American Express Co. v. City Nat. Bank
| Decision Date | 17 May 1928 |
| Docket Number | (No. 9153.) |
| Citation | 7 S.W.2d 886 |
| Parties | AMERICAN EXPRESS CO. et al. v. CITY NAT. BANK OF GALVESTON. |
| Court | Texas Court of Appeals |
Appeal from District Court, Galveston County; J. C. Canty, Judge.
Action by the City National Bank of Galveston against the American Express Company and another. Judgment for plaintiff, and defendants appeal. Reversed and remanded for new trial.
Louis J. Dibrell, of Galveston, for appellant Varnell.
Armstrong & Cranford, of Galveston, for appellant American Express Co.
H. E. Kleinecke, Jr., and McDonald & Wayman, all of Galveston, for appellee.
The statement we make of the cause is an adaption from recitations in the several briefs of the parties, without acknowledgment of what in most instances is a substantial quotation:
This is a suit by City National Bank against American Express Company and Joe Varnell on a number of "travelers' checks," alleged to be negotiable instruments within the meaning of the Negotiable Instruments Act, title 98, Revised Statutes of Texas. The Express Company was sued as drawer, drawee, and acceptor, Joe Varnell as warrantor of the title and validity thereof under section 65 of the act; it being alleged that he negotiated the checks to the bank by delivery and without indorsing them. The following copy of the body of one of the checks shows the form they were in when offered in evidence:
Other data on the checks showed the principal offices of the company abroad. On the margin is this:
Varnell answered the petition of the bank as follows:
"Comes defendant, Joe Varnell, and admits and adopts the allegations in plaintiff's petition, and prays that he have judgment over against the defendant, American Express Company."
Defendant further alleges that he paid face value for the checks without notice of any defenses thereto.
The express company answered by way of general denial, and then for special answer alleged in substance:
First. That the plaintiff bank did not acquire any title to the checks, and had no title to the same authorizing it to maintain a suit upon the same because the checks were in form negotiable instruments payable to order within the meaning of Vernon's Ann. Civ. St. Supp. 1922, article 6001 — 8 and article 6001 — 9, defining negotiable instruments payable to order and negotiable instruments payable to bearer, and such instruments were not negotiated to the plaintiff by indorsement, as is required by article 6001 — 30 for the transfer of negotiable instruments payable to order so as to pass title thereto.
Second. That the plaintiff bank is not entitled to and ought not to recover against defendant express company because the bank is not a holder in due course of these checks, because, at the time of the alleged cashing of the same, if such cashing in law amounts to a transfer of the same to plaintiff, so as to vest the plaintiff with title to the same, the checks were not complete and regular upon their face, as required by article 6001 — 52, in that there was no payee named in the checks in the blank space for the name of the payee, and because the instruments were in form payable to order, and were and have not been transferred to plaintiff by indorsement; and that the defendant has good and valid defenses to the suit upon the checks, and is not liable thereon, for the reason that the same were stolen from the First National Bank of Barnsdall, Okl., on the 9th day of May, 1923, by bank robbers in an incomplete and blank form, and had been filled up, completed, and delivered without authority of the express company, and that they never became, and are not, valid obligations of the defendant express company, and that they were stolen in an incomplete form and are forgeries, and are wholly without consideration, and that the plaintiff bank is not a holder of such instruments in due course for the reasons aforesaid, and did not acquire the checks from a bona fide holder in due course, for that the defendant Varnell received these checks in consideration for the illegal sale and delivery by Varnell to one Frank Nash. alias W. L. Hines, of whisky in violation of law.
Third. That the defendant express company is not liable on the checks because the same did not constitute valid obligations against it, for the reason that the same had been placed with the First National Bank of Barnsdall, Okl., as its agent, in an incompleted form, with only the printed facsimile signature of the defendant's treasurer appended thereto, and the checks were nothing more than incomplete blank forms, and had been placed in such form with the bank with the understanding between the bank and the defendant express company that the bank was to hold the checks as this defendant's agent and trustee, and was only to complete and deliver same, or any of them, for this defendant, upon a sale of the same to a purchaser making written application therefor, and upon the purchaser signing his name in the blank space therefor on the incomplete and blank travelers' checks; and, while the checks were in the possession of the First National Bank of Barnsdall, Okl., in such incomplete and blank form, and under the arrangement aforesaid, the same were taken forcibly from the bank by robbers on May 9, 1923, and, after having been so taken by force and without the consent of the defendant American Express Company, and without any consideration having passed therefor, were completed without authority of this defendant by filling in the aforesaid blank spaces, and that, if the same were negotiated to the plaintiff bank, they were negotiated without the authority of this defendant, and are not valid contracts as against the defendant express company, by virtue of the provision of article 6001 — 15 of Vernon's Ann. Civ. St. Supp. 1922 of Texas.
There were further averments to the effect that: (1) Upon presentment of the checks to it for payment, the express company advised the bank it was not liable thereon because of the facts just alleged, and that, after having been so advised, the latter had negligently and willfully failed to collect the amount it was out on the checks from defendant Varnell, although at various times since such notification was given to it Varnell had had sufficient deposits with the bank to cover the same; (2) the express company, in event it should be held liable on the checks to the bank, should have judgment over against Varnell because the checks were invalid in his hands as having been the consideration for an illegal sale of whisky on his part to Nash, alias W. L. Hines, etc.
The plaintiff bank filed a supplemental petition alleging that, by reason of the facts alleged in plaintiff's original petition, the defendant is estopped from denying the validity of the instruments sued on, and is estopped from denying that they were completed instruments, and the defendant Joe Varnell for his part adopted this supplemental petition of the bank.
The chief evidence the trial court admitted was, in substance: The bank introduced the checks in evidence, and proved by Varnell that he delivered the checks to the bank and received from appellee $2,000, the face value of the checks. Varnell also deposed that he acquired the checks from a man introduced as W. L. Hines, paid him $2,000 cash therefor, and that such man countersigned the checks "W. L. Hines" in his presence at the time he acquired them. Varnell said further that Hines spent some three weeks in Galveston, and, while here, he cashed other American Express Company checks for him, and that the others were all right.
The defendant express company offered to prove:
That these checks were stolen on May 9, 1923, from the First National Bank of Barnsdall, Okl., by bank robbers, and that at that time the checks were in the possession of the bank among other checks in an incompleted form, that is to say, without being dated, and without having any name or signature in either the upper or lower left-hand corners, nor the name of the payee, where blanks were left for the purpose, and that these blank forms had been deposited with the First National Bank of Barnsdall, Okl., as trustee, and that, at the time of depositing the same with the bank, the bank by its cashier executed a trust receipt therefor in the following form (omitting a description of the checks):
That such checks, after having been so stolen by the robbers who took them from the bank, were delivered to W. L. Hines, alias Frank Nash, the party from whom the defendant Varnell received them, and...
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