Exchange Bank v. Turner

Full title: EXCHANGE BANK OF NOVINGER v. BEN E. TURNER and AETNA CASUALTY SURETY…

Court: Supreme Court of Missouri, Division One

Date published: Feb 25, 1929

321 Mo. 1104 (Mo. 1929)

14 S.W.2d 425

Opinion

February 25, 1929.

1. PLEADING: Assignee Bank: For Purposes of Liquidation: Suit on Bond. In a suit by plaintiff bank on a bond executed by a surety company to indemnify an insolvent bank against the official misconduct of its president, allegations in the petition confined to a straight recital of the ultimate fact that plaintiff, for a valuable consideration, took over the assets of the defunct bank and became the owner thereof, and assumed its liabilities and had paid them, are sufficient, without a further allegation that plaintiff took over the assets for the purpose of liquidating them, or that the bank whose assets were taken over was insolvent, or that it was in the hands of the State Banking Department at the time of the transfer of its assets to plaintiff.

2. ____: Amendment: After Close of Evidence. A trivial amendment to the petition, added by leave of court, after the taking of evidence had closed and the court had taken the case under advisement, made at the same term and before judgment, which did not change the cause of action, where the petition before the amendment was not fatally defective, and the evidence in support of the added allegations had already gone in without objection, and when the amendment was made to conform to the proof appellant did not claim surprise or ask to reopen the case, is not a ground for complaint.

3. JUDGMENT: Suit on Bond: Different Items: Lump Sum. A judgment for the amount of a fidelity bond sued on, where there is set out a finding for plaintiff on each of the fourteen breaches alleged, in amounts aggregating a sum far in excess of the obligation, is not a judgment for a lump sum, without separate findings.

4. ____: Certified Copy: Bill of Exceptions: Contradictory. The full judgment brought to this court by defendants when they filed their appeal here by the short-method authorized by the statute (Sec. 1479, R.S. 1919), must be looked to for a decision upon an assignment that the judgment was a general one for a lump sum without a separate finding as to each of the fourteen breaches of the bond charged in the petition, notwithstanding an abstract of the record in the bill of exceptions shows an entry of a judgment, certified by the circuit clerk as having been taken from the minute-book of the court, which recites a judgment in a lump sum, and does not mention a separate finding on any alleged breach. The certified copy of the judgment filed here is the basis of the appeal, and it will be looked to for an ascertainment of what the judgment rendered actually was, and if it shows a separate finding on each breach of the bond alleged, a recital to the contrary in the bill of exceptions will be disregarded.

5. INSTRUCTIONS: Unnumbered: Identification. An assignment that the court erred in refusing appellant's declarations of law numbered 1 to 7, cannot be considered, where they are set out as one declaration in eight paragraphs and none of them is numbered, and some of them are correct and others are not. Although appellant insists that each of the eight paragraphs was a separate declaration of law, just as much so as if they had been separately numbered, and although the abstract recites that the court refused to give said declarations of law and each of them, they were not seven declarations, or seven paragraphs, and are not sufficiently identified to warrant speculation as to just which seven of the eight it was error to refuse.

6. BANK: Assignment of Assets: By Board of Directors: Consent of Stockholders. The board of directors of a going corporation has no power to convey away all its assets without the unanimous consent of its stockholders; but such is not the rule where the corporation is insolvent and the stockholders have no equity to protect.

7. ____: ____: ____: Collateral Attack. A surety company, sued on a bond indemnifying a bank against the misconduct of its president, by an assignee bank, which took over all assets of the other and assumed its liabilities and had a large amount of fresh money, cannot be heard to complain that the assignment was made by the board of directors of the insolvent bank alone, where all depositors and creditors were made whole and no fraud or improvidence in the transaction is claimed. Under such circumstances, the transfer is not open to such collateral attack.

8. ____: Assignment: Prohibitive Statutes: Suit on Bond. The primary object of the provisions of the statute (Art. 1, Chap. 108, R.S. 1919), forbidding a failing or insolvent bank from making a voluntary general assignment of its business and affairs, is to secure an honest and economical administration of its assets for the protection of those concerned; and when a bank has become insolvent and has voluntarily been placed in the hands of the State Banking Department, which advises the organization of a new bank to take over its assets and liquidate them, and that plan is consummated by the organization of a new bank with fresh capital, they do not prohibit the insolvent bank to transfer all its assets to the new bank, which assumes its liabilities; and in a suit by the new bank on the bond guaranteeing the fidelity of the president of the insolvent bank, such transfer will not be held to have been void. [Following Citizens Trust Co. v. Tindle, 272 Mo. 681, and disapproving Haight v. Stuart, 220 Mo. App. 78.]

9. ____: ____: ____: Possession of Commissioner: Surrender: Discretion: Consent of Depositors. The statute (Sec. 11702, R.S. 1919) which says that when the State Bank Commissioner shall have taken possession of an insolvent bank "he may hold such possession" until its affairs are finally liquidated by him, unless "the depositors and other creditors of such corporation and the expenses of such liquidation shall have been fully paid," by the use of the word "may," does not imperatively require the Commissioner to remain in possession of the defunct bank until final liquidation thereof, but authorizes him to exercise a sound discretion; and where its liabilities, including its depositors' accounts, are transferred to and assumed by a newly organized bank, and enough fresh money put into it with which to pay them, and this is done with the consent of all the creditors, it amounts to a payment or liquidation, and authorizes the Commissioner to surrender the possession of the assets to the new bank; and even where some of the depositors remain silent and do not object, and it cannot therefore be affirmatively said that they do not consent to the transfer of their deposit accounts to the new bank, still the Commissioner is justified in exercising a sound discretion.

10. ____: ____: ____: Outright Sale: Liquidation. The transfer of the assets of an insolvent bank to another bank organized for the purpose of taking over its business, if made for the purpose of liquidation, is valid, although it assumes the form of an outright sale.

11. ____: ____: Approval of Court. The statute (Sec. 11713, R.S. 1919) declaring that the Bank Commissioner may sell all or any part of the property of a bank in his charge on such terms as the circuit court may direct, has no application where the Commissioner did not make the sale, but simply surrendered control of the assets of the insolvent bank, and it executed an assignment to another bank, which assumed its liabilities.

12. BANK: Assignment: Meeting of Stockholders. The statute (Sec. 11723, R.S. 1919) providing that when the Finance Commissioner shall have liquidated an insolvent bank to the point where all creditors and the expenses of liquidation have been paid and proper provision has been made for claims in litigation, he must call a meeting of the stockholders to determine whether he shall proceed further, collect and liquidate the remaining assets and wind up the affairs of the corporation, has no application where the assets were legally assigned by the insolvent bank to another bank, which assumed all the liabilities, and the Commissioner thereupon surrendered possession to the assignee bank.

13. EVIDENCE: Transcript in Other Cases: No Specification. An assignment that it was error to admit a transcript of evidence given by the principal in the bond sued on on a former occasion concerning certain of his conversations with and admissions to directors of the plaintiff bank, after the insolvent bank had closed and the plaintiff had taken over its assets and assumed its liabilities, is not for consideration where the conversations and admissions are not specified, and it cannot be ascertained from an examination of the brief what they were.

14. ____: Principal in Bond: Admissions against Interest: Transcripts. In a suit against the principal and surety in a bond, admissions against interest by the principal, found in transcripts of his testimony given on former occasions in other cases, are competent against him, and the admission of the transcripts in evidence will not be held to be error on the ground that a surety is not bound by the admissions of his principal made after being discharged from his agency, where no such objection was offered at the time; and objections that the transcripts were incompetent altogether and for any purpose, because taken in another case and not properly authenticated, and that they were irrelevant and immaterial, and had not been submitted to the witness, did not raise said objection.

15. FIDELITY BOND: Notice: Waiver. Provisions in the bond of a surety company guaranteeing the fidelity of the president of a bank, that the bank, upon becoming aware of any act which may be made the basis of a claim under the bond, shall, within ten days after such discovery, deliver written notice to the surety at its home office, and within ninety days file particulars and proofs of the correction of the claim, may be waived; and in this case the evidence shows that they were waived or that the surety is estopped to rely upon them.

16. ____: ____: Facts Constituting Waiver. A notice to the surety within six days after the bank closed that there was an apparent shortage chargeable to the bond, and a connected series of acts commencing before the expiration of ninety days and continued thereafter, by which the surety invited discussion and disclosure of the substantial merits of the claim, acknowledging some liability, without intimating that it would or did stand on the time limit fixed in the bond for making proof of loss, and by implication extending the time limit, and in its final letter refusing payment basing its refusal, not on a lack of timely proof, but upon the insufficiency of the proof, constitute waiver of the provision requiring notice to be given within ninety days.

17. ____: Vexatious Delay: Unreasonable. An insurance company, acting in good faith, may contest issues of either fact or law without subjecting itself to the penalties of the statute provided for vexatious delay in paying a fidelity bond; but a mere presence in the record of a real law question will not of itself exculpate the surety company from a charge of wilful obstruction, if there is evidence that its conduct was vexatious and recalcitrant. And where the evidence shows that, within six days after the bank closed, the defendant was notified of a claim upon the bond; that its representative was soon on the ground, and was advised of the audit of the bank books then being conducted, and acquiesced therein; that following the audit it was furnished a formal and itemized proof of the loss; that thereafter letters demanding payment went unanswered for four months; that when it finally denied liability no definite reason for the refusal was assigned, and that after suit was brought the premium on the bond was retained for nearly three years, and was tendered back only in its answer, warranted the trial court in assessing a penalty for vexatious delay.

18. ____: Substantial Evidence: Affirmance. There being substantial evidence to support the finding of the trial court that the fidelity bond was breached in the specified particulars charged, and that the bank suffered pecuniary loss as a result of said breaches by its president whose fidelity the surety company had guaranteed, which exceeded the penalty of the bond, and substantial evidence to support its allowance of an attorney fee for vexatious delay, the judgment for the penalty of the bond and interest, and $1000 damages and a fee of $2000 must be affirmed.

Corpus Juris-Cyc. References: Appeal and Error, 3 C.J., Section 733, p. 819, n. 26; 4 C.J., Section 2572, p. 674, n. 53; Section 2853, p. 878, n. 82. Banks and Banking, 7 C.J., Section 134, p. 533, n. 85; Section 564, p. 755, n. 24. Corporations, 14 C.J., Section 1323, p. 866, n. 44, 45. Fidelity Insurance, 25 C.J., Section 32, p. 1116, n. 63.

Appeal from Putnam Circuit Court. — Hon. L.B. Woods, Judge.

AFFIRMED.

Ben Franklin Son, Charles E. Murrell, Charles D. Stewart and H.H. Bristol for appellants.

(1) The demurrer to plaintiff's petition should have been sustained. The petition fails to state a cause of action against defendants or to show that plaintiff had any right to sue any person whatsoever. It ignores the legislative acts of the State and makes no pretense of taking property for the purpose of liquidation or for any other purpose. Citizens Trust Co. v. Tindle, 272 Mo. 681; Koch v. Trust Co., 181 S.W. 44; R.S. 1919, Art. 1, sec. 11701. (2) The court erred in refusing to give defendants' instruction in the nature of a demurrer, asked by defendants, at the conclusion of plaintiff's evidence. The statutory way of handling insolvent banks is exclusive and should be strictly followed. Koch v. Trust Co., 181 S.W. 44; Haight v. Stuart, 278 S.W. 1091; Sec. 11679, Laws 1923, p. 222; Secs. 11673, 11682, 11689, 11698, 11700, 11701, 11702, 11705, 11722-11725, R.S. 1919; Osagera v. Schaff, 293 Mo. 333; Stanton v. Thompson, 234 Mo. 7; Priest v. Capitain, 236 Mo. 446. (3) The filing of plaintiff's amended petition long after the case had been submitted on the evidence and all witnesses had been discharged, constituted prejudicial error against defendants, should not have been permitted and defendants' objection and motion to strike out the same should have been sustained. Weil v. Greene County, 269 Mo. 281; Swift v. Fire Ins. Co., 279 Mo. 606. (a) Plaintiff's amended petition predicates its right to recover on entirely different grounds from its original petition, in that it states plaintiff had "assumed the liabilities of the Union State Bank and had paid the same," thereby changing the cause from the right to sue on an assigned contract to that of a right to recover for money paid for the use and benefit of another, thus introducing two questions of fact not in the original petition, to-wit, that it had assumed the obligations of the Union State Bank and that it had paid the same, thus inviting defendants to prepare on one line of testimony and predicating its right of recovery upon another wholly different line. Groney v. Joyce, 154 Mo. 253; Carter v. Dilley, 167 Mo. 564; State ex rel. v. Reynolds, 277 Mo. 14; Rayl v. Golfinopulos, 233 S.W. 1069; Delaney v. Delaney, 245 S.W. 1075. Plaintiff's original petition states "it took over and became the owner of all the assets and property of the Union State Bank." The amended petition, so-called, states, in addition, that "it assumed its liabilities and has paid the same." The allegations cannot be supported by the same evidence, as two separate and distinct questions of fact are added by the alleged amendment. Defendants were denied the right to disprove either of said new allegations and the alleged amended petition was prejudicial to defendants' rights and should have been stricken out. Liese v. Meyer, 143 Mo. 547; Ross v. Mineral Co., 162 Mo. 317; St. Charles Bank v. Thompson, 284 Mo. 72; Jacobs v. Railway Co., 204 S.W. 954; Baker Co. v. Oklahoma Co., 242 S.W. 134. (4) The instrument of writing on its face purported to indemnify the Union State Bank in the sum of $10,000 upon condition that it should "sustain no loss by reason of any act or acts of larceny, embezzlement, fraud, dishonesty, forgery, theft, wrongful abstraction or willful misapplication of the funds of said bank committed by the said Ben E. Turner while employed in any position or at any location in the service of the bank." The petition states sixteen separate, distinct and complete alleged breaches in as many different counts or causes of action arising from about sixteen different sources of alleged delinquencies on the part of Turner. Some of these if proven would amount to embezzlement, some to theft, some to fraud, some to dishonesty, etc., and for various sums or amounts on the several counts and involving his dealings with substantially as many different parties, corporations and institutions. The finding and judgment of the court is for a lump sum, with interest, attorney fees and damage for vexatious refusal, and in general terms without ascertaining or deciding what sum was due on any particular or individual count of the petition. This was and is prejudicial error, as defendants have a right to know how much, if any, they are indebted to the Union State Bank upon each of the several counts. The judgment is wrong, and, in fact, is a void judgment and should be arrested. Boyce v. Christy, 47 Mo. 70; State ex rel. v. Peterson, 142 Mo. 526; Wells v. Adams, 88 Mo. App. 215. If the amount of any count or cause of action of the petition is not ascertained and decided, it is difficult to see how the sum total of all of the unknown quantities could make a definite fixed obligation or judgment. Flowers v. Smith, 214 Mo. 98; Christal v. Craig, 80 Mo. 367; Brownwell v. Railroad Co., 47 Mo. 239; Cramer v. Barmon, 193 Mo. 327; Bank v. Commission Co., 139 Mo. App. 110. (5) The admission of the alleged transcript of evidence of Ben E. Turner, given on a former occasion at a trial between other parties, constituted prejudicial error against defendants and was therefore error. The court erred in permitting plaintiff to prove conversations and admissions of Ben E. Turner with officers and directors of the Exchange Bank after October 15, 1921, the date the Union State Bank closed, and after the termination of the employment of said Ben E. Turner. Blair v. Perpetual Ins. Co., 10 Mo. 559; City of St. Louis v. Foster, 24 Mo. 146; State v. Bird, 22 Mo. 470; Root Sons Music Co. v. Caldwell, 154 Iowa 432.

Higbee Mills, John M. Campbell and M.D. Campbell for respondent.

(1) Appellants answer and defend jointly. They say that the bond or policy sued upon requires notices of loss within ten days after discovery and formal proof of claim within ninety days thereafter, and that no such notice and claim was made. Immediately upon the directors becoming aware that Turner had breached the policy, they notified appellant company. Mr. Bristol, representing that company, went to the bank, examined its records, and ascertained there was liability on the policy for some of the items sued for. Mr. Bristol, both before and after the organization of the plaintiff bank, requested that a claim be not made up until auditors, then making an audit of the Union State Bank, had completed their work and made report, stating he would get a copy of that audit. The plaintiff bank thereafter and within ninety days did make up and forward its claim, to which no objection was made at any time. The receipt was acknowledged, the claim paper retained for a period of almost four months before a denial of liability, and that denial, if it can be construed as such, is unfair and in such form as to clearly show the defendant company was willing to grab at any straw that might aid in avoiding the terms of its undertaking. That denial merely states the claim paper was not sufficient to warrant payment of the amount demanded on behalf of the Union State Bank of Novinger. Demand had not been made on behalf of the Union State Bank, and no one knew that more fully than appellant company. The letter does not deny liability nor seek further information. The claim paper and the work and expense of its preparation had been made and incurred at the request of the defendant company, and was actually made and delivered within the time limited by the terms of the policy. After defendant company knew of the transfer to the plaintiff bank and examined the records of that transfer, it thereafter requested the claim be made up. The defense thus made is clearly disproven. Even if plaintiff had not strickly complied with the terms of the policy in the respect now under consideration, such failure was due to the request of defendants. Therefore they cannot complain. This defense as well as all others is made by defendants in one voice. (a) Moreover, the policy sued upon will be strickly construed against the defendants. There is no provision therein that a failure to give notice, or make proof of loss or that knowledge of the directors shall render the policy void. In the absence of such provision the bond will be enforced and not forfeited. Dezell v. Company, 176 Mo. 253; Shanebarg v. National, 263 S.W. 512. (b) Damages, attorneys fees and penalties may be recovered on the instrument sued upon. State v. Company, 215 S.W. 25. (2) Does plaintiff own the policy sued upon? The record is such that defendants are not in position to urge that question in this court. Attention is called to their answer in which the allegation is made that the policy contained certain provisions relative to notice and proof of loss; that it was the duty of plaintiff to give such notice and make such proof, and that "defendant states that plaintiff failed, neglected and refused to comply with the terms and provisions of said instrument of writing." That defendant company believed it would comply with the terms and provisions and "that the plaintiff accepted the written instrument, etc.," and that its failure to observe said provisions "on its part constitutes a fraud against the rights of the defendants herein." That plaintiff became aware of the wrongful acts complained of "and no notice was given to this defendant within ten days as agreed and specified in said bond, or within any time, and the same constitutes a fraud upon the defendant surety company." The policy does contain the provisions pleaded by defendants relative to notice and proof of loss. Defendants by pleading such provision and alleging it was the duty of plaintiff to observe them, and that "plaintiff accepted the written instrument" with said terms and provisions therein necessarily concedes plaintiff was the owner of the policy. This because, unless plaintiff was the owner of the policy, it was not under the duties to give such notice and make such proof. The averment that "plaintiff accepted the written instrument," necessarily admits ownership. (a) As a part of this insistence, there is another act on the part of defendant company that precludes it from saying in this court that plaintiff is not the owner of the policy. The closing part of the answer is that defendant company tenders to the Union State Bank of Novinger and now offers to pay into court all monies received by it as premium on said policy, to-wit, the sum of thirty dollars. That answer was filed on the day the trial began. The money was not actually paid into court and the tender is made to the Union State Bank. Said bank was not a party to the suit, was not represented by anyone, and there was no one in court to whom the tender could be made. At the close of the evidence the defendant reversed its position, announced it had actually paid the premium to the clerk and asked that the clerk be instructed to pay the same to plaintiff. This act recognized plaintiff as the owner of the policy, because if not the owner, it would, under no circumstances, be entitled to receive the premium. As a matter of law, a tender into court is in the nature of a judicial admission, that the amount tendered is actually due. Sanders v. Mosbarger, 141 S.W. 720; Bernam v. Noke, 61 Mo. App. 376. (b) There is another allegation in defendants' answer which admits plaintiff's ownership of the policy. That allegation is that plaintiff is not the owner of the policy because certain designed statutes were not followed in the transfer of the property of the Union State Bank to plaintiff. Defendants' answer in this respect, as well as its brief in this court, assumes that the contract entered into between the Union State Bank and plaintiff was a "voluntary deed of general assignment," and that the statute prohibits a bank from making a voluntary deed of general assignment. It ought to be sufficient answer that the contract between the banks, altho introduced in evidence, is not preserved in the bill of exceptions and is therefore not before this court. Defendant ought not be permitted to say the instrument mentioned is a voluntary deed of general assignment while withholding the same from this court. However, aside from that point defendants are estopped to claim plaintiff is not the owner of the bond, because after the plaintiff was open for business, defendant company examined its records, including the instrument transferring the policy to it, as well as the other assets of the Union State Bank, and then requested plaintiff to incur the expense of furnishing proof of loss and plaintiff complied with that request and did furnish the name. (c) Defendants' contention is based wholly upon Sec. 11701, R.S. 1919. That section provides that a bank cannot make a voluntary general assignment of its assets; that when it finds itself in a failing condition, it shall place itself in the hands of the bank commissioner, and that any transfer of its notes and other assets made with a view to prevent the application of its assets in the manner prescribed, shall be null and void. In arriving at a proper construction of that section, its associate section, the object and purpose of the law, is important and persuasive, as it may aid in construction. The law was designed (and that purpose is apparent throughout the chapter), to prevent a bank from preferring a creditor under the general assignment laws. In the absence of legislation prohibiting a bank from making a voluntary general assignment, a deed by the bank under general assignment laws would be valid (Chap. 4, R.S. 1919). Chew v. Ellingwood, 86 Mo. 273; Shuse v. Ames, 104 Mo. 91; Washington Savings Bank v. Banks, 107 Mo. 133. Appellant Turner, as well as all other stockholders, has ratified the transfer, and title by ratification is as good as any other title. No person except a stockholder can question the transfer. 10 Cyc. 1240; 14 C.J. 879, par. 1338; Descombes v. Wood, 91 Mo. 196. (3) Complaint is made the judgment is general and not special. This insistence is based upon an incorrect record. Appellants' abstract sets forth only the minutes of the judgment, and not the judgment itself. Respondents in their additional abstract have supplied that omission. The court made a finding on behalf of plaintiff for all of the breaches except 13 and 14, which were withdrawn (they involved small amounts). The court found that plaintiff had sustained losses in the sum of more than $19,000 — a sum largely in excess of the penalty of the policy. Again no such complaint is made in the motion for new trial. There is no error in this respect. (4) The evidence was heard in June. At the same term and a few days after the close of the trial, an amended petition was filed. The matter of which complaint is made of the amended petition had been fully proven at the trial. The amended petition pleaded that plaintiff had assumed and paid the obligations of the Union State Bank. The case was taken under advisement and decided in October. Affidavit of surprise was not filed, and no request was made to introduce additional testimony. Ordinarily the filing of an amended petition is largely in the discretion of the trial court, but a plaintiff has the absolute right to file an amended petition to conform to the proof. The proof introduced supports every allegation as contained in the amended petition.

ELLISON, C.

This is a suit on a fidelity bond for $10,000 executed by the defendant Turner as principal and the defendant Aetna Casualty Surety Company as surety. The bond was to indemnify the Union State Bank of Novinger in Adair County against official misconduct of Turner, its president. The bank failed, and while in the hands of the State Banking Department the Exchange Bank of Novinger was organized and took over its assets and liabilities. It is this latter bank which sues as plaintiff, claiming the benefit of the bond by succession or assignment under the foregoing arrangement.

Sixteen transactions breaching the bond are separately alleged (not in separate counts, however) and evidence was introduced on fourteen of them. A jury was waived and the cause tried to the court — in Putnam County where the case was sent on change of venue. Plaintiff got judgment for the full amount, with interest, and for $1000 damages, and $2000 attorney fee for vexatious delay. Both defendants answered, defended and have appealed jointly. There are fifteen assignments of error attacking the proceedings from various angles — the amendment of the petition, the insufficiency of the petition and evidence, the refusal of declarations of law, the admission and exclusion of evidence and the form and size of the judgment. In addition the respondent has filed a motion in this court to dismiss the appeal, because of certain alleged shortcomings in appellants' abstract and brief; and appellants object to respondent's additional abstract.

Three banks are mentioned in the evidence. All were state banks organized under the law of Missouri. The first was the Union Bank of Novinger, which failed and went into the hands of the State Banking Department in September, 1920. The appellant Turner at that time was a state bank examiner and was placed in charge. In October certain stockholders of this Union Bank and other persons, among whom was the appellant Turner, organized a new banking corporation called the Union State Bank, to take over the business and assets of the Union Bank.

The appellant Turner was elected president of the Union State Bank and was active in its business. The surety bond sued on was dated December 23, 1920, but the term thereof was expressed to begin on November 25, 1920, and to run until cancelled or terminated as therein stipulated. The bank continued in business for just about a year, until October 15, 1921, when it became insolvent, and was voluntarily placed in the hands of the State Finance Department. A deputy commissioner named Frees was put in charge. He remained for about three months, until January 14, 1922, when the respondent Exchange Bank of Novinger was organized to take over the assets and assume the liabilities of the expiring Union State Bank. Forty-four thousand dollars of fresh money were put into the enterprise, making sufficient assets to meet all outstanding liabilities, according to the evidence.

The facts attending the transfer of assets from the Union State Bank to the Exchange Bank are important. After the closing of the former in October, the appellant Turner went to California the latter part of December and was gone until the following February. During this interval (and even before Turner left, for that matter) there was talk of organizing a new bank. Mr. Hughes, the State Bank Commissioner, went to Novinger and advised a reorganization, and later, it seems, twelve of the fifteen stockholders met at the bank and approved the plan. A public meeting was held at the opera house, which was largely attended, and the same sentiment was expressed there. Several meetings were held at lawyers' offices in Kirksville, and finally, as a result of it, all the directors of the Union State Bank, except Turner, had a meeting on January 11, 1922, and unanimously voted to sell and transfer all assets and liabilities to the Exchange Bank in accordance with a contract referred to and set out in the minutes of the meeting, but not preserved in the record here. However, the purport of it is stated several times. It was that the Exchange Bank assumed all liabilities of the Union State Bank, and took over all its assets, including choses in action. The record shows that the board of directors of the Exchange Bank also authorized the contract, and that both banks and the individual directors thereof (except Turner) signed it.

For a better understanding of what is to follow, we must here anticipate the legal discussion by saying the appellants made strenuous objection to all this evidence, contending, as they do here, that the whole transaction was void: (1) because the board of directors had no authority to transfer all the property of the corporation without the consent of the stockholders, and that such consent was not obtained; (2) because the transaction was at variance with Article I, Chapter 108, Revised Statutes 1919, governing the liquidation of banks by the State Finance Commissioner, in that: (a) the transaction amounted to a voluntary general assignment in violation of Section 11701; (b) no bond was exacted by the Commissioner from the Exchange Bank as a liquidating agent (if it was that) under Section 11706, Revised Statutes 1919; (c) no circuit court order authorizing the sale was obtained as required by Section 11713; (d) no meeting of stockholders was called by the Commissioner to authorize the sale, under Section 11723; (e) and that the transaction contravened the spirit and purpose of the whole article, which lays down a complete and exclusive scheme for the handling and liquidation of insolvent banks. In other words, appellants contend the Exchange Bank did not legally acquire title to the cause of action sued on, and hence is not the proper party to maintain the suit. Bearing on this question, the evidence does not show that there ever was a formal meeting of all the stockholders of the Union State Bank at which the transfer of assets and liabilities to the Exchange Bank was authorized or ratified, but it does show that all of the stockholders except three were present at one informal meeting; and that two of these three were told of the plan afterward and one of them said he couldn't afford to buy stock in the new bank, but then added, "I wish I could be with you." Both of these stockholders had accounts in the Union State Bank which were carried over into the Exchange Bank without objection. The remaining one of these three stockholders was the appellant Turner, and as to him it was brought out that when he was informed of the proposed reorganization before he went to California in December, he replied that "he did not propose to have anything to do with it and that they could go ahead and do what they wanted with it as far as he was concerned." After his return from California, Turner said, according to some of the testimony, that he was glad they had reorganized.

Regarding the attitude of the State Finance Department, the facts developed were that the Commissioner, Mr. Hughes, went to Novinger and urged a reorganization which would take care of depositors and creditors. When the contract between the two banks was approved at a directors' meeting of each on January 11 the deputy commissioner, Mr. Frees, was present. He sent a copy of it to the State Finance Department and after a day or two had elapsed he and Mr. Winn, one of the incorporators of the Exchange Bank, called up Mr. Hughes, the Commissioner, at Jefferson City, and asked him if it would be all right to go ahead. The Commissioner gave his consent, and that night Mr. Winn and Mr. Frees began checking off the assets. They finished about midnight, and Mr. Frees took a receipt from Mr. Winn therefor. This was on Saturday. The following Monday morning, January 16, the new Exchange Bank opened its doors.

There was some evidence, too, that the appellant Surety Company acquiesced in the assumption by the Exchange Bank of the assets and liabilities of the Union State Bank, its assured. On October 21, 1921, about a week after the Union State Bank closed, the bank, by its attorneys, wrote the appellant surety company a letter advising it of that fact and that there was an apparent shortage in assets, covered by the bond. The appellant company answered by letters both from Hartford and St. Louis, in the latter letter saying "our Mr. Bristol" would be in Kirksville on November 7th. Expert accountants were then engaged with Mr. Frees, the deputy commissioner, on an audit of the bank books. When Mr. Bristol came he made only a superficial investigation, saying he would await the completion of the audit.

On January 3rd the attorneys for the bank advised the company by letter that the audit had been completed, and that it showed a shortage in excess of the appellant Turner's bond. Mr. Bristol thereupon returned. This was after the Exchange Bank had opened. He came to the bank and while there admitted liability on two or three items of breach, according to the testimony for respondents. The corporate minute-book was exhibited to him, and in it was the contract of assignment heretofore mentioned and the record of its adoption. He told Mr. Winn of the Exchange Bank to make out a claim, and said he would get a copy of the audit report from the accountants in St. Louis.

Following that on February 27th the attorneys for the bank wrote the company and asked to be advised as to its attitude; and on March 29th they sent a verified and itemized statement of the shortages or breaches claimed under the Turner bond and demanded payment to the Exchange Bank. On April 7th they wrote that suit would be filed by April 13th unless settlement was made before that. The company answered that Mr. Bristol would call some time the next week, and that the papers had been sent to the home office for instructions. Apparently he did come, but what was done is not clearly shown. The next thing on the record is a letter from the bank's attorneys dated July 18th positively asking for a statement as to the position of the company. The company answered on July 26th disclaiming liability. This suit was filed on September 15th — all the above dates are in 1922. After the filing and disposition of certain demurrers, a motion to make the petition more definite and certain, a motion for a change of venue, and a motion for costs, the appellants filed their answer on June 22, 1925, and the case went to trial.

It will be unnecessary to state in detail the facts on which are based the various charges of breach of the bond. One charge is that Turner used $1060 of the bank's funds to buy back certain shares of its capital stock from a stockholder after he knew the stock was worthless. Some eight or ten of them are that he permitted insolvent bank customers to overdraw their accounts. Four or five of them allege he wrongfully made bad loans to insolvent persons and corporations. And one is that he wrongfully used the funds of the bank to take up certain notes which were really the personal obligation of the president of the old Union Bank. Turner asserted his directors knew of these various transactions at the time they were had, or were advised of them at directors' meetings shortly afterward. The directors testified he represented to them and to the public at the time the Union Bank was reorganized into the Union State Bank, that the Union Bank was solvent and never should have been closed; that he told them the Union State Bank was doing well during nearly all the time he was president; and that they did not know of the various transgressions complained of until October, 1921, when the bank suspended.

After the evidence was closed late in June, 1925, the court took the cause under advisement until July 15th, during the same term of court. On the latter date the respondent amended its petition by adding to the allegation quoted below the part in italics: that the Exchange Bank "for a valuable consideration took over and became the owner of all the assets and property of said Union State Bank, assumed its liabilities and has paid the same."

I. The appellants contend the petition was fatally defective and stated no cause of action at all, because it failed to allege the respondent bank took over the assets of the Pleading: Union State Bank for the purpose of liquidating the Liquidation. latter. Appellants say it is held in Citizens Trust Co. et al. v. Tindle et al., 272 Mo. 681, 689, 199 S.W. 1025, 1026, that when a suit is based on facts such as are present here, the petition must contain an allegation of that character. A reading of the case cited does not verify appellants' statement. There was such an allegation in the petition there considered and the opinion does say that when a bank is insolvent and in the hands of the State Finance Department, a transfer of the assets to another bank for liquidation under the supervision of the Finance Department is not violative of Section 11701, Revised Statutes 1919, which forbids a failing bank to make a general assignment for the benefit of creditors. But we find nothing in the opinion holding an assignee bank is required in such circumstances to plead the details of its title in the petition in any suit it may bring.

The petition in this case did not plead the insolvency of the Union State Bank, or that it was in the hands of the State Finance Department at the time of the transfer to the respondent bank. The allegations were confined to a straight recital of the ultimate fact that the respondent bank for a valuable consideration took over the assets of the Union State Bank and became the owner thereof, and assumed its liabilities and had paid them. The fact that the Union State Bank was insolvent and in the hands of the State Finance Department came out in the evidence, and at the same time the further fact came out that the transfer was made for the purpose of liquidation. We think the petition was sufficient to support the proof; and that the Tindle case warrants that conclusion, instead of being an authority for appellants — for it says (272 Mo. l.c. 695, 199 S.W. l.c. 1028) that if the defendants desired to attack the transfer of assets they should have done so as a matter of defense by answer. The Kansas City Court of Appeals appears to have taken the same view in a somewhat similar case, Farmers State Bank v. Miller, 300 S.W. 834, 838. There the suit was by an assignee bank on a promissory note. The petition appears to have been conventional and the facts about the transfer of the note to the plaintiff by a failing bank for the purpose of liquidation, with the consent of the Finance Department, were developed in the evidence. The case of Smith Kinzer v. Dean, 19 Mo. 63, cited by appellants, is not to the contrary. The petition there alleged merely the legal conclusion that the plaintiff was the legal holder of the note sued on.

II. The appellants next complain of the amendment in the petition in the manner heretofore stated, after the evidence was in and the witnesses had been discharged. Cases Amendment: are cited saving "a petition which states no After Close of cause of action at all cannot be amended after Evidence. judgment so as to state one;" and other decisions, holding that amendments which change the cause of action should not be allowed. Reference is made also to authorities along the line that it is improper to permit an amendment after the hearing of evidence is over, when a new issue is thereby introduced of which the other party has not been advised and which he is not prepared to meet. All these rules are correct, but they have no application to this case. The amendment permitted by the court in this instance was trivial; it did not change the cause of action; and the petition was not fatally defective to begin with. The evidence had already gone in without objection (on that score) that the Exchange Bank assumed the liabilities of the Union State Bank and was paying them, and when the amendment was made to conform to the proof the appellants did not claim surprise or ask to reopen the case. This point is ruled against appellants.

III. The next assignment is that the judgment is fatally defective in that it was a general judgment for a lump sum without a separate finding as to each of the fourteen breaches of the bond alleged in the petition and relied upon at the trial. Some eight cases are cited. The leading one is Flowers v. Smith, 214 Mo. 98, 128 et seq., 112 S.W. 499, 507, in which it is held that Judgment: "where the several causes of action are united in one Lump Sum: count, and the case is tried on all, and a simple Separate verdict and assessment of damages in favor of the Findings. plaintiff, if one or more of the causes of action assigned be bad, so as not to support the verdict, the verdict must be bad as to all." Even if this be good law as applied to this case, it is premised on the assumption that one or more of the several causes of action assigned is bad; and appellants have not shown that to be the fact, nor is it. But aside from all that, the judgment in this case is not a general judgment without separate findings. In appellants' abstract of the record they show in their bill of exceptions an entry of the judgment, certified by the circuit clerk as having been taken from the minute book of the court, as follows:

"Cause having been submitted to the court sitting as a jury, finding and judgment for plaintiff for $10,000 with six per cent interest thereon from August 1, 1922, and $1000, being ten per cent damages, and $2,000 attorney fee for vexatious refusal."

But the full judgment brought up to this court by appellants when they lodged this appeal here under Section 1479, Revised Statutes 1919, expressly finds for the plaintiff on all the fourteen breaches complained of, and that they all represented a loss of over $19,000; and it furthermore renders judgment for plaintiff for the whole amount of the separate sums mentioned in the minute entry, totaling $14,910. We have a right to look to the certified copy of the judgment on file here. It is the basis of the appeal. [State ex rel. v. Smith, 172 Mo. 618, 73 S.W. 134; Mahaffey v. Lebanon Cemetery Assn., 253 Mo. 135, 141, 161 S.W. 701.] And since it is so patent from the face of the proceedings that this latter shows the judgment rendered by the court, we shall rule the point on that basis against the appellants.

IV. The next assignment is that the court erred in refusing appellants' declarations of law numbered 1 to 7. On turning to the abstract we find the following recital: "At the conclusion of all the evidence in the case the defendants pray Unnumbered the court to declare the law in this case to be as Instructions. follows." Following that is certain matter in eight paragraphs covering about two pages of the printed abstract. The paragraphs are not numbered. Some of them begin with the words: "The court declares the law to be," and some do not. Without setting them all out, or even their substance, it will be sufficient to say we think some of the propositions propounded were sound and some were not. In this state of the case, what was said in Chouteau v. Missouri-Lincoln Trust Co., 310 Mo. 665, 683, 276 S.W. 49, 54, is applicable:

"It is finally urged that the trial court committed error in refusing instructions offered by the defendant. The record does not afford a sufficient basis for the consideration of this assignment. Under the heading, 'Defendant's Refused Instructions,' follow nearly eight pages of printed matter in successive paragraphs, but otherwise without subdivision or separation as to subject-matter. The paragraphs are not numbered. We are unable to tell from the record whether the whole was offered as one instruction, or whether there were separate offers of different parts of it. There are certain paragraphs which, if they had been offered as single instructions, should have been given, but we cannot assume they were so offered; nor can we convict the trial court of error in not separating the good from the bad."

We do not ignore appellants' insistence that each of the eight paragraphs was a separate declaration just as much as if they had been separately numbered. Neither have we overlooked the recital in the abstract that the court refused to give said declarations of law and each of them. But we cannot uphold these contentions. The assignment of error in appellants' brief specifies the refusal of instructions one to seven. In the argument appellants complain of the rejection of eight instructions. They are not sufficiently identified to warrant speculation as to just what the trial court was asked to do. On the face of things it seems some of the declarations, for instance, the one on the burden of proof, would have been given if they had been separately submitted. The abstract is seriously at fault. In these circumstances it is not unduly harsh and we but follow many precedents in disallowing appellants' contention.

V. One of the declarations of law referred to in the preceeding paragraphs was an instruction in the nature of a demurrer to the evidence at the close of the case. As we have ruled these declarations are not properly before us, we would be Assignment: justified in disregarding it; but since the By Board of questions raised go to the vitals of the case and so Directors. much space is given to them in the briefs, we feel we ought not to ignore them. The gist of appellants' theory is that the respondent Exchange Bank had no title to the claim sued on because the assignment of the assets of the Union State Bank was void in that: (1) all its stockholders did not formally authorize the transfer, action by the board of directors alone being insufficient; (2) the transaction was in violation of the statutes governing the liquidation of insolvent banks by the State Finance Department.

As to the first point, it is true the board of directors of a going corporation has no right to convey away all its assets without the unanimous consent of its stockholders. [Feld v. Roanoke Investment Co., 123 Mo. 603, 613, 27 S.W. 635; Hidden v. Edwards, 313 Mo. 642, 661, 285 S.W. 462.] But such is not the rule when the corporation is insolvent and the stockholders have no equity to protect. [14 C.J. 866, sec. 1323; 7 R.C.L. 312, sec. 287; 5 A.L.R. 932, note; 35 L.R.A. (N.S.) 400, note; Tanner v. Lindell Ry. Co., 180 Mo. 1, 16, 79 S.W. 155, 158, 103 A.S.R. 534; Cummings v. Parker, 250 Mo. 427, 441, 157 S.W. 629, 633.]

Indeed, even when the corporation is solvent it seems such a conveyance is not ipso facto void, and that dissenting minority stockholders will be cast on their remedy at law unless the facts warrant a rescission. [Tanner v. Lindell Ry. Co., supra; Newell v. Wagner Electric Mfg. Co., 318 Mo. 1031 (Banc), 4 Collateral S.W.2d 1072, 1082 et seq.] But it is unnecessary Attack. to go into the refinements of that doctrine or to consider the effect of Laws 1927, page 386, since that act was passed long after the happening of the events here involved. We need only hold, as we do, that since the Union State Bank was admittedly insolvent, and since it affirmatively appears $44,000 of fresh money was put into the enterprise and all depositors and creditors were made whole, and since the appellants Turner and his surety now challenge the transfer for the first time when sued on his bond, without claiming any improvidence or fraud in the transaction — for these reasons, we say, the assignment is not open to collateral attack in this case on the ground that the directors of the Union State Bank had no power to make it.

In this connection the following statutes should be referred to: Sections 9756, 9757 and 9759, Revised Statutes 1919, as repealed and reenacted by Laws 1921, page 264, and Section 9758, Revised Statutes 1919. In some circumstances the sale of all the assets of an insolvent corporation is said to work a de facto dissolution thereof (Hidden v. Edwards, supra, 313 Mo. l.c. 662, 285 S.W. l.c. 468); and the statutes just mentioned provide how a corporation shall be dissolved (Luehrmann v. Lincoln Trust Title Co. (Mo., Div. 1), 192 S.W. 1026, 1032). But even if it can be said with certainty this record shows the transfer of the assets of the Union State Bank brought about an immediate, complete and permanent cessation of all its corporate functions (which seems doubtful) yet we must hold, for the reasons given above, that the sale was not absolutely void, and that the point cannot be raised collaterally as a mere defense.

Appellants' second point is the one they stress. They say the whole transaction was void as being contrary to the letter and spirit of our banking laws, Article 1, Chapter 108, Revised Statutes 1919, and especially Section 11701 thereof, which forbids a failing or insolvent bank from making a Assignment: voluntary general assignment of its business and Prohibition affairs. The cases cited in support of this Statutes. contention are: Koch v. Missouri Lincoln Trust Co. (Mo., Div. 1), 181 S.W. 44, 48; Citizens Trust Co. v. Tindle, supra, 272 Mo. 681, 199 S.W. 1025; and Haight v. Stuart, decided by the Springfield Court of Appeals, 220 Mo. App. 78, 83, 278 S.W. 1091, 1093. The Koch case declares the state banking act provides a complete and exclusive scheme for winding up insolvent banks; and on authority of that case and the Tindle case, the Haight case holds a bank may liquidate its own affairs if not insolvent, though it be in failing condition. From these two authorities appellants draw the conclusion that if a bank is insolvent any deviation from the requirements of the banking law in the sale of its assets will be fatal.

But it is to be noticed the holding in the Haight case is bottomed partly on the Tindle case, which was decided in Court En Banc; and we do not think the latter decision bears the interpretation put upon it by the Springfield Court of Appeals. The Tindle case was appealed from an order of the circuit court sustaining a demurrer to the petition. The strictly record facts are rather meager, but the opinion shows a bank in Pemiscot County through the peculations of its cashier and his accomplices lost "several hundred thousand dollars" and "ceased to be an active concern" in June, 1913, at which time it assigned its assets to a trust company for liquidation with the acquiescence of its stockholders and depositors. The case does not say in so many words that the bank was insolvent, or that the State Banking Department had taken charge, but of that, more later. Among the assets passed by the assignment was a fidelity bond which the defaulting cashier had executed in favor of the bank. The trust company brought suit thereon as assignee and trustee, and the defendants interposed the demurrer mentioned above, one of the grounds thereof being that the trust company had no title to the cause of action sued on because the assignment was void and in violation of Section 1084, Revised Statutes 1909, which was substantially the same as the present Section 11701, Revised Statutes 1919.

The opinion sets out the statute, and then says in substance (272 Mo. l.c. 694, 199 S.W. l.c. 1028) that the purpose thereof was to prohibit insolvent banks from liquidating under the general law and to confine them to the jurisdiction of the State Banking Department in the circumstances contemplated by and indicated in the section; but that the primary object of the provision was to secure an honest and economical administration of the assets for the protection of those concerned; and so, when all the interested parties desired to take the matter into their own hands, the statute did not deprive them of that right, especially since economies would be effected. The assignment was held valid, and the court said no more effective instrumentality for the accomplishment of the liquidation could be employed than a trust company working under the supervision of the State Banking Department.

As indicated in the foregoing summary the ruling of the case is expressly applied to insolvent banks, and to our minds the opinion as a whole shows the bank involved was in fact insolvent and in the hands of the Banking Department. But to clear up that point we have examined the briefs in the cause, which are now lodged in the files of this court; and from them we find the Pemiscot County Bank had lost over $380,000; that it had failed, was insolvent, its doors closed, and the State Banking Department in charge; that the Banking Department had counseled and advised the organization of a new bank to take over its assets and liquidate them; and that the plan was consummated by the organization of the trust company. All these facts are recited in the briefs and make the case strikingly like the one at bar.

But there is one further question. The Tindle case was decided on the statutes as they stood in the revision of Discretion of 1909; and while Section 1084 of that revision is Commissioner. practically the same as Section 11701, Revised Statutes 1919, we have in the present revision another section, Section 11702, which says:

"When the commissioner shall have duly taken possession of such corporation or private banker, under any provision of this chapter, he may hold such possession until its affairs are finally liquidated by him, unless:

"1. He shall have permitted such corporation or banker to resume business pursuant to the provisions of Section 11705.

"2. The commissioner shall have been directed by order of the court to surrender such possession pursuant to the provisions of Section 11704.

"3. The stockholders of such corporation, at a meeting called by the commissioner pursuant to the provisions of Section 11723, shall have duly determined to appoint and shall have appointed an agent or agents to continue the liquidation of such corporation, and such agent or agents shall have qualified to take possession of its remaining assets as provided in Section 11723.

"4. The depositors and other creditors of such corporation or banker and the expenses of such liquidation shall have been paid in full."

Is the decision in the Tindle case rendered inapplicable to our present law by this added section? Is there anything in it which forbade the Finance Commissioner from relinquishing control of the assets of the Union State Bank to permit their assignment to the Exchange Bank on the terms and under the facts shown in this record? We think not. The statute says the Finance Commissioner may remain in possession of a defunct bank until final liquidation thereof unless one or more of the four conditions enumerated be satisfied — not that he shall do so. Besides, the facts come very nearly bringing the case within the fourth condition of the section, if they do not. The undisputed evidence is that all liabilities of the Union State Bank, including depositors' accounts, were transferred to and assumed by the Exchange Bank, and that enough fresh money was put in the latter to pay them. If this was done with the consent of all the creditors it amounted to a payment. Perhaps the evidence is not full enough to warrant us in holding there was a payment in this case, for, as to some of the depositors, the only showing is that they remained silent and did not object (Johnson v. United Rys. Co., 227 Mo. 423, 453, 127 S.W. 63, 72); but certain it is that under the facts and the law the Finance Commissioner was justified in exercising a sound discretion in the matter. And so we think the Tindle case is controlling.

One other point is made with respect to the Tindle case. Appellants distinguish it by saying the assignment there upheld was a sale in trust for the purpose of liquidation, Outright whereas the transfer in this case was an outright sale Sale. for the purpose of vesting full title and ownership in the Exchange Bank. That is true, but it was for the purpose of liquidation so far as the Union State Bank was concerned, and that is all that is important.

Some twelve other sections of Article I, Chapter 108, Revised Statutes 1919, are referred to in appellants' brief, but there are only two that call for comment. Section 11713 provides that the Finance Commissioner may sell all or any part of the property of a bank in his charge on such terms as the circuit Approval court may direct; and the evidence does not show the of Court. assignment in this case was submitted to and approved by the court. Under our holding above this section has no application, because the Finance Commissioner did not make the sale. He simply surrendered control of the assets, and the Union State Bank executed the assignment.

The other section, Section 11723, provides that when the Finance Commissioner shall have liquidated a bank to the point where all creditors and the expenses of liquidation have been paid and proper provision has been made for claims in litigation, he must call a meeting of the stockholders to Meeting of determine whether he shall proceed further, Stockholders. collect and liquidate the remaining assets, and wind up the affairs of the corporation. No such meeting was called in this case, but obviously the facts do not bring it within this section.

VI. The next assignment is that the court erred in admitting a transcript of evidence given by the appellant Turner on a former occasion concerning certain of his conversations with and admissions to directors of the respondent Exchange Transcripts: Bank, after the Union State Bank had closed. The Admissions. conversations and admissions referred to are not specified. We have looked through the argument in appellants' brief and find no reference to the assignment or elaboration of it. Under the assignment in Points and Authorities are cited cases holding that a surety is not bound by the admission of his principal made after being discharged from his agency.

Reference to the abstract shows two transcripts of Turner's testimony given on former occasions in other cases. Both contain admissions against interest which were certainly competent against Turner, himself; and we do not find any objection thereto made on the special ground urged now. The objections offered were that the transcripts were incompetent altogether and for any purpose, because taken in another case and not properly authenticated; that they were irrelevant and immaterial; and that they had not been submitted to the witness. For these reasons the point is ruled against appellants. Only through indulgence have we gone into the matter as such length. The assignment is really not entitled to consideration because not presented with sufficient clearness. [Vahldick v. Vahldick, 264 Mo. 529, 175 S.W. 199.]

VII. Appellants contend the record fails to show the giving of notice of loss within ten days after the discovery Notice: thereof, and the filing of proofs of loss within ninety Waiver. days, as required by the following clause of the bond:

"The bank, on becoming aware of any act which may be made the basis of any claim hereunder, shall, within ten days after such discovery, deliver written notice thereof to the Surety at its Home Office in the City of Hartford, Connecticut, and shall, within ninety days after the discovery of such loss, file with the Surety particulars and proofs of the correctness of said claim, and such proofs, if required by Surety, shall be verified by affidavit:

The bank closed on October 15, 1921, and the directors testified they first learned of Turner's delinquencies on that date, but the appellants claim the directors had actual or constructive knowledge of them as and when they occurred. There is nothing to this contention of appellants that the directors were bound to know what was going on in the bank, because the evident intention of the quoted clause in the bond is to require actual knowledge; but aside from all that, we think the evidence for respondent was sufficient to support a finding that the appellant surety company waived compliance with these provisions, or is estopped to rely on them.

The surety company was notified on October 21st, within six days after the bank closed, that there was an apparent shortage chargeable to the bond. The company's representative, Mr. Bristol, went to Kirksville on November 7th in response to this letter. At that time expert accountants were at work on the bank books. Mr. Bristol said he would complete his investigation after the audit was finished. On January 3rd, the bank's attorneys advised the surety company that the audit had been completed and that it showed a shortage in excess of the coverage of the bond. Mr. Bristol thereupon returned. This was after the Exchange Bank had opened on January 16th, which was more than ninety days subsequent to discovery of the loss, according to the testimony for respondent, and still longer if the losses were discovered earlier, as appellants assert. On that occasion he admitted liability on two or three items of breach, and said he would get a copy of the audit report from the accountants in St. Louis. At the same time he told the cashier of the respondent bank to make out a claim. On February 27th the bank attorneys wrote the surety company inquiring as to its attitude, and, receiving no answer, on March 29th they sent a verified and itemized statement of the breaches claimed under the bond. Following that there was an exchange of correspondence and Mr. Bristol made another trip to Kirksville. Not until July 26th, nearly four months later, did the company deny liability, then simply saying:

"The proof of loss furnished by you together with such other information as you have submitted is not sufficient to warrant payment by the Aetna Casualty Surety Company of the amounts demanded by you in behalf of the Union State Bank of Novinger, Missouri."

Thus it will be seen that by a connected series of acts commencing before the expiration of the ninety day period and continued thereafter, the company invited discussion and disclosure of the substantive merits of the claim, and acknowledged some liability, without intimating it would or did stand on the time limit fixed in the bond for making proof of loss, and even the final letter which refused payment was not based on that ground. By implication the time was extended. In these circumstances the defense is not available now. [Lowenstein v. Queen Ins. Co., 227 Mo. 100, 113, 127 S.W. 72, 75; Campbell v. National Fire Ins. Co. (St. L. Ct. App.), 269 S.W. 645, 648.]

VIII. Complaint is made, also, on the ground that the facts did not warrant the assessment for vexatious delay under Section 6337, Revised Statutes 1919. It is true, as appellants Vexatious say, that insurance companies, acting in good faith, Delay. may contest either issues of fact or law without subjecting themselves to the penalties of the statute; and there are some issues of law in this case about which lawyers reasonably might differ. [Aufrichtig v. Columbia Natl. Life Ins. Co., 298 Mo. 1, 15, 249 S.W. 912; State ex rel. v. Fid. Dep. Co., 317 Mo. 1078, 1095, 298 S.W. 83, 91.] But the mere presence of a real law question in the record will not of itself exculpate the defendant from a charge of wilful obstruction if there is evidence that its attitude was vexatious and recalcitrant. [Non-Royalty Shoe Co. v. Phoenix Assurance Co., 277 Mo. 399, 423, 210 S.W. 37, 43; Fay v. Aetna Life Ins. Co., 268 Mo. 373, 388, 187 S.W. 861, 865; Young v. Penn. Fire Ins. Co., 269 Mo. 1, 21, 187 S.W. 856, 861.]

As appears from the facts heretofore recited, the appellant surety company was advised of the claim under the bond within six days after the bank failed. Its representative was soon on the ground. Presently, thereafter it was advised of the audit of the bank books. Following that it was served with a formal, itemized proof of loss. Nearly four months of delay ensued thereafter, during which interval some of the letters from the bank's attorneys appear to have been passed unanswered. When liability finally was denied no definite reasons for the refusal were assigned. After suit was brought the premium on the bond was retained for two years and nine months until tendered back in the answer filed, and certainly if it ought to have been refunded at all such delay was unreasonable. [Avery v. Mechanics' Ins. Co. (K.C. Ct. App.), 295 S.W. 509, 513.] Considering all the circumstances we think the question was one of fact for the court sitting as a jury.

IX. There are still other formal assignments, but we do not find them covered in the Points and Authorities or developed to any conclusion in the Argument. There is a review of the testimony with criticisms and comments here and Substantial there. It is said the evidence fails to show any Evidence. pecuniary loss suffered by the Union State Bank as a result of Turner's conduct, but to our minds the record is full of it. In our opinion there was substantial evidence to support the finding and judgment, and we are therefore bound by the conclusions of the court below. [Nickey v. Leader, 235 Mo. 30, 43-4, 138 S.W. 18.]

The judgment is affirmed. Lindsay and Seddon, CC., concur.

PER CURIAM:

The foregoing opinion by ELLISON, C., is adopted as the opinion of the court. All of the judges concur, except Frank, J., not sitting.