Third National Bank v. St. Charles Savings Bank

LAMM, J.

This is a suit with a petition in three counts — one on defendant’s guaranty pf a promissory note; the other two were common counts for money loaned, and money had and received — all relating to the same transaction. On an answer denying the authority of its cashier to execute the guaranty, and in a trial without the aid of a jury in the Boone Circuit Court, plaintiff recovered on the first count, $24,722.75, and the finding was for defendant on the second and third. On due steps by both litigants, with a common bill of exceptions and abstract of record, there are cross-appeals.

Plaintiff is a national bank in St. Louis, defendant a State bank at St. Charles. Since 1901, and up to October, 1904, plaintiff was (what is known among bankers) a “correspondent” of defendant in St. Louis. Between the two there was a run of business and plaintiff generally carried a deposit for defendant, called in the record, an “inactive” account, i. e., one hot generally checked against. Defendant had another correspondent in St. Louis, the American Exchange Bank, where it kept an “active” account. For many years prior to October, 1904, one A. F. Mispagel was cashier and chief executive officer of defendant, on its behalf transacting all business with plaintiff.

On October 13,1904, plaintiff, under circumstdnces presently presented, issued to defendant three time certificates of deposit, in their nature negotiable, each for $10,000, drawing three per cent interest from date *565and payable ten days after demand. These were delivered directly to Mispagel on behalf of defendant by plaintiff and were carried by him to St. Charles, were found in defendant bank, were finally indorsed by defendant over to the American Exchange Bank, demand of payment was made by the latter on November 21, 1904, and they were paid by. plaintiff to the latter, as holder, and taken up in the usual course of business through the St. Louis clearing house nine days later. We will recur to this payment later. One of these certificates represented the proceeds of a check drawn by Mispagel on October 13, 1904, on the American Exchange Bank, transferring to plaintiff $10,000.from the account of defendant at that bank. The other two represented the discount of a note for $20,000. According' to the form of this note, one W. J. Baird was maker and defendant was guarantor. Baird lived in St. Charles, as did Mispagel. He was a stranger at plaintiff bank, while Mispagel was well known there. Baird was in the “grain” line. We infer, in puts and calls on the grain market, that is, betting on the future price of grain. We infer, also, that Mispagel was jointly interested in some of these deals. The result was that he, through Baird and otherwise, misappropriated a great deal of defendant’s money, and said misappropriations were covered up by false bookkeeping and similar knavish tricks coming to light a month or sb after said time certificates were issued. We shall recur to those defalcations later and to Baird’s apparent connection therewith.

Attending more closely to the events of October 13, 1904, on pretense that defendant’s reserves needed stiffening against an unexpected bank examination, on that day Mispagel (taking Baird along) appeared at plaintiff’s banking house and, under circumstances presently set forth, Mispagel entered into negotiations with plaintiff’s officers resulting in Baird’s executing to plaintiff a promissory note of $20,000 (the one *566above referred to) due in ninety days, interest at eight per cent from maturity, payable at plaintiff’s banking house in St. Louis. To that note was attached a collateral contract in usual form, signed by Baird, pledging two certain notes to secure the principal note, one for $5000 in which Baird was payor and said Mispagel was payee, dated October 1, 1904, due in ninety days and indorsed by said Mispagel and one Connery. The other collateral note was for $10,000 due in six months, and bore the same date as the first. In that, Baird was also payor and Mispagel payee. It was indorsed by the latter, and purported to be secured by a deed of trust, and certain shares of stock in a commission company and in a milling company. While a few hundred dollars were eventually made out of the deed of trust and credited on the principal note, the testimony shows the collaterals were practically worthless at the time of the pledge, and were then recognized and spoken of by plaintiff’s officers as worthless when pledged. So, the indorsers of those collateral notes, with Baird, were insolvent on that date and up to the time of the trial. It is further shown that the principal note was discounted by plaintiff on the credit and strength of defendant’s guaranty alone. That guaranty was executed by defendant’s cashier at the same time as the Baird note and, among other narrations, recites as follows:

“Now for value received and in consideration of one dollar paid to the undersigned, receipt of which is hereby acknowledged, and in consideration of the discount of said note, by said bank, and other valuable consideration to them moving the St. Charles Savings Bank for themselves, their successors or assigns, hereby guarantees to the Third National Bank of St. Louis, Mo., its successors or assigns, the prompt payment of the aforesaid note, as well as any renewals thereof. Whenever said note, or renewals thereof, shall become due and remain unpaid, the undersigned will, on de*567maud and 'without notice of dishonor or protest, pay the amount due thereon to said Third National Bank of St. Louis, its successors or assigns, and it shall not be necessary for said bank in order to enforce payment, to first institute suit or exhaust its remedies against the other parties liable on said note.
“St. Charles Savings Bank,
“per A. P. Mispagel, Cashier.”

The first interview on said October 13, was between Mispagel and Mr. Galbreath, cashier of plaintiff, at noon while plaintiff’s president was at lunch. Mispagel told Galbreath that his bank was carrying too much of Baird’s paper and wanted to get $20,000 of it out and build up its reserve to a like amount against an expected bank examination. Galbreath it seems took a memorandum of the proposition including data regarding offered collaterals. lie told Mispagel that he (Galbreath) had no authority to make loans and Mispagel must see Mr. Huttig, president of plaintiff, who had such authority. Mispagel told Gal-breath that his (Mispagel’s) bank didn’t need funds but that its object was as stated, and, as an additional inducement, he offered to draw a check as defendant’s cashier for $10,000 on the American Exchange Bank, making $30,000 to leave as a deposit with plaintiff as the result of that transaction if plaintiff would make the loan. At this stage of the affair Mispagel and Baird left the bank. Returning presently Mispagel saw Mr. Huttig and told him, as he had Galbreath, that he wanted to negotiate a $20,000 loan for Baird. It seems Galbreath had already talked to Huttig before that conversation and Huttig had a sketch of the proposition. Huttig refused to make the loan to Baird, telling Mispagel that plaintiff would not loan to any but customers, but he would be glad to accommodate defendant bank, a customer, and loan the money to it. Thereat Mispagel said he would take the loan for *568Ms bank. Thereupon Huttig took Mispagel over to Gfalbreath’s desk and told him he had made a loan to the St. Charles Savings Bank for $20,000. He left the matter with the cashier to attend to and left the two together to arrange details, himself going away to take no further hand in it. Galbreath asked Mispagel in what form he wanted the loan drawn up. Mispagel said he wanted plaintiff to take Baird’s note secured by collaterals, which he had in his pocket, the note to be guaranteed by defendant bank. Gralbreath did not want the collaterals, and said to Mispagel the guaranty of the bank would be sufficient without them. Mispagel insisted on the collaterals going in and that form was adopted to effectuate the loan and carry out Huttig’s instructions. Mispagel was turned over to Mr. Cooke, another officer, whose duty it was to draft such papers. He drafted them, telling them, according to Baird’s version, the collaterals were of no account. After the papers were executed the proceeds of the note were credited to defendant, Mispagel drew his cashier’s check for $10,000 on the American Exchange Bank, as said, and plaintiff then caused to be executed to defendant the three time certificates mentioned, representing that check and the proceeds of the note, and delivered them to Mispagel. It is not clear that Baird was present during all or most of these negotiations. At any rate he took no part in them of his own initiative. Mispagel was the spokesman, and outside of signing the note and attending to some details Baird did nothing and said notMng. He seems to have been clay in the potter’s hands — the potter being Mispagel. Adding the $10,000 check to the proceeds of the discount of the note and the account defendant -then had with plaintiff, there was left standing to defendant’s credit with plaintiff about $60,000 on that day when this transaction was over, against wMch the three time certificates were outstanding.

*569Going back a little: At a certain time before the things happened we have been narrating, at a date dark, the directors of defendant bank got the notion they had too much idle money in their St. Louis depositories. They hit on the plan of having some of it put on time deposit in order to draw a larger rate of interest than was allowed on daily balances. Accordingly they instructed Mispagel orally to see to it that the thing was done. There was no record to that effect on the bank’s minute books, but there was testimony that a consultation was had, with the result mentioned. Ostensibly carrying out that plan, Mispagel caused a stub on the draft or cheek book used in checking on the American Exchange Bank to show a check in favor of plaintiff, drawn on October 14, 1904, for $80,000. As said the real check was for $10,000 and dated October 13, and the lying stub-spoke of one for $30,000. At or about that date, we infer, there appeared in the bank the three time certificates issued by plaintiff, which would indicate to the other officers if they saw them that Mispagel had carried out Ms instructions to make a time deposit for $30,000.

We come now to speak of the apparent connection of Baird with at least some of Mispagel’s misappropriations of his bank’s funds. It seems, as near as can be seen from the dim record, that the plan of Mispagel. and Baird was to have Baird draw drafts signed by bfm and the Connery Commission Company, which drafts by some form of manipulation by indorsement or order, were to be and were paid by defendant’s depository in St. Louis. When these drafts were returned to defendant as paid they were not allowed to appear on the books of defendant, but were taken out by Mispagel. The record is not as clear as it might be on the details, but the result was that defendant’s books showed a very much greater volume of deposits in St. Louis to the credit of defendant than actually existed, and this fact may have led up to-the directors’ *570plan of putting some of it out on time. “We do not understand that the hank books showed these dealings with Baird, or any overdraft of his or that he owed the bank anything — the data evidencing those facts being carried by Mispagel in his vest pocket, so to speak, and came to the surface later. At some time after the 13th of October, 1904, at a date uncertain, Mispagel took out of his pocket four of these worthless Baird drafts, each for $5000, and handed them over to Baird. Baird at that time,, as said, was insolvent, and when on the witness stand for defendant he stated that the consideration for the surrender of these drafts was the collateral he had put up at plaintiff bank on the $20,000 loan. At that time defendant bank had cashed for Baird about $60,000 of the same sort of drafts. These drafts were also signed by the Connery Commission Company, but Mispagel knew at the time that the commission company was insolvent and that Baird was insolvent. Mispagel also was insolvent, and Baird knew that fact. There is not a scintilla of evidence that the arrangement for surrendering the four drafts to Baird was made prior to the negotiation of the $20,000 note to plaintiff. It may or may not have been an afterthought.

• The last of October or the first of November, 1904, the crookedness of Mispagel came to light and was bruited. Thereupon plaintiff, hearing thereof the next day, sent its assistant cashier, Arnold, to St. Charles, to get the indorsement of Mr. Bruere, president of defendant bank, upon the $20,000 note. Mr. Arnold’s version of the conversation with Mr. Bruere (now dead) differs somewhat from that of the president’s son who was present. According to Arnold he informed the president of defendant bank, Bruere, Sr., that plaintiff was carrying the $20,000 Baird note on account of defendant and that twp of the three certificates of deposit of $10,000 each, held by defendant and issued by plaintiff, represented the proceeds of *571said $20,000 loan made by Mispagel as defendant’s cashier. Arnold conveyed to defendant’s president the wish of the directors of plaintiff to have the indorsement of Mr. Brnere, in addition to the bank’s guaranty, in order to make the note absolutely good. Bruere refused to make the indorsement and told Arnold that “an examination of Mispagel’s accounts had not been fully made, and that he did not know whether the St. Charles Savings Bank had received the proceeds of the note.” The son of Mr. Bruere, now,president of defendant, gave the following version of that conversation: Arnold wanted the board of directors of defendant to ratify the action of Mispagel in executing the guaranty. "Witness looked over the guaranty which Arnold presented and Arnold was told it was null and void, was prohibited by the statutes unless authorized by the board of directors; that such authority had not been given; that defendant bank knew nothing about the transaction, and if plaintiff loaned Baird any money it was its own lookout, and defendant would not ratify Mispagel’s act in executing the guaranty. Up to that time, said this witness, defendant knew nothing about the Baird note. The witness admitted that Arnold said that one of the time certificates represented the proceeds of the $10,000 check on the American Exchange Bank and that the other two were received by defendant on the Baird transaction. The upshot of this witness’s version was that Arnold was told that defendant bank had nothing to do with it, that plaintiff would have to look to Baird for payment, and that defendant expected plaintiff to pay the time certificates when due.

On defendant’s part it stands conceded that it got the money on the three time certificates, that it put on them the indorsement, “Pay American Exchange Bank, St. Louis, or order,” over its signature, before due and sent them before due to the American Exchange Bank with instructions to collect. *572On plaintiff’s part it appears, nem. con., that when the American Exchange Bank demanded payment, plaintiff demanded to know what relation the American Exchange Bank bore to the certificates, how that bank held them, and sneh information was denied. In that condition of things, plaintiff after taking time to consider concluded to pay them and did so on the advice of its attorney that they were negotiable. Mr. G-albreath testified that at that time plaintiff knew defendant disclaimed liability. It stands conceded, furthermore, that there was no prior authority given'by defendant to Mispagel to execute the guaranty, and that unless defendant is bound on all the facts it is not bound at all. The pledged collaterals (except the collection made on the deed of trust, a few hundred dollars credited, as said, on the principal note) were tendered to defendant.

It appears that while defendant claims it repudiated the act of its cashier in executing the guaranty as soon as it knew of it and finally, as agreed on all hands, denied all liability to plaintiff, yet plaintiff from the outset insisted defendant was liable and that the delay in bringing suit (about three years) was an act of courtesy shown by plaintiff at the instance and suggestion of defendant itself to avoid embarrassment to its credit while readjusting its affairs and getting on its feet after Mispagel’s malversations.

Originating in St. Charles County, the venue of the cause was changed to Boone. There it was tried before Judge Nick M. Bradley, the judge of another circuit who was acting at that term in the place of the regular judge, Waller, ill. and absent. The bill of exceptions was settled and signed by Judge Bradley at a subsequent term when Judge Waller was presiding.

Such is the material record, barring defendant’s objections to certain evidence, to appear when the point is up for determination.

*573Counsel argue seriatim a formidable aggregation of propositions. As both sides appeal and propositions advanced by one are, as a rule, only varying phases of related propositions advanced by the other, they run concurrently and we can without confusion consider both appeals at the same time, sifting from briefs material propositions and putting them in our own way, thus:

(1) The bill of exceptions was not signed by the proper judge, hence is not valid and we have nothing here but the record proper.

• (2) The court erred in favor of plaintiff in admitting over defendant’s objection oral testimony to vary the written- contract in suit. (And herein of a contention that the representations made by Mispagel to plaintiff at the time of the contract were outside his duties as cashier of defendant bank, hence are not binding on it.)

(3) And in finding against plaintiff on the common count for money had and received.

(4) And in finding against defendant on the first count.

I. Of the hill of exceptionsi

Judge Waller, regular judge of the Boone Circuit Court, was sick. Acting under Eevised Statutes 1909, section 3960, he requested Judge Bradley, judge of another circuit, to hold the term of court in Boone at which this case was tried. Section 3960, among other things, provides that the judge so called in “shall, during the period he shall so act, possess the same powers and he liable to the same responsibilities as the judge of said circuit. ’ ’

Steps were taken for cross-appeals, time was allowed to settle a common bill of exceptions. At a subsequent term the common bill was signed by Judge Bradley and filed. Plaintiff’s counsel now suggest (diffidently we opine and under cover of the. phrase *574“it seems”)'that the hill was improvidently allowed and signed by Judge Bradley instead of by Judge Waller. We hold the point without substance.

In doing so it is not necessary to stress the fact that whatever Judge Bradley did in signing the bill he did at the instance and request of both parties, that the bill was a common one, was authenticated and filed in due time and form, and if error was committed in getting the wrong judge to sign it both parties are at fault in tolling the court into that error. Does not the maxim run: Omnis consesus tollit errorem? We say we need not apply or rely on that view of it, though we mark the spot with a judicial pin prick in order not to be precluded should it become decisive in some other case. The quoted maxim is full of wisdom and is of wide application. [Star Bottling Co. v. Exposition Co., 240 Mo. 634.]

We prefer to put our ruling on the proposition that the statute contemplated, as one of the powers and responsibilities belonging to Judge Bradley when sitting for a sick brother, that he should in a case tried by him preside in completing the record in a matter involving the verity of the incidents and rulings of such trial. Who should know them better than he? Somewhat agreeably to the figure of Bleckley, J., in Hull v. Meyers, 90 Ga. l. c. 677, so we say; common sense does not always make law, but law and common sense are likely to be one and the same unless divorced and thereby violently put asunder by lawmaker or judge. In this matter they have not been divorced. The signing of the bill was a mere incident to the main power granted the sitting judge by section 3960, and it has been so ruled pointedly. [State v. Bobbitt, 215 Mo. l. c. 29, et seq.; Bower v. Daniel, 198 Mo. l. c. 315.] The general doctrine is: “Whenever a power is granted by statute, the grant of such power carries with it by necessary implication, everything necessary to make such grant effectual.” Incidents *575follow tacitly. [State ex rel. v. Perkins, 139 Mo. l. c. 118; Church v. Hadley, 240 Mo. 680.]

H. Of error in -<-e admission of testimony.

Over timely objections plaintiff was allowed to prove conversations tending to show a verbal agreement ,to make the $20,000 loan to defendant and not to Baird, that the attitude and relation of the two banks at very bottom, despite the mere form, was that of borrower and lender. As shown by the statement of facts, the testimony objected to took now one form and then another in conversations with Mispagel, but the effect we have stated. Saving exceptions to such rulings, defendant insists that prejudicial error thereby crept into the case. In deciding the point it is needful to bear in mind that there are three counts in the petition and that the trial progressed on all three at once. Therefore, when the question of the competency of proof is up, that question, from the very nature of things cannot be determined by narrowing the proof to one count, but it must be viewed at large with reference to all. A rule which would exclude a piece of evidence, because in and of itself it does not sustain one count when it might with something more sustain another, is unsound, because it would enable the adversary party to exclude piecemeal what taken as a whole would maintain some proper issue. (Billings v. Monmouth, 72 Me. l. c. 177, arguendo.) If the case stood alone on the first count we should rule some of the proof incompetent but, as it does not, we think it well enough. This, because:

(a) A good deal of the challenged testimony related to the consideration for the guaranty. In so far as it touched that point it was competent on the first count. The general doctrine is that the consideration- clause of a contract is in the nature of a receipt and is open to explanation by parol. [Squier v. Evans, 127 Mo. l. c. 519; Liebke v. Knapp, 79 Mo. l. c. *57626-7.] Especially should this he so where, as here, the contract of guaranty does not purport to name all the considerations but contains the clause'“and other valuable considerations to them moving.”

(b) But the testimony in hand went beyond that boundary line. In some of its phases its tendency was to show, as said, that the contract of the guarantor was not in fact that of a guaranty, as solemnly recited in the writing, but a different one. Observe, the first count was not a suit to correct an instrument for mistake or on any other head of equitable cognizance — contra, it was a suit at law declaring on a written guaranty whereby the guarantor undertook to guarantee to plaintiff the payment of a note described elsewhere in the writing, together with all renewals thereof, and whereby the guarantor waived the right to insist on plaintiff’s exhausting its other remedies before proceeding on the guaranty. Neither is the guaranty ambiguous or imperfectly expressed so as to let in parol proof to seek out and get at its true intendment. In a suit to recover on a guaranty like that at bar, as on other written contracts, the universally accepted doctrine is that parol proof is not admissible to alter or vary, by enlarging or diminishing, its terms, or to put on foot a different relation between the parties to that prescribed by the instrument itself. A rule that would permit that to be done as to a part of a contract in suit would permit it to be done as to all of it. It would be tantamount to say that contracts are written in water. It would subject the dealing of mankind to an incurable confusion and paralysis. Therefore in a suit on an unequivocal written contract it must speak for itself as its own interpreter. A party who declares on it must abide the event and stand or fall on its very terms. The foregoing propositions are so trite and elementary they need no aid from a line of cases. We refer to a late *577one (Beheret v. Myers, 240 Mo. 58) and pass the matter by.

It is on such premises we hold the testimony improper on the first count. It follows that so far as it swayed, if it did sway, the mind of the court on that count and led up to a judgment for plaintiff thereon, its admission was error, affecting the merits.

(c) It is argued that Mispagel on October 13, 1904, was. not acting on behalf of defendant; that he was engaged in matters outside of his duties as cashier; hence the conversations between Mispagel and plaintiff’s officers should have been excluded. But we are not impressed with that view of it. Absent a statute (of which more presently) the general rule is that: ‘ ‘ The cashier of a bank is held out to the public as having authority to act according to the general usage, practice and course of business of such institutions. ... In short, he is considered the executive officer of the bank through whom the whole moneyed operations of the bank, in paying or receiving debts, or in disposing or transferring securities, are conducted. . . . The acts of a cashier, done in the ordinary course of the business actually confided to such an officer, may be regarded prima facie as coming within the scope of his duties.” [Bank v. Hughes, 62 Mo. App. l. c. 581-2, and cases and authorities cited.]

Whether Mispagel had authority to execute the guaranty we shall presently consider. That question does not relate to the mere admission of testimony. It goes to the right to a judgment on the first count. The contention that said conversations are inadmissible because Mispagel was outside of his duties to his master and pursuing his own affairs in negotiating with plaintiff, we cannot allow as sound. Even on defendant’s own theory Mispagel had authority to loan the moneys of the bank on time deposits in St. Louis. *578But aside from that the negotiations were an entirety. As part of them, and as cashier, he negotiated those deposits in fact. He negotiated the considerations for the certificates. He received the latter. He took them to defendant hank. He put them among its assets. He, and no one else, accepted them for the hank. Whatever title he got to the two in question as agent for defendant is the only title the bank has to them— the only title it seeks to sustain. May a defendant repudiate the negotiations of its cashier bringing to it such a windfall (with one hand) and at the same time (with the other) clutch the gains? May it take the gift and repudiate the hand fetching it? May it take as principal and deny the agency? To so hold would be bad law and worse morals. Even the red Indian has an adage: You should not call the forest that sheltered you, shrubbery. To say of one that he drank of a spring and then turned his back on it, or climbed by a ladder and then struck it down, is but to speak the bitter proverbs of the fireside against ingratitude. However, some of the comments just made are more pertinent to the right to recover presently considered. They bear only incidentally on the admission of testimony.

(d) Turning to the third count, it is for money had and received. It is not on the written contract of guaranty. It lays the guaranty, as such, out of the case. It cuts back of that writing and goes to the root of the matter by encompassing all the facts. Whether the testimony makes a case is not now the question. For the present purposes it is enough to rule, as we do, that on the third count evidentiary rules designed to protect the integrity of the terms of the guaranty sued on in the first count are not applicable.. On the third count the guaranty merely goes in as a fact for what it is worth with all other facts making up the transaction from end to end and side to side. On that count the testimony was proper.

*579Accordingly, we rule the point against defendant, except in so far as the right to recover on the first connt is predicated on the challenged testimony. (Vide, paragraph ££b” under this head.)

III. On the right to recover on the third count.

If plaintiff was entitled to recovery on the first connt, it suffered no harm in being denied one on the third. It could only have one recovery where all counts related to the same transaction and the pleader puts his case on different hypotheses in separate counts to meet the possible proof. In this view of it there lies at the threshold under this head, the preliminary question whether a recovery would go on the first? To that we address ourselves.

(a) On that preliminary question with no little doubt and consequent hesitation, for there are strong authorities running the other way, we conclude that, when we keep in mind that the first count was on the written guaranty, and that it stands conceded that Mispagel had no prior authority to execute that guaranty, plaintiff could not recover on the first count. The guaranty recites that the note of Baird was guaranteed by defendant. Strictly speaking, and confining ourselves to the bare recitals of that instrument, the guarantor was not loaning money (a prime function of a bank), it was lending the credit of the bank for the accommodation of Baird — another thing, and one, considered by itself, of doubtful propriety. It matters not that at bottom the transaction was really not that way; for on the first count we are concerned solely with what the writing says and that is what it does say. For that turn and to that extent the guaranty was not binding on defendant. [Bacon v. Bank, 79 Mo. App. 406.]

Something is made of two statutes, Eevised Statutes 1909, section 1099 and section 1112, in the chapter on banks. Section 1099 provides, inter alia, that *580“no bills payable shall be made . . except with the consent of the board of directors.” Section 1112 provides, inter alia, that “the cashier . . . shall have no power to endorse, sell, pledge or hypothecate any notes, bonds or other obligations received by said corporation for money loaned, until such power and authority shall have been given such cashier . . . by the board of directors, in a regular meeting of the board, a written record of which proceeding shall first have been made.” A subsequent clause in the same section makes the interdicted acts void. Those sections were elaborately and closely construed by our brother Woodson in Bank v. Lyons, 220 Mo. 538, in a way meeting the approval of this court. Under the reasoning of that case it is difficult to see how the language of those two sections can be held to cover a guaranty by defendant bank. Certainly the words of the statute are unfortunate and inapt if the lawmaker was striking at guaranties. A guaranty is not a bill payable, nor by making one is there an indorsing over, pledging or hypothecating of the bank’s notes, bonds or other obligations. But the point is not necessary to our case and we do not decide whether a guaranty comes within the mischiefs aimed at in those sections. We prefer to put our decision against recovery on the first count on the broad proposition that under the strict terms of the guaranty in suit (and looking no further), defendant bank was neither loaning money nor receiving money in the ordinary course of banking business, but was lending its credit for the accomodation of another through the unauthorized act of its cashier. In this connection we are somewhat relieved from embarrassment by the fact that learned counsel for plaintiff were not willing to stand on the first; they east' an anchor to the windward by appealing from the adverse decision on the third count. That course, we think, must be taken as a concession, first, of doubt on the validity of their judgment on the first *581count, and, second, that the situation was so grave as to warrant keeping open the road to another remedy. That he who follows two hares is sure to catch neither, is an old adage, but it is of no appreciable use in dispensing justice through the courts.

(b). This brings us to the final question, to-wit: The right to recover as for money had and received.

(1). Before the discussion proper we submit a foreword thus: Changing the phrase in a bill of rights of a sister State, we think it self-evident that the usefulness of jurisprudence is enhanced' by a frequent recurrence to fundamental principles. It was a famous Greek (was it not?) who said in effect, that argumentation should be begun by a statement, of propositions not to be gainsaid. Agreeably to those ideas, we observe that some of the cardinal precepts of the law are: The obligation to do justice rests upon all persons, natural or artificial. It is equity that he should have satisfaction who sustained the loss, and that he should make satisfaction who received the benefit. By the law of nature itself, it is just that no one become rich by the detriment and injury of another, i. e., unjust enrichment is abhorrent. The common law, says its great master, is a science at once “copious and sociable. ’ ’ By which Coke means, I think, that it is a bundle of doctrines tending to make ideally tolerable the relations of men with each other. The action for money had and received was sprung and fostered under the glow of such broad and enlightened principles. There is a growth in that behalf and the constant tendency is to widen the scope of that action. Though an action at law, it is so favored by courts and is so flexible in form and relief that it levies tribute indifferently on equitable as well as strictly legal principles. In the exposition of the matter, therefore, we may refer to the precepts of both law and equity, as above. The accepted rule is that “the action lies where ‘defendant has received or obtained possession *582of the money of the plaintiff, which, in equity and good conscience, he ought to pay over to the plaintiff.’ ” It goes further and lies for things treated as money and when such is the case the count may be supported by evidence of defendant’s receipt of bank notes, .promissory notes or credit in account in the books of a third, person, etc. [Clifford Banking Co. v. Donovan Commission Co., 195 Mo. l. c. 288, et seq.; 2 Greenleaf Ev. (16 Ed.), secs. 117 and 118.]

(2) The facts of this record, we think, make it a typical case in which to apply the principles underlying the action for money had and received. If the case were one in which Baird in reality had borowed or received money from plaintiff and thereafter used that money in paying his debt to defendant and which defendant had received in good faith (or ordered paid out) in the usual course of business as such payment, we would have a different case to deal with. Such hypothetical a case would be like Vandagrift, Receiver, v. Masonic Home of Missouri, 242 Mo. 138. But taking the transaction of October 13, 1904, as uncovered and established by the evidence in the case at bar, it differs in essential particulars from that case and the cases upon which it must rest as a sound judgment. Here Baird did not borrow the money of plaintiff. Mispagel made a proposition to that effect to plaintiff, but it was declined; and the actual, naked transaction was that defendant bank through the form of a written guaranty and through its cashier negotiated a $20,000 loan with plaintiff to stiffen its reserves. Baird was a stranger and not a customer of plaintiff, it had the right to refuse him a loan and, under the uncontroverted proof, did refuse it to him. The eye of justice, looking straight to the heart of the matter, discards the mere evidentiary shell or form adopted at Mispa'gel’s request, sees the cashier of defendant bank initiating, shaping and hovering over the matter, using the broken grain gambler and his discredited *583collaterals as a mere dummy or man of straw; sees Mispagel, as defendant’s cashier, dictate and receive a credit on plaintiff’s hooks in favor of defendant for the proceeds of the loan; sees the invalid guaranty on the strength of which the loan was made; sees him take two negotiable certificates of deposit for that credit, take those certificates to defendant and put them in its coffers; sees defendant claim them and, finally indorsing them, put them, ostensibly into circulation as cou- . riers without luggage, and get the proceeds of them by cover of that indorsement under the law of negotiable paper. In all this Baird had no substantial voice from start to finish, so far as shown. He saw and handled no dollar of the money and paid out none of it by check, order or direction. In short, it was not his and never was. Indeed, on defendant’s books the two certificates, so far as connected with any book entry, appeared as proceeds of a loan made .by defendant by way of a time deposit in plaintiff’s bank, against which the certificates were drawn. That Mispagel afterwards and, for aught appearing here, as an afterthought, handed Baird four of his discredited' and worthless drafts we cannot look on as of vital significance. Those drafts at best were mere evidence of a debt. To hand them to Baird paid no debt of his to anyone. That delivery was only colorable and is not shown to have been brought about by any agreement, express or implied. If Mispagel, as defendant’s cashier, cashed those drafts originally in behalf of defendant in the usual course of banking, then defendant had notice of their worthlessness and of all facts lying back of them covering the whole affair, for notice to the cashier transacting the business of the bank is notice to the bank. [Bank v. Lovitt, 114 Mo. l. c. 525.] Again, if defendant, as it seems to do, adopts Mispagel’s act as cashier in handing over those worthless drafts, then once more notice to him as cashier is notice to defendant.

*584But the question of notice does not rest alone with Mispagel. Before defendant did the final act of consummátion, whereby it got the cash on the certificates, it had full notice from Arnold, assistant cashier of plaintiff, of the true condition of things, and thenceforward it cannot claim it acted otherwise than with wide-open eyes and charged with knowledge.

Recurring to the whole subject of notice to defendant through Mispagel, the Supreme Court of Massachusetts in Atlantic Mills v. Indian Orchard Mills, 147 Mass. l. c. 273-4-5, lays down acceptable doctrine. The question was on defendant’s right to a setoff, and the facts were like ours in some important features. Says Allen, J., for that court:

“It is true that no officer of the plaintiff besides Gray knew of the fraudulent origin of these checks, but, in the very transaction of receiving them, the plaintiff was represented by Gray, and by him alone, and is bound by his knowledge. It is the same as if the plaintiff’s directors had received the checks, knowing what he knew. For the purpose of accepting the checks, Gray stood in the place of the plaintiff, and was the plaintiff. It is quite immaterial in reference to this question, in what manner or by what officers of the corporation the funds were afterwards used. The important consideration is, how the plaintiff became possessed'of the money; and it is apparent that it was through the act of no other person than of Gray himself. ... It must be deemed to have known what he knew; and it cannot retain the benefit of his act, without accepting the consequences of his knowledge. The plaintiff cannot obtain greater rights from his act than if it did the thing itself, knowing what he knew. . . . The rule is general, that, if one who assumes to do an act which will be for the benefit of another, commits a fraud in so doing, and the person to whose benefit the fraud will enure seeks, after the knowledge of the fraud, to avail himself of that act, *585and to retain the benefit of it, he must be held to adopt the whole act, fraud and all, and to be chargeable with the knowledge of it, so far at least as relates to his right to retain the benefit so secured.”

Says Loring, J., for the same court (Newell v. Hadley, 206 Mass. l. c. 346): “Apart from authority it would be a strange doctrine if it were law that the true owner of money lost his title to it by a thief who stole it undertaking to use it in paying a debt owed by the thief to another, when” mark the vital distinction “the thief and.no one else received for that other the payment so made. It is not conceivable that such a manipulation by a thief of stolen -money should result in the true owner’s losing his title and the creditor of the thief getting a better title to the money than the thief had to it.”

In People’s Bank v. Bank, 101 U. S. 181, defendant’s cashier without authority guaranteed the payment of the notes of a customer which plaintiff bank discounted. The facts there are not dissimilar in salient features to the case at bar. It was held plaintiff could recover on the guaranty itself. A fortiori, we think recovery could go in an action for money had and received. In that case is the- following apposite language: “All the parties engaged in the transaction • and the privies were agents of the defendant. If there were any defect of authority on their part, the retention and enjoyment of the proceeds of the transaction by their principal constituted an acquiescence as effectual as would have been the most formal authorization in advance, or the most formal ratification afterwards.”

In Bank v. Trust Company, 187 Mo. 494, defendant indorsed the paper of a railroad corporation in which it was interested and received benefits from the transaction. The plea was ultra vires. Speaking through Fos, J., we said (p. 536): “ . . . and if the defendant can avoid the payment of the note in suit, *586upon the plea that its act was a wrongful one, in excess of its powers and void, then we confess, that the maxim, which is as old as the law itself, that ‘no person can take advantage of his own wrong, is absolutely shorn of all its force and vitality under our system of jurisprudence.” That case was a suit on the paper itself, and what was said applies with double force when the suit, as here, is on all the'facts for money had1 and received.

In Bank v. Lyons, Receiver, 220 Mo. 538, the cashier of a bank that went into the hands of a receiver, borrowed a large sum of money from another bank and issued its note therefor. His action was unauthorized, but because his bank received the benefits of the loan, its estate in the hands of its receiver was held liable for money had and received. In that case our brother Woodson, pursued his investigation of the question industriously and far. His opinion is replete with a wealth of case learning and is on all fours in essential matters. True in that case there was no third party or dummy like Baird. And if the office filled by Baird in this case was a material factor, Bank v. Lyons would have to be reckoned with in connection with such factor. But the function of Baird in our case was immaterial, he did not a whit in getting the money, he got none, he borrowed none, he was a mere cover for the bank and when the form of the transaction is laid aside he is disposed of by the maxim, ex nihilo nihil fit — out of nothing nothing comes. “If,” said this court in that case, in referring to the borrower, “it repudiates the note for the reason that the board of directors had not authorized its execution, then this court would sanction rank injustice to hold that payment of that money need not be made at all. Such is not the law. • The bank is not exempt from the common obligation to do justice which binds individuals. Such obligations rest upon all persons whether natural or artificial. If the bank obtained the money *587and by mistake or without authority of law executed therefor an invalid note, then it was its duty, under this general obligation to do justice, to refund it. Under those conditions an implied obligation arose on the part of the appellant to repay the money so obtained. ’ ’ For “note” read “guaranty,” as we may, and that case is this on principle.

In addition to authorities cited in Bank v. Lyons, counsel for plaintiff present an array of others abundantly supporting the proposition that plaintiff, on the facts here, is entitled to recover on its common count for money had and received. Appleton v. Bank, 190 N. Y. 417, affirmed in 216 U. S. 196; Bank v. Bank, 15 N. D. 594; Aldrich v. Bank, 176 U. S. 618, are samples of them.

(3). There is a doctrine of the law that a payment made without duress of person or property and without fraud or any form of imposition cannot be recovered back. Defendant calls on that doctrine for help and cites a line of cases, of which Hethcock v. Crawford County. 200 Mo. 170, is one. But none of those cases break on the facts at bar. If defendant had not indorsed the time certificates before due and parted with the possession of them in a way that clothed the American Exchange Bank with apparent ownership; if that bank as defendant’s collecting agent had frankly disclosed upon demand of plaintiff that it held the paper merely for collection; and if plaintiff had known to a moral certainty that defendant bank would eventually repudiate the guaranty, when subsequently it matured, we say if such had been the facts, then we do not say that plaintiff could not recover back the money it paid, but we do say we would have a different problem to solve. This plaintiff paid those certificates under the advice of its counsel that the paper was negotiable and was in the hands of another party.- While it finally turned out the American Exchange Bank held the paper as a collecting *588agency for defendant, yet plaintiff knew it not and was refused information. It would put plaintiff in hard lines to be obliged to contest liability on those certificates with said apparent owner and take its chances of showing that the holding bank was not an innocent purchaser for value before due. While that case was dragging through the courts the effluxion of time might release defendant from liability for money had and received. Considering the negotiable character of that paper we think it too narrow a view to consider alone the fact that plaintiff responded to its own obligation, leaving defendant to respond to its own when it fell due. But even on that view we are of the opinion that plaintiff acted ethically and commercially in good form when it protected its own paper and should not be punished for doing so. The case, however, must be considered on all the facts, and as defendant put plaintiff to the hazard of guessing at its own risk whether the American Exchange Bank owned the paper, it ought not to be allowed to escape liability because plaintiff guessed wrong. In equity and good conscience plaintiff owed defendant nothing whatever, defendant has been unjustly enriched by plaintiff’s money, and it must make restitution.

There are other questions discussed but we deem them not of substance.

As the judgment was on the first count and included eight per cent interest we are not at liberty to consider the count on which it was rendered as immaterial as we could have done otherwise. The third count would draw a different and lower rate of interest. Accordingly the judgment is reversed and remanded with directions to find in favor of defendant on the first and second counts and to find in favor of plaintiff on the third for the amount remaining due on the $20,000 note, deducting payments thereon and *589adding interest at sis per cent from the proper date of bringing this suit.

This case coming into Banc from Division Number One, the foregoing divisional opinion is adopted in Banc.

Valliamt, C. J., Graves, Ferriss and Kennish, JJ., concur; Brown, J., concurs in result; Wood-son, JJ., dissents in an opinion filed.