Auten v. Manistee National Bank

• Decision Date: 09 December 1899
• Citation: 54 S.W. 337,67 Ark. 243
• Parties: AUTEN v. MANISTEE NATIONAL BANK
• Court: Arkansas Supreme Court

54 S.W. 337

67 Ark. 243

AUTEN v. MANISTEE NATIONAL BANK

Supreme Court of Arkansas

December 9, 1899

Appeal from Pulaski Circuit Court, JOS. W. MARTIN, Judge.

Judgment affirmed.

Cockrill & Cockrill, for appellant.

Without the allegation of the notice of dishonor, or of facts which show an excuse, the complaint alleged no cause of action against the indorser. Wood's Byles, Bills & Notes *306. The collecting agent does not assume the responsibility of doing anything more than making demand upon the maker and notifying the principal of the result. 1 Morse, Banks, § 232; 1 Dan. Neg. Inst., § 331; Story, Bills, § 232; 5 Mason, 366. The sending of the note to the indorser bank for collection by it is evidence that it was not looked to for payment. 117 Ill. 100; 71 Mo.App. 451. Knowledge of appellant as to non-payment of the note did not dispense with the necessity of notice of dishonor by the holder. Benj. Chal. Bills and Notes, 182; Story, Bills, §§ 376-7; 3 Pet. 87; 7 Pet. 291; 16 S. & R. 157. The indorsement of the appellant having been for accommodation, there is no presumption that the cashier communicated it to the bank. 65 Ark. 543; 37 A. 550; 35 A. 1053; 50 N.E. 1079. Where the notary's certificate of protest misdescribes the note the burden is on the holder to show such fact, and explain it. 1 Comst. 413; 12 Barb. 245; 1 Const. 413; S. C. 2 Seld 19. The notice of dishonor must be such as to apprise the indorser of the dishonor of the identical note in question. Story, B. & N., § 349; 23 Wend. 626; Chitty, Bills, 501 Byles, Bills, 204; Mees. & Wels. 437; 11 Wheat. 436; 11 M. & W. 809; 1 Comst. 415; 9 Peters, 33; 5 Seld. 279; 9 Ala. 631; 19 Hun, 518; S. C. 75 Am. Dec. 361. Borrowing money is out of the usual course of banking business, and one who loans it must, at his peril, see that the officer or agent of a national bank, who offers to borrow money for it, has special authority to do so. 152 U.S. 346; 13 C. C. A. 47; S. C. 65 F. 573; 21 C. C. A. 319, 323; S. C. 75 F. 296, 300; 55 F. 465; Ball, Nat. Banks, 54; Mechem, Agency, §§ 291, 285. The directors of national banks are the proper ones to manage its affairs. Rev. Stat. U.S., § 5145. The performance of these duties cannot be delegated. 1 Morse, Banking, §§ 116, 117; 3 Story, 411, 425; 12 R. I. 164. In the business of banking, re-discounting commercial paper is only a method of borrowing money. 8 Wheat. 338; 104 U.S. 277; 14 F. 662; 15 Johns, 358, 392; 17 N.Y. 507, 515; 26 Ohio St. 141, 151; 157 Mass. 548, 550; 2 Harr. (N. J.) 191, 206, 207, 209, 211; 52 Md. 78, 129; 42 Md. 581, 592; 14 Ill.App. 566, 570; 48 Mo. 189; 23 Minn. 198; 20 Kas. 440, 446, 447, 450, 451; 3 McLean, 587, 589; 8 C. C. A. 320; 76 F. 339, 341, 344; 1 Batty, 273; 8 Wheat. 338; 104 U.S. 271; 15 Johns. 358, 392; Bouvier's Dict. Discount; Webst. Dict. Discount; Ency. Dict. Discount; 50 Conn. 167; 28 W.Va. 653; 9 Metc. 306, 314; 28 W.Va. 653; 63 Ark. 413; 23 Minn. 198; 52 Md. 82; 62 Ky. 216; 157 Mass. 548. Any attempt by the cashier to negotiate appellant's notes was a criminal offense and a nullity. Sand. & H. Dig., § 1004; 62 Ark. 33; Rev. Stat. U.S. § 5209; 164 U.S. 347; 9 Wall. 362. The cashier's mere assumption of authority to bind the bank raises no presumption that he really possessed such authority. 4 Thompson, Corp., §§ 4880, 4882; 62 Ark. 33; S. C. 34 S.W. 89; 152 U.S. 346; 5 Wheat. 326; 21 How. 356; 7 Wall. 666; 130 U.S. 416; 2 Mor. Corp., § 608. The protection which commercial usage throws around negotiable paper can not be used to establish the authority of an agent to issue or indorse it. 7 Wall. 666, 676; 1 Dan. Neg. Inst., §§ 273, 279; 109 N.Y. 512, 525, 526; 62 Ark. 33; 93 Ky. 525; 95 U.S. 557; 5 Denio, 567; 89 Va. 290. Even if the board had delegated the cashier to run the bank, his authority would not have extended to the borrowing of money or indorsing of paper for that purpose. 47 N.J.Eq. 357; 7 Wend. 31; 5 Wend. 567; 152 U.S. 346. There was no ratification by the directors of the act of the cashier. 152 U.S. 346; 143 Mass. 250; 12 Allen, 493; 141 U.S. 132. Nor do the facts show that the appellant ever received any of the proceeds of the notes. 69 F. 131; 66 F. 34; S. C. 13 C. C. A. 313; 66 F. 694; S. C. 14 C. C. A. 61; 65 F. 573; 3 Dill. 44; 58 F. 638. Further on the question of satisfaction see, 54 Ia. 86; 3 Dill. 403; 95 U.S. 557; 36 Kas. 284; 113 Mass. 291; 152 U.S. 346, 352; Mechem, Agency, § 148; 150 Mass. 209; 7 Gray, 287; 109 Mass. 214; 128 Mass. 503.

Dodge & Johnson, for appellee.

There was no error in the refusal of the court to give the first, second, third, fourth and tenth instructions asked by appellant, as to re-discounting and the notice a purchaser is bound to take of an agent's authority. All these points have been decided adversely to appellant's contention in another case precisely like this, to which it was a party. 174 U.S. 125, 144-149, citing to the point that the directors might have empowered the cashier or president to indorse paper: 141 U.S. 132; 101 U.S. 181; 104 Mich. 521; 106 Mich. 367; 26 Wis. 663; S. C. 7 Am. Rep. 107; 40 Neb. 501; S. C. 24 L. R. A. 263. See also same case, 27 U.S. App. 603; 49 U.S. App. 67. Where the notary's certificates describes a note as bearing 8 per cent., instead of 10, the variance was not material. 4 Am. & Eng. Enc. Law (2 Ed.), 381. Service of the notice of protest upon the examiner in charge of the affairs of appellant bank was sufficient. 94 Tenn. 624; S. C. 28 L. R. A. 492; 57 Cal. 327; 4 Duer, 212; 3 Rand. Com. Pap. 278; 7 Mo.App. 318; 15 Me. 270; 14 La. 494; 15 La. 51; 11 Gratt. 260; 12 Ind. 225; 28 La.Ann. 48. Only foreign bills of exchange need to be protested. 3 Rand. Com. Pap., §§ 1142, 1143; Sand. & H. Dig., § 4288; 9 Ark. 45; 8 Wheat. 326, Parsons, Bills & Notes, 643g; 6 How. 23; 8 How. 234; 4 Am. & Eng. Enc. Law, 379. We have no statutory requirements as to recitals of the certificate of protest, and it is not necessary that it recite the notice of dishonor. 3 Rand. Com. Pap. § 1666; Sand. & H. Dig., §§ 2884-5; 57 Cal. 327; 1 Kelley, 306; 11 Ind. 253. It was the duty of appellant to give notice of protest or have it done. Morse, Banks, 352. Failing to do so, it became liable for the amount. 5 Minn. 523; 47 N.Y. 570. Appellant should have notified appellee of dishonor of the note. 8 Metc. 79; 7 How. (Miss.) 656; 7 Sm. & M. 592. A notary's authority to give notice will be presumed from his possession of the paper. 20 Ala. 322; 28 Mo. 339; 18 Johns. 230; 15 Barb. 326; 26 Me. 45. Appellant's acts amounted to a waiver of demand and protest. Pars. Bills & Notes, 582; 12 Wend. 489; 13 Barb. 163; 4 E. D. Smith, 458; 1 Stark. 116; 7 Cal. 763; 11 Ind. 323; 2 Dan. Neg. Inst. 143; 32 Oh. St. 526; 15 Ark. 422. If appellant's contention that the notes were not genuine be true, the indorsers thereon would be liable without proof of demand or notice. 12 L. R. A. 434; 1 Pars. Bills & Notes, 444; 2 Vt. 193; 2 Dan. Neg. Inst., § 113; 1 id. § 669; 39 Ark. 47. All presumptions are in favor of the correctness of a notary's actions. 2 Dan. Neg. Inst., § 964; 1 Swan, 420; 43 Me. 144, 27 Grat, 674; 34 Ia. 466. Further, that protest was properly made and notice properly given, see: 2 Dan. Neg. Inst., §§ 965, 972, 998, 1000, 1002, 1005, 1016, 1017; 31 Ill.App. 78; 29 Mo.App. 518; S. C. 24 Mo.App. 420; 2 La.Ann. 964; Tied. Com. Pap. § 337; 3 Rand. Com. Pap. 1243; 82 Ky. 231; 2 Law. Dic. 409; 6 How. (Miss.) 217; 3 Keyes, 343; 55 N.Y. 465; 13 So. 336; 40 Cent. L. J. 450; 39 S.W. 725; 11 Wheat. 173, 177.

OPINION

BUNN, C. J.

This is a suit by the appellee against the appellant, as the indorser on two promissory notes; the one drawn by the McCarthy & Joyce Company, payable to the appellant, at its office in Little Rock, on the 10th of February, 1893, dated July 19, 1892, for the sum of $ 5,000, with 8 per centum per annum interest from date until paid, and indorsed James McCarthy and Geo. Mandlebaum, secretary and treasurer. The First National Bank of Little Rock, the drawee, in due course of trade assigned and transferred said note, for value, by indorsement, to the appellee National Bank, of Manistee, Michigan, and the latter thereby became the owner thereof. This note was presented for payment at the First National Bank of Little Rock in due time after maturity, payment refused, and the same was duly protested before suit.

This suit is also on a second note, made to the order of George R. Brown, on October 10, 1892, for $ 4,000, with 10 per cent. interest from maturity until paid, due and payable at the First National Bank of Little Rock, Arkansas, ninety days after date, by the Press Printing Company, Geo. R. Brown, president, the same falling due January 11, 1893. This second note was duly indorsed by Geo. R. Brown, the payee, to the First National Bank, waiving demand and protest, and by it indorsed and transferred for value to appellee bank before maturity. In due time it was sent by appellee to appellant bank for collection, it being made payable at its office or place of business. The appellant thus became the agent of the appellee to collect the note, although it was liable thereon, as the immediate indorser, to appellee. The First National Bank of Little Rock, the appellant here and defendant in the court below, thereby was made to occupy, or rather chose to occupy, two antagonistic positions, the one as indorser and conditionally responsible for the payment of the note, and the other as the agent of the appellee to collect the same, and, peradventure, from itself. Appellant, after a delay of twelve or fifteen days, returned the note to the appellee, with notification of its non-payment.

Upon this state of case, the defendant asked the court to give the following instruction, No. 11, to-wit: "If the plaintiff is excusable for not making...