Opinion
No. 21482.
June 18, 1951.
APPEAL FROM THE CIRCUIT COURT, JACKSON COUNTY, ALLEN C. SOUTHERN, J.
Leo T. Schwartz, Kansas City, John A. McGuire and Don M. Jackson, Kansas City, of counsel, for appellant.
Copper, Neel, Sutherland Rogers, Wallace Sutherland, Kansas City, for respondent.
Plaintiff insurance company sued defendant bank to recover the sum of $765.80, alleged to be the amount paid by plaintiff to Chemtest Laboratories, Inc., in settlement of liability for losses sustained by that company on certain checks. Trial before the court without a jury resulted in a judgment for defendant, and plaintiff appealed.
For convenience, the appellant, Liberty Mutual Insurance Company, will be referred to as plaintiff, and the respondent, Mercantile Home Bank Trust Company, as defendant or bank. Chemtest Laboratories, Inc., Keysall Pharmacal Company, and Wellington Laboratories, Inc., will sometimes be referred to as Chemtest, Keysall, and Wellington.
The cause was tried on an amended petition containing eighteen counts. Paragraphs one to five, inclusive, of the first count were adopted by reference and made a part of the remaining counts. Each count involved a separate check, and it will be sufficient to outline the allegations of the first count for the purpose of illustration. After alleging that plaintiff and defendant were duly incorporated, the petition alleged that on August 1, 1946, plaintiff issued its policy of insurance in favor of Keysall Pharmacal Company and Chemtest Laboratories, Inc., wherein it "agreed to pay the insured for loss of property, including checks, sustained by the insured"; that "at all times mentioned herein, and for a long time prior thereto, Chemtest Laboratories maintained a checking account with defendant"; that defendant knew, by reason of its long course of dealing with Chemtest Laboratories, Inc., that Wellington Laboratories, Inc., was a fictitious trade name used by Chemtest Laboratories, Inc., in the sale of pharmaceutical products; that "defendant knew that checks received for deposit which were made payable to Wellington Laboratories, Inc., and Chemtest Laboratories, Inc. were to be credited to the account of said Chemtest Laboratories, Inc."; that defendant knew "that all checks presented to it by said Chemtest Laboratories, Inc., or by anyone on its behalf, were to be deposited to its credit in said account, and that none of said checks was to be cashed"; that on each of the occasions hereinafter mentioned, defendant "wrongfully, carelessly, negligently and without authority of said Chemtest Laboratories, Inc., and in complete disregard of said established and long continued course of dealing with said depositor, received certain checks which were intended for deposit to the account of said depositor, and, instead of so crediting said checks to said account, paid to the bearer of said checks in cash the sum represented by each of them"; that as a direct result of said wrongful acts, Chemtest Laboratories, Inc., "did sustain a loss of the amount of said checks, which amount plaintiff has paid to said Chemtest Laboratories, Inc., under the terms and conditions of the policy of insurance hereinbefore referred to; that by reason thereof, it has become subrogated to all rights of the said Chemtest Laboratories, Inc., against defendant"; and that "plaintiff has demanded the total amount of said checks from defendant, but that defendant has failed and refused * * * to pay to the plaintiff said sum or any part thereof." Paragraph six of the first count described one of the eighteen checks in question, and prayed judgment for the amount thereof. The amount claimed in the several counts varies from $16.22 to $213.90.
Defendant's answer to each count of the amended petition admitted the corporate existence of the parties and that Chemtest maintained a checking account with defendant at all times mentioned in the petition, and denied the other allegations of the petition. For further answer to all counts of the petition, defendant alleged facts setting up the defense that the doctrine of election of remedies barred plaintiff from prosecuting this action.
The evidence shows that Chemtest Laboratories, Inc., and Keysall Pharmacal Company, a corporation, were subsidiaries of Katz Drug Company; that Wellington Laboratories, Inc., was a trade name used by Chemtest in the sale of pharmaceutical products; and that checks received by Chemtest from its customers were made payable to Wellington Laboratories, Inc. Chemtest maintained a separate checking account with defendant bank. It was the practice of Chemtest to deposit all checks (in payment of invoices, etc.) in that bank. Checks so deposited were endorsed with a rubber stamp as follows: "Pay to the Order of Mercantile Home Bank Trust Company. Previous Endorsements Guaranteed. For Deposit Only. Chemtest Laboratories, Inc."; and this form of endorsement was approved by the bank. As these checks were made payable to Wellington Laboratories, Inc.; they were also endorsed with a rubber stamp bearing that trade name. Chemtest had in its employ a bookkeeper, one Delmar K. Patten, who in the course of his duties sent out the invoices, received the checks in payment thereof, and deposited checks to the credit of Chemtest in defendant bank. Between August 28, 1946, and December 13, 1946, the bank cashed for Patten eighteen checks payable to Wellington Laboratories, Inc., and bearing the rubber stamp endorsements of Wellington and Chemtest, and Patten appropriated the money to his own use. As indicated, the Chemtest endorsements contained the words "For Deposit Only." All of these checks were issued by customers of Chemtest in payment of bills for merchandise shipped to them. Patten was not authorized by Chemtest to demand cash payment on the checks. It was stipulated that "the records of the bank show that no part of these eighteen checks was deposited to the credit of Chemtest Laboratories."
The comptroller of the bank testified as a witness for plaintiff that the bank had been furnished with resolutions of the board of directors of Chemtest regarding the banking transactions of that company (plaintiff's exhibits 1 and 2), and that such resolutions did not authorize the bank to cash checks which bore the form of endorsement described above. Steve M. Kovac was the teller who cashed the eighteen checks for Patten. He testified as a witness for plaintiff that he had been instructed not to pay out money on checks endorsed "For Deposit Only," and that he had no authority to cash the checks in question. In view of the conclusion which we have reached in this case, it is not necessary to summarize all of the evidence pertaining to the question whether the bank was at fault in cashing these checks.
Plaintiff's evidence shows that it had executed a crime policy in favor of Chemtest Laboratories, Inc., promising, for a consideration, "to pay for loss of property due to any dishonest or fraudulent act committed by any of the insured's employees." There were seven other corporations similarly covered by this policy, including Katz Drug Company, the first named insured, and Keysall Pharmacal Company. The dishonesty of Patten was discovered about the end of December, 1946. Thereafter, and on September 27, 1947, Keysall Pharmacal Company executed a proof of loss, in which it listed the eighteen checks mentioned above, and also a check issued by Marvin Katz, payable to Keysall for the sum of $137.50. The proof of loss stated that the "items" (the nineteen checks) charged "to Delmar K. Patten on the dates and in the amounts set forth have not been paid over to the said Employer (Keysall) but have been fraudulently misappropriated by said Employee (Patten) to his own use with the intent to deprive the said Employer of the same * * *." The proof of loss further stated that the amount of Keysall's loss on the "items" was $903.30, the aggregate amount of the nineteen checks less $32.52. The credit of $32.52 "represented the unpaid salary due Patten from Chemtest Laboratories, Inc., at the time he left its employment." Keysall presented this proof of loss to plaintiff. The evidence shows that plaintiff issued its check for $903.30, dated October 7, 1947, payable to Keysall Pharmacal Company, and delivered the same to the named payee. On October 7, 1947, plaintiff obtained from Keysall a release and assignment which recited that Keysall released plaintiff from all liability under the crime policy "on account of loss which occurred * * * by reason of the unauthorized cashing of 19 checks"; and also that Keysall assigned to plaintiff "any right or cause of action that undersigned may have against any person, firm, association, or corporation for the recovery of such loss to the extent of $903.30." Plaintiff's petition, as amended, prayed judgment for $765.80, the total amount of the eighteen checks described in the petition. The difference between $903.30 and $765.80 is $137.50, the amount of the check issued by Marvin Katz and payable to Keysall. The last mentioned check is not involved in the present suit.
Other facts will be stated in the course of the opinion. As indicated above, the court found the issues in favor of defendant on all counts of the petition and entered judgment accordingly.
Plaintiff contends that the court erred in refusing "plaintiff's requested finding of fact and conclusion of law No. 2 and in giving defendant's requested findings of fact and conclusions of law Nos. 1, 2, 3, and 5 and in rendering judgment for defendant"; and that the court erred in refusing "plaintiff's requested finding of fact and conclusion of law No. 1 and in giving defendant's finding of fact and conclusion of law No. 4 and in rendering judgment for defendant." While plaintiff asserts that the trial court erred in giving and refusing "requested findings of fact and conclusions of law," it is apparent that plaintiff is complaining of the action of the court in finding against it under the evidence. See A. A. Electric Machinery Co. v. Block, Mo.App., 193 S.W.2d 631. Since the case was tried to the court without a jury, it must be reviewed upon both the law and the evidence as in cases of an equitable nature, and the judgment will not be set aside unless clearly erroneous. R.S. 1949, sec. 510.310, subd. 4, Mo.R.S.A. sec. 847.114(d).
Plaintiff contends that the undisputed evidence shows that it paid the insured, Chemtest, the sum of $765.80 in settlement of liability for loss sustained by Chemtest on the eighteen checks in question and, therefore, that it became subrogated to the rights of Chemtest against defendant bank to the extent of $765.80. On the other hand, defendant contends that plaintiff cannot recover because it failed to prove that it paid the amount of the loss to Chemtest. As stated, the evidence shows that Keysall, a corporation, executed the proof of loss; that thereafter plaintiff issued its check for $903.30, payable to Keysall and delivered the same to Keysall; and that plaintiff obtained a release and assignment from Keysall. But Chemtest, a corporation, as the owner of the eighteen checks, suffered the entire loss on those checks through the dishonesty of its employee Patten. Both Chemtest and Keysall were subsidiaries of Katz Drug Company, but they dealt with one another as separate corporate entities. Plaintiff contends, however, that the reasonable inference to be drawn from the evidence is that Keysall was acting as agent for Chemtest in receiving the check mentioned above. In this connection, plaintiff cites cases which hold that "a corporation may act as an agent for another and that the existence of such relation may be proved by circumstances, such as the relationship of the parties and their conduct with reference to the subject matter dealt with," citing State ex rel. Stiers Bros. Const. Co. v. Hughes, 354 Mo. 659, 190 S.W.2d 880; and National Plumbing Co. v. Torretti, 237 Mo.App. 570, 175 S.W.2d 947. We think those cases were correctly decided, but they are not applicable to the facts of the instant case. The burden of proving its right to recover as subrogee of Chemtest rested on plaintiff. "Insurer's rights to subrogation accrue on payment of the insurance claim; but until payment of the claim on the policy no rights to subrogation accrue." 46 C.J.S., Insurance, § 1209, p. 153; Pacific Fire Ins. Co. v. L.A.D. Motor Corporation, 136 Misc. 594, 240 N.Y.S. 372. There is nothing in the record to show that plaintiff paid Chemtest the amount of the loss or that Chemtest ever received any part of the proceeds of the check issued by plaintiff and payable to Keysall. The trial court found that "plaintiff has failed to prove that it paid any loss to its insured."
Plaintiff insists, however, that "in the trial of the case the parties assumed or tacitly agreed that Chemtest had received its share of the proceeds of the plaintiff's check"; that defendant "joined with plaintiff on that theory," and that defendant "cannot now shift its position and urge another theory on appeal." In support of this contention, it is pointed out "that in the opening statement of plaintiff it was recited that the Liberty Mutual Insurance Company paid the loss to Chemtest and the Katz Drug Company and counsel for defendant in his opening statement advised the court that plaintiff's counsel had made a very fair statement of the facts in this case," and "advised the court that the legal proposition on which this case hinged was the question of election of remedies." We find that counsel for defendant did make such remarks in his opening statement. However, a party is not bound by statements in the opening statement of his counsel unless the same are clear upon the fact or facts to which they relate. Evans v. Sears, Roebuck Co., Mo.App., 129 S.W.2d 53. We have carefully studied the opening statements of the respective parties, and in our opinion nothing that defendant's counsel said in his statement amounted to a binding admission that plaintiff had paid Chemtest the amount of its loss.
Plaintiff also asserts that defendant "made no objection to the proof of loss, the check and other evidence which was wholly incompetent and immaterial under defendant's present contention." The record shows that plaintiff introduced in evidence photostatic copies of the proof of loss executed by Keysall and the check for $903.30, issued by plaintiff and payable to Keysall, and that these exhibits were admitted without objection. The fact that defendant's counsel did not object to the admission of these exhibits did not have the effect of dispensing with the necessity of proving that Chemtest received from plaintiff the amount of its loss, either directly or indirectly; and when plaintiff thereafter failed in its proof upon that essential element of its cause of action, it was not to be relieved from the consequences of such failure upon the ground that defendant's counsel did not object to the admission of the exhibits.
We find nothing in the record to support plaintiff's contention that "in the trial of this case the parties assumed or tacitly agreed that Chemtest had received its share of the proceeds of the plaintiff's check" and that defendant "joined with plaintiff on that theory." It is true, of course, that a party cannot advance a different theory upon appeal from the one advanced in the trial court. Hodge v. Feiner, 338 Mo. 268, 90 S.W.2d 90, 103 A.L.R. 483. But the record does not show that defendant did advance another theory on appeal. On the contrary, it shows that defendant requested the trial court to find that "plaintiff has failed to prove that it paid any loss to its insured," and the court so found. It also appears that plaintiff's counsel was served with a copy of defendant's "requested findings" on February 3, 1950, and that the court made its findings and entered judgment for defendant on February 10, 1950. Under the record, we are unable to say that the judgment was clearly erroneous.
In view of the conclusion which we have reached, it is not necessary to consider the other questions raised on appeal. 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.