Bank of Hatfield v. Clayton

Decision Date02 April 1923
Docket Number263
Citation250 S.W. 347,158 Ark. 119
CourtArkansas Supreme Court

Appeal from Polk Circuit Court, James S. Steel, Judge; reversed.

Judgment reversed. Rehearing denied.

Norwood & Alley, for appellant.

Judgment was wrongfully rendered against the bank. If the bank was at fault in paying out appellee's money on her check signed by her by Johnson, she should have complained about it immediately upon receiving knowledge of the fact. If she authorized it, she was bound, and she had notice of the transaction, receiving the check he signed for her, and, not having complained about it, she is bound any way, and appellant was entitled to a directed verdict. The court erred in giving the four requested instructions for appellee. Should not invade province of jury as to weight to be given the evidence or single out any part thereof. Sharp v. State, 51 Ark. 147; Railway Co. v Byars, 58 Ark. 108; 93 Ark. 316; 141 Ark. 25; 45 Ark. 165. No. 2 erroneously placed the burden of proof on appellant. Harris v. Lemley, 131 Ark. 471. There was nothing in signature of check to indicate bank was borrowing the money. Board of directors act for and direct affairs of bank. 3 R. C. L. 440, sec. 66; 128 Ark. 266. Court erred in amending appellant's requested instructions 1 2, 3 and 4, and giving them as modified. Facts show an account stated between the depositor and the bank. Citizens' Bank & Trust Co. v. Hinkle, 128 Ark. 275, quoting 1 R. C. L. 211.

Van Hoy & Frederick, for appellee.

The instructions were correct, and properly submitted the issues to the jury. Appellee's money being on deposit, it devolved on the bank to show it had been paid to the depositor, or some one authorized to receive it, or that she had ratified an unauthorized payment made. 7 C. J. 699; Michie on Banks and Banking, 1341, sec. 154; 111 Ill. 323; 13 Cyc. 1647. Johnson, vice president of the bank, appropriated appellee's funds, for which the bank was liable. Citizens' Bank & Trust Co. v. Hinkle, 126 Ark. 266. The court's instructions on ratification are correct. 21 R. C. L. § 107; 31 Cyc. 1647; 147 Ark 425; 124 Ark. 360; 74 Ark. 557; 55 Ark. 240; 29 Ark. 131; 11 Ark. 189; 96 Ark. 505; 141 Ark. 414; 96 Ark. 505. Appellee, immediately upon discovering that the bank had not borrowed her money, complained and demanded payment of the money. No evidence of ratification except she received the letter and the bank statement, with voucher or paid check. As to duty of depositor to examine passbook, 3 R. C. L. 538-9, sec. 168. No error in rejecting stub of receipt which was offered by appellant. The verdict is supported by the evidence, and judgment should be affirmed.

MCCULLOCH C. J. WOOD, J., dissenting.



The plaintiff, Mrs. Nancy Clayton, instituted this action against the defendant, Bank of Hatfield, to recover the sum of $ 1,000 held on deposit in the bank to the credit of plaintiff, for which a check had been issued and payment refused. The bank defended on the ground that the deposit had been previously withdrawn by check, and that plaintiff had no funds on deposit at the time the last check was drawn. Upon the issues the jury returned a verdict in favor of the plaintiff, and the defendant has appealed.

The defendant is a banking institution doing business at the town of Hatfield, in Polk County, and the plaintiff, Mrs. Clayton, is the wife of a farmer residing about a mile and a half distant from that town.

In May, 1921, Mrs. Clayton had on deposit in the bank the sum of $ 1,475.83, and Lewis Johnson, who was vice-president of the bank, and, according to the evidence, was more or less active in assisting in the management of the affairs of the bank, made a visit to the home of the plaintiff and proposed to plaintiff that if she would permit him to withdraw $ 1,000 of the funds from the bank and lend it out he could secure a loan for her at the interest rate of ten per cent. per annum. Johnson testified that the plaintiff consented to that arrangement, but the plaintiff testified that she declined to go into the plan, for the reason that she needed the money for another purpose. The verdict of the jury must be treated as having settled this issue of fact in favor of plaintiff. However, Johnson disregarded the expressed will of the plaintiff, and on June 5, 1921, he drew a check on the bank for $ 1,000 and signed plaintiff's name to it. The money was withdrawn from the bank on this check by Johnson and used in a loan to himself. He executed a note to the plaintiff with G. H. Johnson as surety, and this note was laid away in the vaults of the bank, presumably to be kept for the plaintiff. The check was in form as follows:

"Hatfield, Ark., June 5, 1921.


"Pay to the order of loan 90 days ($ 1,000) one thousand and no/-- dollars.



The money was withdrawn on this check June 8, 1921, and a charge was made against the plaintiff's account on the books of the bank, together with another item of $ 6.08, covered by a check which the plaintiff had drawn herself.

On June 11, 1921, Johnson wrote the following letter to plaintiff, which was received by her:

"Hatfield, June 11, 1921.

"Mrs. W. S. Clayton:

"I have placed a thousand dollars for you at ten per cent., and, if you should happen to need it, let me know a couple of weeks before you need it, and will place it back, but just as long as you don't need it, will draw you 10 per cent. interest, and this will help you out. You have been good to us, and we want to do all we can to help you.

"Your friend,


"V. President."

Plaintiff testified that she received this letter, but made no response thereto.

On July 30, 1921, the bank delivered to the plaintiff an itemized statement of her account with the canceled checks. The statement had a proper caption showing what its nature was, and it had printed thereon notice to the depositor in the following form:

"This statement is furnished you instead of balancing your pass book. It saves you the trouble of bringing your pass book to the bank and waiting for it to be balanced. These statements will be found very convenient to check up and file. All items are credited subject to final payment. Use your pass book only as a receipt book when making deposits."

This statement covered the plaintiff's account for the months of June and July, and she admitted on the witness stand that she received the statement, and also that she thereafter received similar statements each month as to the condition of her account and the items thereon.

On October 1 the plaintiff wrote a letter to Johnson as follows:

"I will wrote you a few lines in regard to my money. Will you be so kind as to place it back in the bank by the 1st of November, as I will need it bad by that time."

Plaintiff drew a check for $ 1,000 in favor of her husband, W. S. Clayton, and gave it to him for presentation to the bank. The plaintiff's husband went to the bank and presented the check, and, according to his testimony, the clerk, or official, in the bank, without paying the check, told him about the note and gave him a receipt in the following form:

"To Nancy Clayton 10/6/21.

"For note of L. H. J. amount $ 1,000. O. K.


"By W. S. Clayton."

According to the testimony, plaintiff made no objections to the use made of the funds until some time in November. She testified that she did not understand that the money was to be handled or used by Johnson individually, but that the bank was to handle the money for her.

The court submitted the case upon instructions which told the jury that plaintiff was entitled to recover the funds on deposit in the bank, unless it was found, from a preponderance of the evidence, that she authorized the loan of her funds, "or that thereafter, being fully informed of all material facts with respect thereto, plaintiff expressly ratified said transaction, either orally or in writing, or by her conduct, to said defendant."

The court refused to give the following instruction requested by the defendant:

"5. The court tells you, as a matter of law, that a reasonable time for the plaintiff to object to the stated account furnished her, if she had objection, was such time as a reasonable person, under all the circumstances, would have required to investigate the account, and if plaintiff failed in this, and failed to object within this time, then, as a matter of law, she would be estopped, and you should find for defendant."

The statement of plaintiff that she understood that Johnson was acting for the bank, and that the bank, instead of Johnson individually, was to lend out her money, or had done so, may as well be disregarded as an issue in the case, further than it may throw light upon the reasonableness of the time for objection to be made by plaintiff against the items of her account presented in the statement furnished by the bank, for there is no issue made by the pleadings or submitted to the jury as to the negligence or wrongdoing of the bank in lending the money to Johnson on insufficient security. The case was tried solely on the theory that the withdrawal of the funds from the bank was without authority from plaintiff, and that she had a right to recover the amount of the balance of the deposit on the ground that the bank was her debtor to that extent.

We are of the opinion that the court not only erred in refusing to give the fifth instruction requested by defendant, for it is a correct statement of the law, but that there was really no evidence upon which to submit the question to the jury whether or not plaintiff had objected to the statement of her account within a reasonable time.

The statement rendered...

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