded for the purposes of the decision, and the question for decision was, whether the principal had ratified the agent’s unauthorized act so as to become responsible. The ruling in the Massachusetts cases and the doctrine in the dissenting opinions in the Missouri cases was that the unauthorized act was not ratified by the retention of the proceeds of it by the principal, if the agent was a defaulter and the money was retained to make good his defalcation.
In the Schaumberg case the agent negotiated a loan in the name of his principals from a bank of which he was president, to pay his own large overdraft to said bank. In signing his principals’ names to the notes given he exceeded his authority; which the bank’s officers knew, as they also knew he intended to use part *85of the money to make good what he personally owed the bank. The court held that the bank in effect made the loan to the agent instead of to the defendants, his principals.
In the present case there is no pretense that O’Kelley was not authorized to sign the checks in suit. Miller, the president of the lumber company, swore O’Kelley had for years full authority to sign checks in respondent’s name. The only thing that O’Kelley did which is said to have been unauthorized, was depositing the proceeds of the checks in the Stotts City Bank in his own name. Now for that act to debar plaintiff from recovering, two things are necessary: first, the respondent must have lost the proceeds of the checks on account of the act; second, the appellant must have had knowledge that O’Kelley was. unlawfully converting the money to his own use. Anderson v. Kissam, 35 Fed. 699. Not only is there no proof that any of appellant’s officers knew O’Kelley was unlawfully converting the proceeds of the checks drawn in the respondent’s name, but the undisputed fact is that O’Kelley did not convert the proceeds of these checks to his own use at all, but turned them over to the respondent company; and the court so found. Of course, the law forbids an agent to convert the funds of his principal to his own use, and a party who cashes checks drawn by an agent in his principal’s name on the latter’s funds, knowing that the agent intends to fraudulently misappropriate the funds, can not recover the amount of the checks. The cases cited by the respondent supporting that doctrine contain facts showing fraud on the part of the agent and participated in by the plaintiff. But the trial court found and the evidence shows, that O’Kelley accounted to the Miller Lumber Company for the money credited to him by the Stotts City Bank on the checks in controversy, instead of fraudulently appropriating it.
The contention of respondent’s counsel, in its final analysis, amounts to this: Because in other transac*86tions O’Kelley had been guilty of embezzlement, the respondent company should be exonerated from paying the checks in order to partially reimburse it for the loss sustained by O’Kelley’s embezzlements, although the money was not accepted by the respondent for. that purpose, but was checked out of the Stotts City Bank by O’Kelley and placed to plaintiff’s credit in the Farmers’ Bank of Mount Vernon in the usual course of business. This, too, in the face of the fact that there is no evidence that the respondent company ever sustained a dollar of loss on account of any transactions between O’Kelley and the appellant bank and when the evidence shows positively that it sustained no loss on account of the particular transactions involved in this action. If we should accede to the contention thus preferred, it would be nothing short of making the appellant bank partly reimburse the respondent for O’Kelley’s embezzlements, although it was innocent of any connection with them. These checks were drawn by O’Kelley within the scope of his authority, in the ordinary course of business, and the respondent company got the proceeds of them and ought to pay them.
The motion for rehearing is, therefore, overruled.
All concur.