Auten v. United States Nat Bank of New York
Decision Date | 24 April 1899 |
Docket Number | No. 206,206 |
Citation | 43 L.Ed. 920,19 S.Ct. 628,174 U.S. 125 |
Parties | AUTEN v. UNITED STATES NAT. BANK OF NEW YORK |
Court | U.S. Supreme Court |
Two of the parties to this action in the court below were national banks,—one located at New York; the other located at Little Rock, Ark. Sterling R. Cockrill, as receiver of the latter bank, was also a party. He resigned, and plaintiff in error was appointed. The banks will be denominated, respectively, the 'New York Bank' and the 'Little Rock Bank.'
The complaint contains the necessary jurisdictional allegations, and that
Judgment was payed for the debt and other relief.
Three of said notes are in the following form:
'$5,000. 34,131.
'Little Rock, Ark., Dec. 7th, 1892.
'Four months after date we, or either of us, promise to pay to the order of G. R. Brown and H. G. Allis five thousand dollars, for value received, negotiable and payable, without defalcation or discount, at the First National Bank of Little Rock, Arkansas, with interest from maturity at the rate of ten per cent. per annum until paid.
'City Electric St. Ry. co.
'H. G. Bradford, Pt.
'W. H. Sutton, Sec'y.
The following indorsement appears on each:
'Geo. R. Brown; H. G. Allis; First National Bank, Little Rock, Arkansas, H. G. Allis, Pt.'
Two of the notes were in the following form:
'$5,000. 34,128.
'Little Rock, Ark., Dec. 7, 1892.
'Four months after date we, or either of us, promise to pay to the order of James Joyce five thousand dollars, for value received, negotiable and payable, without defalcation or discount, at the First National Bank of Little Rock, Arkansas, with interest from maturity at the rate of ten per cent. per annum until paid.
'McCarthy & Joyce Co.
'Geo. Mandlebaum, Secy. & Treas.
They were indorsed as follows: 'James Joyce; H. G. Allis; First National Bank, Little Rock, Ar., H. G. Allis, Pt.'
The receiver only answered, and his answer, as finally amended, denied that 'either of the notes described in the plaintiff's complaint was ever indorsed and delivered to the First National Bank; he denies that either of said notes was ever the property of, or in the possession of, said bank, and denies that the said bank ever indorsed or delivered either of said notes to the plaintiff; he denies that said bank ever received any consideration from said plaintiff for any indorsement or delivery of said notes to it'; and averred 'that the name of the defendant bank was indorsed on said notes by H. G. Allis for his personal benefit, without authority from said bank; that the said Allis, assuming to act for defendant bank, procured the plaintiff to advance or loan upon said notes a large sum of money, which he appropriated to his own use; that said Allis had no authority from said bank to negotiate said loan or to act for it in any way in said transaction; if said transaction created an indebtedness against the defendant bank, then the total liability of said defendant bank to the plaintiff by virtue thereof exceeded one-tenth of the plaintiff's capital stock, and the total liability of the defendant bank thereby exceeded the amount of its capital stock actually paid in; that the plaintiff knowingly permitted its officers to make such excessive loan under the circumstances aforesaid; that the transaction aforesaid was not in the usual course of banking business, which either the plaintiff or the defendant bank was authorized to carry on; that the plaintiff is not an innocent holder of either of said notes; that the defendant bank received no benefit from said transaction; that it had no knowledge thereof until a few days prior to its suspension; that no notice of the dishonor of said notes was ever given to the defendant bank.' Also that 'at the date of the suspension of the First National Bank the United States National Bank was indebted to it in the sum of $467.86, that sum then being on deposit in the said United States National Bank to the credit of the First National Bank of Little Rock, and that the same has never been paid.'
The receiver prayed that 'he be discharged from all liability upon the notes sued on herein, and that he have judg- ment against the plaintiff for the said sum of $467.86, and interest from the 1st day of February, 1893.'
The plaintiff bank denied the indebtedness of $467.86, and averred 'that at the time said First National Bank failed it was indebted to plaintiff in a large amount, to wit, the notes sued upon herein, and plaintiff applied said $467.86 as a credit upon said indebtedness.'
The issues thus made up were brought to trial before a jury. Upon the conclusion of the testimony, the court, at the request of the plaintiff bank, instructed the jury to find a verdict for it, and denied certain instructions requested by the defendant. The jury found for the plaintiff, as instructed, for the full amount of the notes sued, less the amount of the set-off, and judgment was entered in accordance therewith.
A writ of error was sued out to the circuit court of appeals, which affirmed the judgment, and the case was brought here.
There had been two other trials, the rulings in which and the action of the circuit court of appeals are reported in 27 U. S. App. 605, 13 C. C. A. 472, and 64 Fed. 985, and 49 U. S. App. 67, 24 C. C. A. 597, and 79 Fed. 296.
The defendant assigns as error the action of the circuit court in instructing the jury to find for the plaintiff bank, and in refusing the instructions requested by the defendant. The latter were 19 in number, and present every aspect of the defendant's defense and contentions. They are necessarily involved in the consideration of the peremptory instruction of the court, and their explicit statement is therefore not necessary.
The evidence shows that the New York bank solicited the business of the Little Rock bank by a letter wrtten by its second assistant cashier, directed to the cashier of the Little Rock bank, and dated June 21, 1892.
Among other things, the letter stated: 'If you will send on $50,000 of your good, short-time, well-rated bills receivable, we will be pleased to place them to your credit at 4 per cent.'
The reply from the Little Rock bank came, not from its cashier, but from its president, H. G. Allis, who accepted the offer, and inclosed notes amounting to $50,728, among which were three of the City Electric Railway Company, the maker of three of the notes in controversy. When first forwarded, they were not indorsed, and had to be returned for indorsement. They were indorsed, and the letter returning them was signed by Allis. To the letter forwarding them the New York bank replied as follows:
'New York, June 27th, 1892.
'H. G. Allis, Esq., President, Little Rock, Ark.—Dear Sir: We have this day discounted the following notes contained in favor of the 24th inst., and proceeds of same placed to your credit.'
The notes were enumerated, their amounts calculated and footed up, and discount at 4 per cent. deducted, and the proceeds, amounting to $50,216.48, placed to the credit of the Little Rock bank.
On July 6, 1892, the following telegrams were exchanged:
'New York, July 6th, 1892.
'First National Bank, Little Rock, Ark.: Will give you additional fifty thousand on short-time, well-rated bills, discounted at five per cent. Money rates are little firmer. Answer, if wanted.
U. S. Nat. Bank.'
'Little Rock, Ark., July 6, 1892.
'First Nat. Bank.'
In accordance with the propo ition thus made and accepted, H. G. Allis, as president, wrote on the 9th of July, 1892, to the New York bank a letter, inclosing what he denominated 'prime paper, amounting to $50,301.88,' and requested proceeds to be placed 'to our credit, and advise.' Thses notes were discounted and acknowledged. Their proceeds, less discount, amounted to $49,641.68.
On July 26, 1892, the New York bank telegraphed:
'New York, July 26th, 1892.
'First National Bank, Little Rock, Ark.: Can take fifty thousand more of...
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