Opinion
No. 3839.
June 10, 1930. Rehearing Denied July 10, 1930.
Appeal from District Court, Kaufman County; Joel R. Bond, Judge.
Suit by the Farmers' Merchants' National Bank of Kaufman and others against W. C. Biggers Company. Judgment for plaintiffs, and defendant appeals.
Reversed and remanded.
See also (Civ.App.) 16 S.W.2d 324, 325.
The suit is based upon four acceptances, one of which reads, namely:
"The Farmers Merchants National Bank No. 416.
"Kaufman, Texas, 1 — 9 1928.
"At 60 days sight Pay to the order of F M Nat'l Bank $2434.66 Twenty-Four Hundred Thirty-Four 66/100 Dollars For 25 bales cotton for which Tickets are attached.
"To W. C. Biggers Co. at the Farmers Merchants National Bank. Kaufman, Texas.
"[Signed] F. M. Bank, Seller.
"Accepted 1-9 1928
"With interest at 8 % per annum.
"W. C. Biggers Co.,
"Per A. L. Nash."
The other three drafts were similar, except as to date and amount. The second draft was dated January 18, 1928, and in the sum of $2,690.82, and recited "for 28 bales of cotton for which tickets are attached." The third draft was dated February 3, 1928, and in the sum of $2,077.41, and recited "for 24 bales of cotton for which tickets are attached." The fourth draft was dated February 9, 192S, and in the sum of $1,976.62, and recited "for 22 bales of cotton for which tickets are attached." The Farmers' Merchants' National Bank of Kaufman brought the suit, and, based upon the allegations made in the petition, sought recovery against the partnership of W. C. Biggers Co. and A. L. Nash for the amount of such acceptances, with interest thereon. The defendant W. C. Biggers Co. answered, in substance, that: (1) The acceptances were not signed by them or under their authority; (2) A. L. Nash had no authority, and the bank so knew, to accept the drafts in suit for or on behalf of them; (3) the drafts were not drawn in furtherance of their business, but were drawn in pursuance of a fraudulent plan of A. L. Nash to defraud them; (4) the bank signed the acceptances as seller of the cotton, when it was not in fact the seller or owner of any cotton, and thereby enabled A. L. Nash to further his fraudulent scheme; (5) the bank by collusion with A. L. Nash drew the acceptances; (6) the cotton tickets were not valid and genuine, and the bank never sold any cotton to defendants. The bank in a supplemental petition made reply to the defendants' answer and specially pleaded estoppel based upon the facts and circumstances therein stated. Judgment was entered in favor of the bank for the amount represented by the acceptances and interest, and the defendants Biggers Co. have appealed from the judgment.
W. C. Biggers Co. is a partnership composed of W. C. Biggers and R. J. Patterson. They were cotton buyers, with office at Waxahachie. A. L. Nash was the agent of W. C. Biggers Co. in Kaufman in 1928 and for eight years prior thereto. He was employed and authorized by W. C. Biggers Co., as admittedly shown, to represent them in buying and paying for cotton purchased by him in Kaufman and points outside of Kaufman, including Kemp and Maybank. As testified by Mr. R. J. Patterson:
"A. L. Nash was W. C. Biggers Company's agent in Kaufman, Texas. I really do not know how long he has been our agent, but he has bought cotton for our company at Kaufman since 1920. We did not put money at Kaufman for A. L. Nash to buy cotton with. He bought cotton over there from the farmers or other cotton buyers or anybody that had cotton for sale, and he paid for it through the banks. We did business with the two banks on what they term `trade acceptances' with the cotton tickets or their equivalent attached to the acceptances. He would buy whatever cotton we wanted within the limits daily given to him. In other words, if we wanted 50 or say 100 bales of cotton, he would buy that much cotton, and he then gave trade acceptances and signed them `W. C. Biggers Co. by A. L. Nash.' That is the way we handled it. We had bought thousands of dollars worth of cotton that way each year at the First National Bank and the Farmers Merchants National Bank. Our dealings with these two banks have always been satisfactory. I can estimate the amount of cotton handled through the Farmers Merchants National Bank last year — I would say around ninety thousand, probably one hundred thousand. During the entire time we have been doing business through the Farmers Merchants National Bank we have never handled cotton tickets from this office; we would never see the tickets here at Waxahachie at all. We would buy, as stated, on trade acceptances, with the cotton tickets attached to the different acceptances, and he (A. L. Nash) would send us invoices giving us the number of bales of cotton, with the amount of drafts, and we would pay the amount of money shown by the invoice, and then he (A. L. Nash) would send us samples covering the cotton, and we would class it and then send shipping orders covering that cotton, with bills of lading and drafts, and A. L. Nash would turn over the bills of lading to the bank and we would be credited at the bank for the amount. * * * Mr. Nash had authority to accept for us and to sign acceptances for us."
In respect to the four drafts in suit, the precise facts appear that A. L. Nash at the date of each one of the drafts went to the appellant bank and presented "the acceptance already made out and accepted," with cotton tickets attached, to the cashier of the bank and told him that he had bought that much cotton from Mr. Haynie at Kemp and requested the cashier to sign the bank's name as "seller" of the cotton and "to give him (Nash) a cashier's check payable to the First National Bank at Kemp, Texas," for the sum stated. The cashier then signed the acceptance "F. M. Bank, seller," and drew a cashier's check for the amount payable to the "order of First National Bank of Kemp" and delivered the check to A. L. Nash. The four transactions in suit were done in the same way. The four cashier checks were all paid by the appellee bank. A. L. Nash presumably collected the proceeds of the checks from the First National Bank at Kemp. The proceeds of the first cashier's check, less $100, was paid over to the First National Bank of Kaufman "to the credit of W. O. Biggers Co."; otherwise Biggers Co. never got any benefit of the acceptances, either in cotton or money. It is admitted that the cotton receipts attached to the drafts were void and not genuine. The cotton tickets attached to each one of the four acceptances, totaling 99, were, it is shown, cotton tickets which had been issued in 1927 by the public weigher at Kemp and surrendered to him in October, 1927, by the owners of the cotton at the time the cotton was taken out of the cotton yard. The surrendered cotton tickets were kept by the public weigher in a box in his place of business, as evidence of the disposition of the cotton. This batch of 99 cotton tickets were taken from the possession of the public weigher and out of his box, which was kept locked, by some one not known. The public weigher testified:
"I had a box that had a lock and key, and I kept the void tickets in it. I kept that box locked most of the time. I do not know how that package of tickets got out of my possession after the cotton was shipped. The cotton tickets were not good, the cotton having previously been shipped out. The whole 99 bales were shipped out during October, 1927. I do not know who got the 99 tickets out of my box. I did not give anybody permission to take them out of my box. I do not know whether or not Albert Nash got these cotton tickets from Son Haynie."
The cashier testified:
"There were cotton tickets attached to this acceptance when A. L. Nash brought it to me. He told me he had bought the cotton from Mr. Haynie at Kemp. * * * I signed these drafts as seller for the accommodation of Jack Haynie and his father, of Kemp, Texas. I did not get any cotton tickets from Jack Haynie and his father. I did not have any draft from the First National Bank at Kemp with cotton tickets attached. I had no draft from any bank with cotton tickets or bill of lading attached. Mr. Haynie did not ask me to sign them. A. L. Nash is the person who asked me to sign them."
The cashier further testified:
"I understood that the usual and customary way of handling this business of W. C. Biggers Co. through A. L. Nash was to have the seller of the cotton sign the draft. The reason I made those cashier checks payable to the First National Bank at Kemp was because Mr. Nash asked me to. The usual and customary way when I paid a draft signed by the seller of the cotton was to give the money to the seller; and if the seller had already gotten his money through the First National Bank at Kemp by the draft drawn on our bank, then the money went back to the First National Bank at Kemp. Out of all the drafts handled that season as represented by the stubs in the books now shown me, on no other occasion was the cashier's check made payable to the First National Bank at Kemp. It might be a little unusual, a little out of the ordinary, to handle it that way. I relied upon what A. L. Nash said to me. I had implicit confidence in him. I had known him a long time, and trusted him. I knew he had no authority to draw money from our bank except for the purpose of buying cotton. I knew he had no authority to draw money or acceptances in the name of W. C. Biggers Co. for his own use."
As to the course of dealing, the cashier of appellee bank testified:
"I have been handling the bank's transactions with W. C. Biggers Co. for the past five years. During these years A. L., or Albert, Nash has handled the account of W. C. Biggers Co. with the bank. During all these years, where A. L. Nash would buy cotton at Kemp or Maybank and send it to our bank for payment it would be handled by draft — whoever he was giving the money to or buying the cotton from would draw a draft on W. C. Biggers Co., and A. L. Nash would come to take up the draft with an acceptance. After we advanced the money to pay for the cotton and an acceptance was given us by A. L. Nash, to complete the transaction there would be signed, as an accommodation to him, "F. M. Bank, Seller." That would be done after we had advanced the money to pay for the cotton; and the bank had been doing that for five or six years. * * * When A. L. Nash bought cotton out of town at Kemp he would take the seller of the cotton to the First National Bank of Kemp and give that bank a draft on W. C. Biggers Co. at Kaufman for the amount of the cotton, and the cotton tickets or a bill of lading would be attached to it always. We always had, in cases of that kind where the `F. M. Bank' signed as `seller' with the cotton or something representing it. * * * The bank would sign the draft as `seller' for any seller of cotton who happened to be out of town. The bank did that as an accommodation to the seller if the seller asked us to do so. I do not know how many drafts we signed for the seller during the season of 1927-28. I know the only drafts I signed for the F. M. Bank as seller except these during 1927-28 were drafts that came from other banks with bills of lading or cotton tickets attached by the other banks. There wasn't a chance for our bank to lose when we paid those drafts. We had bills of lading or cotton tickets attached, or a receipt for them."
It was proven that 66 drafts had been signed "F. M. Bank, Seller," from 1923 through 1927, aggregating about $118,000 and covering about 1,100 bales of cotton. These drafts were all based on drafts with genuine cotton tickets attached that had "come in from other banks."
The jury made the findings of fact, upon special issues submitted, that: 1. A. L. Nash "had the authority from W. C. Biggers Co.," namely, (a) of acceptance of "drafts with cotton tickets attached signed by parties who were not owners or sellers of the cotton represented by such tickets," and (b) "to receive cashier's checks in exchange for drafts accepted by him with cotton tickets attached signed by parties who were not owners or sellers of the cotton represented by such cotton tickets." 2. That "the evidence" shows that the cashier of the plaintiff bank did not know (a) that A. L. Nash was not authorized "to accept for the defendant drafts signed by parties not the sellers of the cotton represented by the tickets attached," and (b) "that A. L. Nash was not authorized to receive cashier's checks from the bank for drafts accepted by him for cotton purchased for the defendant." 3. That "in accepting the drafts in question, with the plaintiff signing the same as the seller of the cotton represented by the cotton tickets attached and receiving therefor cashier's checks payable to the First National Bank at Kemp, Texas," A. L. Nash (a) "was acting within the scope of his employment with the defendant, W. C. Riggers Co., and (b) such transactions were not "so unusual or extraordinary as to put Roy Trantham on notice of inquiry as to the extent of A. L. Nash's authority," and (c) the transactions were "the usual and customary way of handling such transactions between the parties thereto."
Smithdeal, Shook, Spence Bowyer, of Dallas, and Tom Whipple, of Waxahachie, for appellant.
Thos. R. Bond, of Terrell, and Angus G. Wynne and Nestor Morrow, both of Kaufman, for appellees.
It is the insistence of the appellant that (1) the findings of the jury were contrary to the evidence, and (2) the evidence required an instructed verdict in its favor. We are of the opinion that it is more nearly correct to say the evidence shows that (1) the bank and its cashier did know "that A. L. Nash was not authorized to receive cashier's checks from the bank for drafts accepted by him for cotton purchased for the defendant," and (2) "executing and passing the acceptances in question and receiving therefor cashier's checks in payment" was not "the usual and customary way of handling such transactions between the parties thereto." The findings are of vital importance, for it is very evident that if the cashier's checks in favor of the First National Bank of Kemp had not been issued and delivered the present loss would not have been occasioned. In that view of the facts we conclude that the findings of the jury are against the preponderance of the evidence and against the weight of the evidence. The evidence shows without dispute that W. C. Biggers Co. authorized A. L. Nash (1) to buy cotton generally from "anybody that had cotton for sale" in Kaufman and other points, including Kemp, and (2) to execute and deliver in payment for the cotton so purchased, not checks or cashier's checks, but "trade acceptances with cotton tickets or their equivalents attached." He was not authorized to receive the proceeds of the acceptances in money or cashier's checks. By this special method and way of paying for the cotton purchased, A. L. Nash, as proven, would have the seller of the cotton sign a draft on W. C. Biggers Co. through the appellee bank for the purchase price of the cotton and attach thereto the cotton tickets, and then A. L. Nash would sign the draft "accepted" and deliver it to the seller. The appellee bank would then, upon presentation of the acceptance, pay to the seller or his transferee or assignee the amount thereof, and after doing so would charge the amount paid to W. C. Biggers Co. in its account at the bank. The bank and its cashier actually knew, as appears without dispute, of the authority and the extent of the authority so conferred upon A. L. Nash. As was shown, W. C. Biggers Co. had specially arranged with and authorized the Farmers' Merchants' National Bank of Kaufman to pay the money for the cotton purchased by A. L. Nash, not to A. L. Nash, but to the payee named in the "trade acceptances with the cotton tickets or their equivalents attached to the acceptances" so given by the seller and accepted by A. L. Nash. It was in keeping, as appeared, with this arrangement so made with the bank by W. C. Biggers Co. to pay the amount of the draft signed by the seller and accepted by A. L. Nash, that the form of the acceptances to be used by the parties was prepared. The cashier testified: "The bank prepared the forms and delivered them to A. L. Nash to be used for these acceptances. * * * The bank had these forms printed at its own expense and gave them to A. L. Nash, agent for W. C. Biggers Co. That form has a line at the bottom, in the right-hand corner, under which is printed the word `seller.' The usual way of filling out one of the acceptances was for the seller to sign it and to state the number of bales of cotton for which a bill of lading or cotton tickets were attached." The cashier further testified: "I understood that the usual and customary way of handling the business of W. C. Biggers Co. through A. L. Nash was to have the seller sign the draft. The usual and customary way, when I paid a draft signed by the seller of the cotton, was to give the money to the seller of the cotton." All of the previous acceptances which the appellee bank had signed as "seller" of the cotton, with itself as the payee of the amount, were based on drafts that had "come in from other banks" with the genuine cotton tickets attached. As explained by the cashier: "During all these years that A. L. Nash had been handling their business, in the cases where he would buy cotton at Kemp or Maybank and send them to our bank for payment, they would be handled by draft — whoever he bought the cotton from would draw a draft on us to W. C. Biggers Co. A. L. Nash would then come in the bank and take up that draft with an acceptance. After we had advanced the money to pay for this cotton and he gave us an acceptance, the bank, to complete the transaction and as an accommodation to him, would sign for him `F. M. Bank, Seller.' That would be done after we had advanced the money to pay for the cotton. The bank had been doing that for five or six years."
In such circumstances, in legal effect, the bank at the time of signing these 66 acceptances as "seller" was, as against W. C. Biggers Co., in the relationship of the cotton of lienor, and was entitled to the rights and remedies incident to that relationship. The bank had a claim against and an interest in the cotton, created as an incident of advancing the money on the cotton to the seller or his transferee. Such circumstances are not similar to those respecting the four acceptances in suit, and the cashier could and should be held to have reasonably so known. In each of those instances the money was paid directly to the banks forwarding the drafts upon direction of the seller. In the precise facts of the four acceptances in suit A. L. Nash, through means of false statements, had the cashier to execute for the bank the drafts payable to the bank's order and signed by the bank as "seller" and to attach to the drafts cotton tickets which in fact were worthless. He had the cashier to execute and deliver to him cashier's checks payable to the order of the First National Bank of Kemp. But the acts of the certain kind stated were never done before and were not acts contemplated by W. C. Biggers Co. to be done. That appearance of authority on the part of A. L. Nash was not caused by W. C. Biggers Co., but by A. L. Nash himself. Executing the acceptances and issuing cashier's checks, as was done, were acts unlike other acts in the usual and customary course of business dealings, and were known to be so by the cashier. As testified by the cashier: "Out of all the drafts handled for that season, as represented by the stubs in the book you are now showing me, on no other occasion was a cashier's check made payable to the First National Bank at Kemp. Well, it might be that it was a little unusual, a little out of the ordinary, to handle it that way. I relied upon what A. L. Nash said to me. I had implicit confidence in him."
Quoting from Gunter v. Robinson (Tex.Civ.App.) 112 S.W. 134, 135: "It does not follow as a matter of course that an agent, employed to negotiate, make, or conclude a contract, has incidental authority to receive payments which may become due under such contract."
In view of the evidence, responsibility for their agent's fraud as to three of the acceptances in suit cannot be imputed to W. C. Biggers Co., since the bank through its cashier knew that A. L. Nash was not authorized by W. C. Biggers Co. to have issued and to receive the cashier's checks on the Kemp bank. It is believed, however, that the peremptory instruction was not required by the evidence, considered in its entirety, because there was evidence going to show that W. C. Biggers Co. derived some benefit from the first acceptance in receiving credit therefor at the First National Bank. In this record this latter issue was the issue — and the only issue, we think — that should have been tried before the jury. Accordingly the judgment is reversed and the cause remanded.
On Motion for a Rehearing.
If the evidence should be the same on the next trial of the case as was shown on this appeal respecting the cause of action on the three drafts Nos. 419, 422, and 423, then as respects such drafts a verdict should be directed in favor of the appellant. The issue arising for decision by the jury would be respecting the cause of action on draft No. 416, unless other evidence that might be offered in the trial would warrant a different holding in respect to such draft. With this explanation the motions of both the appellant and the appellee for a rehearing are overruled.