Bank of Commerce & Sav. v. Matthews

• Decision Date: 21 January 1919
• Docket Number: 2657.
• Citation: 257 F. 292
• Parties: BANK OF COMMERCE & SAVINGS v. MATTHEWS. In re MATTHEWS.
• Court: U.S. Court of Appeals — Seventh Circuit

257 F. 292

BANK OF COMMERCE & SAVINGS v. MATTHEWS.

In re MATTHEWS.

No. 2657.

United States Court of Appeals, Seventh Circuit.

January 21, 1919

Rehearing Denied March 4, 1919.

Charles R. Brown, of Chicago, Ill., for appellant.

A. B Dennis, of Danville, Ill., for appellee.

Before BAKER, MACK, and EVANS, Circuit Judges.

MACK Circuit Judge.

Discharge was granted appellee over appellant's objection alleging in substance that he had obtained certain money by means of a materially false statement in writing made by him to it for the purpose of obtaining the credit from it.

The special master, finding that the statement was not relied upon by the bank in extending the credit, recommended for this reason that the objection be overruled and the discharge granted. The District Judge, in approving the report and granting the discharge, based his conclusions upon his finding from the evidence that the bankrupt did not read the statement or know its contents, that he relied entirely upon the bank cashier to prepare a correct statement, and that while the statement was untrue, the bankrupt had no intention of signing the false statement.

The undisputed facts as disclosed by the record are that the bank cashier, who, some time after the loan was made, absconded had been the bankrupt's financial agent and was better acquainted with his affairs than the bankrupt himself. He alone acted, so far as the bank was concerned, in the granting of the loan. No one else was consulted. While the loan was made on a note of $5,000 signed by the bankrupt, only $1,500 of it was intended for or inured to the latter's benefit. The other $3,500 went to the cashier. The cashier prepared the financial statement which he had the bankrupt sign at the time that the $5,000 note was signed, telling him that it was a mere matter of form and that he himself would put up bank stock as collateral.

The bankrupt testified that he had not read the statement, did not know its contents, acted entirely and completely in reliance upon the cashier (whose real character at that time had not been discovered), and that, if he had known the contents of the statement, he would not have signed it.

1. If the money had been paid out at the time the note was executed, the conclusion of the special master that the loan was not made in reliance upon the statement would be sound. But the money was not then paid; the bank merely extended a credit to...