29 F. 498 (N.D.Ill. 1887), Prather v. Kean

Citation:29 F. 498
Party Name:PRATHER and others v. KEAN and others.
Case Date:January 03, 1887
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 498

29 F. 498 (N.D.Ill. 1887)

PRATHER and others

v.

KEAN and others.

United States Circuit Court, N.D. Illinois.

January 3, 1887

H. W. Jackson and Robert Hervey, for plaintiffs.

John P. Wilson and O. H. Horton, for defendants.

GRESHAM, J.

The plaintiffs, who were bankers at Marysville, Missouri, opened an account in 1873 with the defendants, who were bankers at Chicago, and this relation continued until the spring of 1883. Interest was allowed the plaintiffs on their deposits above a certain amount, at the rate of 2 1/2 and 3 per cent. per annum, and the deposits averaged from $200,000 to $400,000 a year. On July 7, 1880, the defendants sold to the plaintiffs $12,000 of 4 per cent. government bonds, for which the latter paid, including premium and accrued interest, $13,005. The letter which the plaintiffs wrote ordering the purchase concluded thus: 'You will please send us description and numbers of the bonds, and hold same as special deposit for us. ' In the account which the defendants rendered to the plaintiffs of the purchase, the latter were informed

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that the bonds were held as a special deposit, subject to their order. The numbers of these bonds appeared upon the bond register which the defendants kept, and they remained in their custody until some time between November, 1881, and November, 1882, during which period they were stolen by their assistant manager, Ker, who disappeared on January 16, 1883, and this suit is brought to recover their value.

On October 8, 1880, the plaintiffs wrote to the defendants: 'Would it be convenient for you to discount for us, say, up to par of our bonds with you as collateral, and, if so, at what rate?' and in reply to this, on October 11th, the defendants said: 'We will discount for you with pleasure, taking your government bonds at par as collateral. ' On December 22d the defendants discounted plaintiffs' note for $12,000, and on the same day notified them that the bonds were held as collateral security for the loan. This note was renewed, and when it became due, on April 27, 1881, the defendants wrote the plaintiffs: 'We debit you $12,000 for your note due to-day, which please find inclosed, canceled. What disposition shall we make of the collaterals? ' The answer to this letter was not produced; but Robinson, one of the plaintiffs, testified that he directed the defendants to 'hold the bonds, as formerly, for our (plaintiffs') use,' and to furnish a list of them, giving numbers. On May 5th the defendants wrote to the plaintiffs: 'Your favor of the second inst. at hand. We hold $12,000 U.S. 4%, as special deposit;' giving the numbers, and informing the plaintiffs the bonds were held subject to their further orders. On October 11, 1882, the defendants discounted the plaintiffs' note for $10,000, at 60 days, receiving as collateral security therefor a number of notes given to the plaintiffs by their customers. This note was paid at maturity, and the collaterals returned.

Robinson testified that, in a letter which he wrote to the defendants...

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