85 F. 539 (8th Cir. 1898), 956, First Nat. Bank v. Rush

Docket Nº:956.
Citation:85 F. 539
Party Name:FIRST NAT. BANK OF KANSAS CITY, MO., v. RUSH.
Case Date:February 23, 1898
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 539

85 F. 539 (8th Cir. 1898)

FIRST NAT. BANK OF KANSAS CITY, MO.,

v.

RUSH.

No. 956.

United States Court of Appeals, Eighth Circuit.

February 23, 1898

The plaintiff in error, the First National Bank of Kansas City, brought an action against the defendant in error, J. W. Rush, upon his promissory note for $3,780, made on February 5, 1894, and payable to the order of the bank. In its petition it set forth the note; alleged that Rush pledged to it as collateral security for the payment of this note 10 shares of the capital stock of the First National Bank of Ness City, Kan., and 64 shares of the capital stock of the First National Bank of Dighton, Kan.; that he gave written authority to sell the same at public or private sale without notice, upon default in the payment of the note; that the bank had received on June 29, 1894, as the proceeds

Page 540

of the sale of the collaterals, $740; and that the defendant in error was still indebted to it for the unpaid balance of his note and interest. The defendant in error, in the amended answer upon which the case went to trial, admitted the execution of his note and the pledge of the bank stock, and alleged that the sale of the collaterals which the bank made on June 29, 1894, was in fact a sale to itself, but that it concealed this fact from the defendant in error; that it pretended that the sale had been made to Richard Allen, a janitor in the bank, for $740; that it caused the certificates of the stock to be surrendered, and had new certificates issued to Richard Allen; and that he had disposed of the same as his own property, free from all claims of the defendant in error. He alleged that the pretended sale to Allen and his disposition of the stock constituted a conversion of it by the bank; that it relieved the defendant in error from the necessity of making a tender of the amount due on his note, and entitled him to receive of the bank the actual value of his stock on June 29, 1894; which he alleged was $7,400, less the amount due on his note. A demurrer was interposed to this amended answer, and the circuit court sustained it. The judgment upon that demurrer was reversed by this court on the ground that, under the state of facts set forth in the answer, the defendant in error was not required to tender the amount of his debt before pleading and proving his counterclaim. Rush v. Bank, 36 U.S.App. 248, 17 C.C.A. 627, 71 F. 102. When the case returned to the trial court the bank denied the allegations of the amended answer, a trial was had before a jury, and a judgment of $2,048.62 was rendered against the bank. The fact that the bank was the real purchaser at the sale of the collaterals on June 29, 1894, was conceded at the trial. The officers of the bank testified that they bid the property in for the bank in the name of Richard Allen, and caused the stock to be transferred to him to avoid permitting the bank to incur liability as a stockholder. The only question tried by the jury was the value of the collaterals at the time of the alleged conversion, and the court charged them that if their value was less on June 29, 1894, than the amount of the note and interest, the bank was entitled to a verdict for the difference, and, if their value was greater on that day than the amount of the note and interest, the defendant in error was entitled to a verdict for that difference. During the trial, and after the defendant in error had introduced testimony to the effect that the 64 shares of the stock of the First National Bank of Dighton were worth $5,120 on June 29, 1894; that the bank of Dighton never met with any heavy losses after that date; that its capital stock was $50,000, and that the net profits of the bank from July 1 to October 2, 1894, were $316.85; and after the plaintiff in error had produced evidence to the effect that it bid this stock in on June 29, 1894, in the name of Richard Allen for itself; that on July 13, 1894, it notified the defendant in error that it could purchase the collaterals back for the amount of the bid and interest, and that it subsequently sold them to E. E. Parker for $960,--the plaintiff in error offered in evidence the deposition of Parker, and copies of certain letters written by the defendant in error to Lowell & Parker, and copies of certain letters written by the defendant in error to Lowell & Parker, a...

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