George Rankin v. City National Bank of Kansas City, Missouri

• Decision Date: 24 February 1908
• Docket Number: No. 51,51
• Parties: GEORGE C. RANKIN, Receiver of the Capitol National Bank of Guthrie, Oklahoma Territory, Plff. in Err., v. CITY NATIONAL BANK OF KANSAS CITY, MISSOURI
• Court: U.S. Supreme Court

208 U.S. 541

28 S.Ct. 346

52 L.Ed. 610

GEORGE C. RANKIN, Receiver of the Capitol National Bank of Guthrie, Oklahoma Territory, Plff. in Err.,

v CITY NATIONAL BANK OF KANSAS CITY, MISSOURI.

No. 51.

Argued November 12, 13, 1907.

Decided February 24, 1908.

Messrs. C. B. Ames, D. T. Flynn, and W. C. Scarritt for plaintiff in error.

Mr. John A. Eaton for defendant in error.

Mr. Justice Holmes delivered the opinion of the court:

This suit was brought by the receiver of the Capitol National Bank of Guthrie, Oklahoma territory, which we shall call the Guthrie bank, to recover the amount of an alleged deposit in the City National Bank of Kansas City, Missouri which we shall call the City bank. At a trial without a jury in the circuit court the facts were found and judgment was given for the defendant, which judgment was affirmed by the circuit court of appeals. 75 C. C. A. 343, 144 Fed. 587. We give an abridgment of the findings of the circuit court.

The bank examiner had complained of excessive loans by the Guthrie bank and especially of three notes for $10,000 each, made, respectively, by the Missouri, kansas, & Oklahoma Company, the Wild West Show Company, and the Western Horse Show Company, and had directed them to be reduced. Thereupon one Billingsley, its president, who managed its business with the defendant, wrote to the defendant's cashier, saying: 'I want you to take my not of 30,000.00 and Cr. my Bank with like amount in a special account, with the understanding that said account is not to be checked against. My reason for wanting this is that I have that amount of excessive loans that the Department is kicking about. . . . You will not be out any money and loan and deposit will offset each other on your books.' The Guthrie bank had a general deposit with the City bank, but this on its face was a scheme for a separate paper transaction. The proposal was accepted, Billingsley sent his note, and wrote saying that he had given the Guthrie bank his check on the City bank for the amount, adding: 'And it is agreed that said [Guthrie bank] is to keep this 30 Th with you until note is retired, together with as large a balance as possible. . . . Chas. E. Billingsley, Pres't.'

Billingsley gave the above-mentioned check to the Guthrie bank, which credited it to his personal account, in which the bank's money was kept, as will be stated later. The same day he gave to the bank a ckeck against his personal account for the same sum, which was charged to that account and credited to bills receivable, and thereupon the three notes objected to by the bank examiner were taken out of the bank's assets and possession. What became of them does not appear. It was argued from several circumstances not necessary to mention that they were paid by Billingsley, but that fact is not found. Billingsley does not seem to have been personally liable upon them, and all that can be said is that the scheme to get them off the books was carried out. The cashier of the City bank was away when the letter with Billingsley's note arrived, and there were telegrams; after which the City bank, on September 10 or 11, 1903, charged the note to bills receivable, the check to Billingsley, and credited the Guthrie bank with $30,000 on general account. On September 14 the cashier, having returned, transferred $30,000 to a special account, according to the plan. Billingsley was notified and all transactions in this matter thereafter were entered by the City bank on this special account.

On November 9, 1903, Billingsley's note falling due, the account was charged with the amount and interest. The same day a letter from Billingsley was received, asking an extension. The cashier replied that they had charged his account with the note, but would renew it on satisfactory collateral, and returned the note. Billingsley answered, inclosing a note for $30,000, and requesting that the former arrangement be continued. In answer to this the president of the City bank wrote that they preferred a demand note, and that to satisfy the Comptroller they would rather that it should be for $25,000 instead of $30,000. On November 30, 1903, Billingsley inclosed his note for $25,000 in a letter to the president, requesting that the proceeds be placed as a special deposit to the credit of the bank, and repeating the old agreement: 'It being expressly understood and agreed that this fund is not subject to check, but is to remain with the City National Bank for the payment of the note, and you are hereby authorized to charge this note to said account at any time you desire.' Originally the note was signed 'Chas E. Billingsley Pt.,' and the letter with his name, without addition. On December 12 the president of the City bank wrote that the note should be signed individually and the letter as president, and inclosed the letter for the change. Billingsley admitted the mistake, added 'Prest.' to his signature, and returned the letter, at the same time authorizing the City bank to strike off the 'Pt.' from the signature on the note, which was done.

On November 30, 1903, in order to make the balance of the City bank account on the books of the Guthrie bank correspond with the books of the City bank, Billingsley gave the teller of the Guthrie bank his check upon it in favor of the City Bank for $5,000, which was stamped paid, and the amount credited to the City bank on the books of the Guthrie bank. On December 7 the City bank credited the Guthrie bank with $25,000 on the special account. It credited 2 per cent interest at the end of each month while the account was open, and there was a small deduction as the result of the first stage for interest on the $30,000 note, so that on April 4, 1904, the special credit to the...