State Bank v. Estate of Braly

33 P.2d 141, 139 Kan. 788, 1934 Kan. LEXIS 144
CourtSupreme Court of Kansas
DecidedJune 9, 1934
DocketNo. 31,679
StatusPublished
Cited by4 cases

This text of 33 P.2d 141 (State Bank v. Estate of Braly) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Bank v. Estate of Braly, 33 P.2d 141, 139 Kan. 788, 1934 Kan. LEXIS 144 (kan 1934).

Opinion

The opinion of the court was delivered by

Burch, J.:

The question in this case is one relating to election of remedy.

Jesse T. Braly was director, secretary and active manager of the Farmers’ Grain and Mercantile Company of Kingman. Braly, using the name of the company as drawer, drew two drafts on a grain company in Wichita, each for $600, in favor of the State Bank of Kingman. To each draft was attached a bill of lading for a carload of grain. The bank gave the Kingman company credit on its checking account for the drafts. The company exhausted the credit and overdrew its account. The bills of lading were fictitious. The drawee of the drafts refused to honor them, and they were returned to the bank. The company was adjudged bankrupt in an involuntary proceeding. The bank filed a claim in the bankruptcy court for the amount of the drafts. The claim rested on the fact [789]*789that, induced by Braly’s deceit and fraud, the bank gave the company credit for money which was used for the company’s benefit and was not repaid.

Braly died, and his wife, Jessie L. Braly, was appointed administratrix of his estate. Subsequent to the filing of the claim in bankruptcy court, the bank filed a claim in the probate court against Braly’s estate for the amount of the drafts. The claim rested on the fact that by his deceit and fraud Braly induced the bank to give the company credit for money which was used for the company’s benefit and was not repaid. The claim was allowed by the probate court and, on appeal to the district court by the administratrix, was again allowed. In her appeal to this court the administratrix contends that by filing the claim in the bankruptcy court the bank elected to treat the transaction whereby it lost its money as one involving contract only, and the election absolved the estate from liability for Braly’s tort.

The subject of election of remedy has received consideration by this court, and it is established that in seeking redress for violation of legal duty a plaintiff may not occupy inconsistent positions. The case of Ireland v. Waymire, 107 Kan. 384, 191 Pac. 304, presents the subject in simple form. Waymire had an automobile in his possession. While he was in Arizona, Juanita Hill sued him for the value of the automobile, alleging Waymire had procured it from her, had refused to return it, and had converted it to his own use. The theory of the action that Waymire should pay Hill the value of the automobile necessitated the conclusion that Hill had no further interest in the chattel, and it had become property of Waymire. In an action subsequently commenced in Kansas, Ireland sued Waymire and attached the automobile as a chattel owned by Waymire. Hill intervened and claimed she was and had been owner of the automobile. It was held that, because in Arizona Hill had affirmed ownership in Waymire, she could not subsequently recover on the contradictory affirmation that she and not Waymire was owner. It is manifest the choice was not primarily between remedies, but was between inconsistent rights — right of owner of a chattel to possession, and right of one who had parted with ownership to value of the chattel. The remedy must be appropriate to vindication of the chosen right.

In recent times the doctrine of election of remedies has been scrutinized by legal analysts of high repute who have criticized it [790]*790severely. Some courts have mitigated to some extent the harshness of the doctrine. The decisions disclose much confusion in application of the doctrine. The authorities agree that whether the doctrine of election of remedy applies depends on the facts of the particular case, and, without qualifying the decision in the Ireland-Waymire case, it may be shown that case does not govern the present controversy.

The claim filed by the bank in probate court alleged Braly colluded and conspired with his company to get the money by means of the worthless drafts.

There was in fact no collusion, and there was in fact no participation by the principal in its agent’s misconduct. The drafts were deposited on February 26, and Braly committed suicide on February 27. The principal in fact had no knowledge of anything done by the agent, and, so far as the company is concerned, all that in fact happened was, its bank balance was increased, out of which some of its obligations were discharged.

The first claim filed was filed against the estate of the bankrupt company, and if any election occurred it was made by that act. That claim reads:

“The bankrupt carried its banking account with the above bank, and an overdraft was created on February 27, 1932, amounting to $1,193.15, no part of which has ever been paid. A large amount of such overdraft resulted from certain fictitious bills of lading, with draft attached, on proposed shipments of wheat. Claim with interest at 6 per cent to date of bankruptcy, September 20, 1932, amounts to $1,232.15.”

The operative facts on which the claim in bankruptcy court was founded are precisely the same as those on which the claim in probate court was founded. The bankrupt company had the benefit of money obtained from the bank through Braly’s deceit and fraud, which the company did not repay. Braly, through his deceit and fraud, created the condition whereby the bank’s resources were depleted and the company’s resources were augmented. Why did not the bank have two consistent and concurrent remedies to obtain reparation, one against the company which profited, and one against the wrongdoer who caused the bank’s loss?

Solution of the problem does not depend on choice between affirming and denying ownership of a chattel, as in the Ireland-Waymire case, or of wheat, as in the case of Morse v. Grain and Ice Co., 116 Kan. 697, 29 Pac. 366. In the latter case grain was stored in the [791]*791elevator of a grain company whose business was conducted by its officers and directors as if the company were solvent. In fact, it was insolvent. The company sold the wheat and did not account. The plaintiff elected to treat the storage transaction as a sale of the wheat to the company, and he recovered judgment against the company accordingly. He then sued the officers and directors of the company as tortfeasors for conversion of the wheat. Since plaintiff elected to affirm a perfectly good sale of his wheat, the court applied the orthodox doctrine that plaintiff could not both affirm and deny sale.

In the case just referred to the specific question whether one person may be sued for damages for deceit and fraud whereby another is induced to make a contract with a third person who does not perform was not considered or decided. The case of The Union Central Life Insurance Company v. Schidler, 130 Ind. 214, was such a case. A father conveyed land to his son for the purpose of enabling the son to procure a loan secured by mortgage, through false and fraudulent representations regarding location, quality, condition and value of the land. A loan was procured from the insurance company for $1,750. The mortgagor did not pay, the mortgage was foreclosed, and the land was sold for $500, its full value. Execution against the son for the remainder of the judgment was returned unsatisfied. A judgment rendered against the father for damages for tort committed by inducing the contract was affirmed. While the father received some of the money, the decision was not predicated on that fact. The syllabus reads:

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Bluebook (online)
33 P.2d 141, 139 Kan. 788, 1934 Kan. LEXIS 144, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-bank-v-estate-of-braly-kan-1934.