Opinion
No. 21603.
November 5, 1951.
APPEAL FROM THE CIRCUIT COURT, JACKSON COUNTY, THOMAS R. HUNT, J.
R. C. Southall, Kansas City, R. J. Southall, Kansas City, of counsel, for appellant.
Jack B. Robertson, Reed O. Gentry and Rogers, Field Gentry, Kansas City, Mo., for respondent.
Plaintiff R. C. Southall sued Columbia National Bank for $1,179.47, the aggregate amount of nineteen checks drawn by plaintiff upon his deposit account with defendant bank, which checks were paid by defendant on forged endorsements and charged to plaintiff's account. The cause was tried upon the original petition, the answer as amended, and the reply of plaintiff. Verdict and judgment were for defendant, and plaintiff has appealed.
Plaintiff's evidence disclosed the following facts: Harold J. Sloan was the owner of Lots 676 and 677, Broadland Addition, Kansas City, Missouri. In August, 1947, Sloan entered into a written contract with Robert J. Haddix wherein the former agreed to "contribute the said lots toward a joint enterprise of building and selling two houses," and the latter agreed to "finance at his own expense and construct said houses" on Lots 676 and 677. The other provisions of that contract are not material here. On October 8, 1947, Robert J. Haddix, C. H. Elting, and R. C. Southall, the plaintiff herein, executed a three-party contract wherein Elting agreed to "advance up to $6000 for the purpose of paying the costs" of constructing a house on Lot 677; and on November 4, 1947, the same parties executed another contract by the terms of which Elting agreed to "advance up to $6500 for the purpose of paying the costs" of constructing a house on Lot 676. In each of the three-party contracts Haddix was designated as "First Party," Elting as "Second Party," and plaintiff as "Trustee." Since the pertinent provisions of those contracts were almost identical, it will be sufficient to set forth the material parts of the contract dated November 4, 1947. That contract recited: "That whereas the said First Party (Haddix) has a contract with Harry J. Sloan to build a house on a certain lot therein described, and whereas he needs financial assistance for such construction, and whereas the said Party of the Second Part (Elting) is ready and willing to furnish financial assistance upon certain terms and conditions, to build improvements on Lot 676, Broadland Addition; Now Therefore it is stipulated and agreed that the said Second Party will advance up to $6500 for the purpose of paying the costs of such construction, at 6% per annum on the unpaid balance, the advances to be made thru the said Trustee (plaintiff), as follows: $600.00 to said First Party upon the signing of this contract, receipt of which is hereby acknowledged by said First Party. Upon completion of certain phases of said construction, as hereinafter set forth, said Second Party will advance funds with which said Trustee shall pay material costs and labor payrolls, to-wit:" (Here the parties inserted clauses which specified the sums to be paid at stated periods as the work progressed.) The contract further provided "that said Trustee is to receive a fee of $300 out of the above and foregoing payments, as part of the costs, for his services in checking progress, handling payment of materials and payrolls and in general supervising the performance of this contract, and said fee shall be deducted from said payments before final settlement is made." The three-party contracts, as well as the contract between Haddix and Sloan, were introduced in evidence by plaintiff.
Plaintiff testified that at all times mentioned herein he maintained a personal checking account with defendant bank; that as the work on the two houses progressed "Elting would bring me over a check for $500, or $300 or $1000. I would deposit it in the bank and disburse it as required"; and that "Mr. Haddix brought invoices and bills to me, for merchandise, materials he had bought for this construction project and presented them to me. I made out checks payable to the firm or company from whom he claimed to have purchased the materials and gave the checks to him to pay the bills. At the same time, weekly he presented me with a payroll sheet showing the names of the workmen, the wages per hour they were to draw, and computed the total amount that they were entitled to obtain for that work. I made out checks payable to the workmen for the amount set aside for them and gave these checks to Mr. Haddix to pay his workmen." Relying upon the information thus presented by Haddix, plaintiff signed numerous checks payable to the order of various materialmen and workmen and gave them to Haddix for delivery to the respective payees named therein. Unfortunately, Haddix conceived a scheme to defraud plaintiff. As indicated above, the fraudulent transactions involved nineteen checks drawn by plaintiff upon his account with defendant.
It appeared from plaintiff's evidence that during the period between November 20, 1947, and December 8, 1947, Haddix induced plaintiff to issue five checks by falsely representing to him that they were in payment of bona fide bills for building materials used in the construction of the two houses. In each instance Haddix submitted to plaintiff a spurious invoice. Relying upon such representations, plaintiff executed the checks and gave them to Haddix for delivery to the supposed payees. One check was made payable to the order of "Scott Supply Co." another to the order of "Scott Lbr. Co."; and three to the order of "N. T. Collins Lbr. Co." The names of the three payees, unknown to plaintiff, were fictitious and did not describe or identify any real firm or corporation which had supplied building materials to Haddix. After endorsing the names of the fictitious payees on the checks, Haddix deposited three of the checks in the Plaza Bank of Commerce in Kansas City, Missouri, where he maintained an account in the name of "R. Scott Hilton." He deposited the other two checks in the Southeast State Bank, Kansas City, Missouri, where he had another fictitious account in the name of "Scott Supply Co."
It further appeared from plaintiff's evidence that in November, 1947, Haddix began to pad the payroll by inserting therein three names: viz., "L. Kenton," "E. Creason," and "R. Hilton." During the period between November 19, 1947, and January 7, 1948, Haddix fraudulently inserted one or more of the foregoing names in the payroll which he presented to plaintiff each week and thereby induced him to execute fourteen checks as follows: Six checks payable to the order of "L. Kenton"; four to the order of "E. Creason"; and four to the order of "R. Hilton." The names of these payees, unknown to plaintiff were fictitious and did not describe or identify any real person who had performed work in connection with the construction of the houses mentioned above. In each instance plaintiff handed the check to Haddix for delivery to the supposed payee. Haddix endorsed on the backs of the four "Hilton" checks the name of "R. Scott Hilton" and cashed or deposited them at the Plaza Bank of Commerce. As to the other ten checks, he endorsed on the back of each the name of the fictitious payee and cashed them at various places of business in Kansas City, Missouri.
In due course the nineteen checks, drawn for sums aggregating $1,179.47, were sent through banking channels to defendant drawee bank. Defendant admitted at the trial that it paid each check and charged the amount thereof to plaintiff's account. Plaintiff did not discover the loss until the latter part of January, 1948. On or about January 29, 1948, plaintiff made demand upon defendant for reimbursement. The demand was refused and suit followed.
In addition to certain denials in its amended answer, defendant pleaded, as a separate defense, that under facts alleged in the answer the checks in question were payable to bearer within the intent of sec. 3025(3), R.S. 1939, as amended, Laws 1945, p. 594, now sec. 401.009(3), R.S. 1949. If the checks were bearer instruments, in contemplation of the statute, and therefore transferable by mere delivery, then the endorsements thereon became immaterial so far as the passing of title was concerned, and defendant incurred no liability when it paid the checks and charged them to plaintiff's account. Sec. 401.030, R.S. 1949; First Nat. Bank of Kansas City v. Produce Exchange Bank of Kansas City, 338 Mo. 91, 96, 89 S.W.2d 33, 36; Globe Indemnity Co. v. First Nat. Bank in St. Louis, Mo.App., 133 S.W.2d 1066, 1069. Defendant pleaded, as a second affirmative defense, that plaintiff was guilty of negligence in the issuance of the checks; that such negligence was the direct cause of the forgeries and the consequent payment of the checks, and, therefore, that plaintiff was estopped to claim reimbursement. At the close of plaintiff's case and also at the close of all the evidence, defendant moved for a directed verdict on the ground, among others, that the evidence showed conclusively that the nineteen checks were all payable to bearer within the meaning of sec. 3025(3), R.S. 1939, as amended. As heretofore indicated, these motions were overruled and the verdict and judgment were for defendant.
Plaintiff-appellant relies on the following points for reversal: Error in giving defendant's instructions 5 and 6; error in excluding evidence offered by plaintiff; and alleged prejudicial remarks of the trial judge in the presence of the jury. Defendant-respondent contends that no submissible case was made because plaintiff's evidence, together with an admission in his reply to the amended answer, established defendant's pleaded defense that the checks were bearer instruments. In view of the conclusions which we have reached in this case, it is not necessary to discuss or decide the question raised by defendant. Consequently, we turn to plaintiff's contention that the court erred in giving instructions 5 and 6 at the request of defendant.
Instruction 5, in effect, submitted to the jury the question of whether the checks in controversy were payable to bearer within the meaning of subdivision (3) of sec. 401.009, R.S. 1949, which reads as follows: "The instrument is payable to bearer * * * (3) When it is payable to the order of a fictitious or nonexisting person or to a living person not intended or entitled to have any interest in it and such fact was known to the person making it so payable or was known to his employee or other agent who supplies or causes to be inserted the name of such payee". Sec. 3025(3), R.S. 1939, as amended, Laws 1945, p. 594. We have italicized the words added by the amendment. The term "person," as used in the statute, "includes a body of persons, whether incorporated or not". Sec. 401.191, R.S. 1949.
Plaintiff's uncontradicted evidence showed the checks were made payable to the order of fictitious or nonexisting persons; that plaintiff was "the person" who made the checks so payable, but that the fictitious character of the payees was not known to him when he signed the checks and delivered them to Haddix. Prior to the amendment of the statute such a check was not payable to bearer unless the fact that the payee was fictitious "`was known to the person making it so payable'". American Sash Door Co. v. Commerce Trust Co., 332 Mo. 98, 56 S.W.2d 1034, 1042; First Nat. Bank of Kansas City v. Produce Exchange Bank of Kansas City, supra. See also Globe Indemnity Co. v. First Nat. Bank in St. Louis, supra; 146 A.L.R. 848, 849; 118 A.L.R. 15, 38; 74 A.L.R. 822. However, all of the transactions here involved occurred after the statute was amended in 1945. Under the amended statute a check made payable to the order of a fictitious or nonexisting payee is a bearer instrument if the fictitious character of the payee is known to the maker's "employee or other agent who supplies or causes to be inserted the name of such payee." In such case the maker is bound by the guilty knowledge of his agent even though the latter had no authority to prepare or execute the check in question. The statute was so construed by this court in Prugh, Combest Land, Inc., v. Linwood State Bank, Mo.App., 241 S.W.2d 83.
In the present case, it is clear that the conduct of Haddix, as disclosed by the evidence, amounted to supplying the names of the payees. It is conceded that he knew the payees were fictitious. However, plaintiff is not bound by the guilty knowledge and intent of Haddix unless the latter, in supplying the names of payees, was acting as plaintiff's agent. Defendant contends that "the duty imposed upon appellant Southall by his contracts was to see that the debts incurred under the contracts for materials and payrolls were discharged and satisfied"; that "the duty to pay material costs and payrolls imposed the obligation on plaintiff to determine whether the payees on the checks were actually creditors entitled to be paid and that the checks in payment were actually received by bona fide creditors"; but that plaintiff's evidence and admissions showed that he "delegated the performance of his duties to Haddix," that this "was done * * * by the agreement of the parties to the contracts," and that Haddix did act as plaintiff's agent "for the purpose of supplying names of payees and delivering checks to payees." On the other hand, plaintiff insists that he "never delegated any of his duties under the contracts to Haddix and there was no evidence that he did." He also asserts that after the contracts were executed the parties thereto orally agreed that plaintiff should disburse the money in question in reliance upon invoices and payrolls presented to him by Haddix, and that the checks in controversy were issued in accordance with this "supplemental oral agreement." Plaintiff introduced evidence tending to show such an oral agreement. As indicated, instruction 5 submitted to the jury defendant's affirmative defense based upon the above statute. The main issue presented by that instruction was whether Haddix was acting as plaintiff's agent in supplying the names of the payees.
Defendant's instruction 6 submitted the affirmative defense of negligence and estoppel. See American Sash Door Co. v. Commerce Trust Co., supra; Scott v. First Nat. Bank in St. Louis, 343 Mo. 77, 119 S.W.2d 929.
Plaintiff contends the court erred in giving instructions 5 and 6 because there was not sufficient evidence to make a jury case on the defense issues of agency and negligence. It will not be necessary to review all of the evidence relating to those issues, for the record shows that the court gave the following instructions at the request of plaintiff.
Plaintiff's instruction 1 reads in part as follows: "You are therefore instructed that if you find and believe from the evidence that when the defendant bank paid the checks offered in evidence, the name of the payee had been forged, as that term is hereinafter defined, then your judgment must be against the defendant and in favor of the plaintiff for the amount of the checks so paid by defendant, if you find there were any, with the name of the payee forged, unless you also find and believe from the evidence that plaintiff was guilty of negligence in the disbursement of the funds for which he was trustee. And that such negligence on the part of plaintiff, if any, caused or contributed to the payment of said checks, with forged endorsements, as you are hereinafter instructed." (Italics supplied.)
Plaintiff's instruction 2 told the jury, among other things, that "if you find and believe from the evidence that the Robert J. Haddix mentioned in the evidence affixed a fictitious name to the checks in evidence, if so, or affixed the name of a person not in existence, then it was a forgery; unless you also find and believe that when plaintiff wrote the checks he knew the names of the payees were fictitious, or that Robert J. Haddix, as agent of the plaintiff, knew the names were fictitious." (Italics supplied.)
Plaintiff's instruction 3 put the burden of proof on defendant to prove its affirmative defense in the nature of estoppel, and told the jury: "If plaintiff was guilty of negligence and you so find, it is immaterial unless it is such negligence as directly and proximately affects the conduct of the bank in the performance of its duties." (Italics supplied.)
Plaintiff did not move for a directed verdict in the court below. By the instructions given at his request the defense issues of agency and negligence were submitted to the jury for its determination. Since plaintiff voluntarily joined with defendant in the submission of those issues, he is in no position to contend here that the court erred in submitting the same on insufficient evidence, and this court cannot consider the question on appeal. Royal v. Thompson, Mo.Sup., 212 S.W.2d 921, 922; Hogsett v. Smith, Mo.App., 229 S.W.2d 20,22.
Plaintiff also contends that aside from any question of the sufficiency of the evidence to support the giving of defendant's instructions 5 and 6, it "was error to repeat the defenses in two consecutive instructions." In this connection, plaintiff says "the giving of two identical instructions could not fail to be highly prejudicial to plaintiff and to mislead the jury." This contention is without merit. The two instructions were not identical. As shown above, each instruction submitted a separate and distinct defense.
Plaintiff further contends that the court erred in "excluding evidence which was material to the issues and competent to disprove the claimed defenses." In this connection, plaintiff states that he "was entitled to show by parol evidence that his instructions were to make out the checks and deliver them to Haddix," but that the court erroneously excluded evidence offered by plaintiff for the purpose of showing "how he was to pay the material costs and payrolls and to explain the mechanics of his duties." The evidence which plaintiff says was offered and excluded is not set forth in his brief or identified by reference to the transcript. We find, however, in examining the record for other purposes, that during the course of plaintiff's testimony the following offer of proof was made: "I would like to offer to prove that the supplemental oral agreement was entered into by the terms of which R. C. Southall was to make checks payable to the material men and employees and said checks to be delivered to the material men and employees by Mr. Haddix." Plaintiff's offer was refused on objection by defendant. Later in the trial the offer was renewed. After considerable discussion between counsel for both parties and the court, defendant's objection was overruled. Thereafter both plaintiff and C. H. Elting testified to the "supplemental oral agreement" mentioned above. Assuming that this testimony was competent and material, plaintiff is in no position to complain that the court committed prejudicial error in rejecting his first offer, for it is "well settled that, if in a specific instance the evidence should not have been excluded, the error is harmless if the same evidence is found in the testimony of the same or other witnesses, given before or after the objection was sustained." Steffen v. Southwestern Bell Tel. Co., 331 Mo. 574, 583, 56 S.W.2d 47, 48; 5 C.J.S., Appeal and Error, § 1753, p. 1060. If the court erroneously excluded any testimony offered by plaintiff, he has failed to point out such rulings by specific references to the transcript. It is not the duty of this court to search the record in order to discover, if possible, errors committed by the trial court. See Supreme Court Rule 1.08.
Plaintiff's next point involves a part of his reply to defendant's amended answer. Paragraph 10 of plaintiff's reply reads as follows: (a) "Plaintiff admits, as alleged in this paragraph (of defendant's amended answer) that `C. H. Elting and Haddix were engaged in the construction of certain houses under the aforesaid contracts; that as a part thereof, plaintiff was charged with certain obligations and duties, among which were the payment of necessary amounts for labor and materials in said construction'; (b) plaintiff admits as alleged by defendant, `that the aforesaid Haddix furnished the names of certain fictitious payees to plaintiff and caused fictitious endorsements to be placed thereon, knowing that the purported payees were non-existent and fictitious persons'; (c) but plaintiff denies that the aforesaid knowledge and action of Haddix constituted knowledge to all persons engaged in said construction, among whom were this plaintiff, and plaintiff specifically denies that he had such knowledge until about January 29, 1948 at which time he promptly reported said forgeries to the defendant" (d). We have inserted the letters (a), (b), (c), and (d).
Counsel for defendant offered in evidence and read to the jury, without objection by plaintiff, that part of the reply between the points marked (a) and (b). It was offered in evidence as "an admission against the interest of the plaintiff." Plaintiff then offered in evidence that part of the reply between the points marked (c) and (d), but the offer was rejected on objection by defendant that the evidence was self-serving. Plaintiff now claims such evidence was admissible because it explained that part of the reply introduced by defendant. Plaintiff's brief discloses that his contention is based upon the assumption that defendant introduced in evidence that part of the reply between the points marked (a) and (c), whereas the record shows that counsel for defendant read to the jury only the part between points (a) and (b). It appears, therefore, that the part offered by plaintiff was not only self-serving, but that it did not explain or qualify the part introduced by defendant. In fact, the part between points (c) and (d) had no relation to the admission introduced by defendant. Plaintiff had the right to introduce any statements in the reply which explained or qualified the part read by counsel for defendant; but he was not entitled to read as evidence a self-serving portion of the pleading which was entirely unrelated to the admission introduced by defendant. Gunn's Adm'r v. Todd, 21 Mo. 303, 306; 20 Am. Jur., Evidence, sec. 632, p. 534; 31 C.J.S., Evidence, § 301, p. 1072. Cf. Hildreth v. Hudloe, Mo.App., 282 S.W. 747, 748. The point is ruled against plaintiff.
Plaintiff is a lawyer and he acted as his own attorney throughout the trial. He further contends that "in the endeavor to introduce competent, relevant and necessary evidence to substantiate his position, plaintiff was subjected to constant heckling, reprimanding and admonishing at the hands of the court in the presence of the jury"; that "the court repeatedly interposed objections and comments on the testimony which were highly prejudicial"; and that "the court repeatedly made statements indicating a distrust of plaintiff's veracity and acts." If plaintiff considered any statement or remark of the trial judge prejudicial, he should have objected to it at the trial. Since the record shows that no objection or request of any kind was made as required by Section 122 of the Civil Code, the alleged errors were not preserved for appellate review. Sec. 510.210, R.S. 1949; Bloecher v. Duerbeck, 338 Mo. 535, 553, 92 S.W.2d 681, 689; State ex rel. State Highway Commission v. Bengal, Mo.App., 124 S.W.2d 687, 690; Johnson v. Smolinsky, 229 Mo.App. 652, 662, 81 S.W.2d 434, 439; 3 Am.Jur., Appeal and Error, sec. 373, p. 105. We have considered all of plaintiff's contentions but do not regard this case as a proper one for the application of Supreme Court Rule 3.27.
The judgment should be affirmed.
SPERRY, C., concurs.
The foregoing opinion of BOUR, C., is adopted as the opinion of the court. The judgment is affirmed.
All concur.