Bradley Lumber Co. v. Bradley County Bank

• Decision Date: 02 May 1913
• Docket Number: 3,820.
• Parties: BRADLEY LUMBER CO. v. BRADLEY COUNTY BANK et al.
• Court: U.S. Court of Appeals — Eighth Circuit

206 F. 41

BRADLEY LUMBER CO. v. BRADLEY COUNTY BANK et al.

No. 3,820.

United States Court of Appeals, Eighth Circuit.

May 2, 1913

Ratcliffe & Ratcliffe, of Little Rock, Ark., Luther E. Mackall, of Baltimore, Md., and Thomas C. Hennings, of St. Louis, Mo for plaintiff in error.

John T Hicks, of Little Rock, Ark., for defendant in error Colvin.

U. M Rose, W. E. Hemingway, G. B. Rose, D. H. Cantrell, and J. F Loughborough, all of Little Rock, Ark., for other defendants in error.

Before HOOK and SMITH, Circuit Judges, and VAN VALKENBURGH, District judge.

SMITH Circuit Judge.

The Bradley Lumber Company, located at St. Louis, maintained lumber mills at Warren, Ark., and at Lumberton, Miss. It was a considerable purchaser of lumber lands in the vicinity of its mills. Mr. John F. Forsythe purchased for the plaintiff many of these lands and was manager of both the mills named. About the 1st of December, 1909, Mr. Forsythe applied to the Lagle Stave & Lumber Company, of Hermitage, Ark., for a loan of $5,000, and it made the loan, but to secure the money borrowed it from the defendant, the Bradley County Bank, on a note signed by the Lagle Stave & Lumber Company and indorsed by M. J. Anders, G. B. Colvin, and J. M. Adams. It is not clear whether the loan was made to Forsythe in his individual capacity, or to the Bradley Lumber Company; but the note by the Lagle Stave & Lumber Company to the Bradley County Bank recites that one note of the Bradley Lumber Company for $5,000, with interest from December 12, 1909, at 10 per cent., due March 2, 1910, has been deposited as collateral security for the payment of the principal note. About March 17, 1910, by direction of Mr. Forsythe, Mr. M. J. Anders, who was secretary of the Lagle Stave & Lumber Company, and who had indorsed the note of that company to the Bradley County Bank, drew on Mr. Forsythe individually for $650, and on the Bradley Lumber Company, through the Bradley County Bank, for $4,492. Both drafts were paid, but the draft on the Bradley Lumber Company for $4,492 is the only one material here. The draft was dated at Hermitage, Ark., March 17, 1910, and called upon the Bradley Lumber Company to pay at sight to the order of the Bradley County Bank $4,492. This was plainly marked: 'Customer's Draft.' It was sent for collection by the Bradley County Bank to the Merchants' & Planters' Bank at Warren. Upon its presentation Mr. Forsythe took up the draft and issued to the Merchants' & Planters' Bank a voucher on the Bradley Lumber Company at St. Louis for the amount thereof. This voucher contained the following untrue statements:

'To take Jasper Anders draft-- to apply on timber purchase-- Cap Asst Vou (capital asset voucher) will be issued when deal is consummated.'

On this same day the Merchants' & Planters' Bank forwarded the amount of the Anders draft to the Bradley County Bank and sent forward the voucher for collection, and it was subsequently paid on the 21st of March at St. Louis by the Chicago Lumber & Coal Company, who owned the Bradley Lumber Company, and was charged to its account. This voucher was never seen by the Bradley County Bank, who had been paid by the Merchants' & Planters' Bank long before it was presented to the Bradley Lumber Company, and neither the Bradley County Bank, the Lagle Stave & Lumber Company, M. J. Anders, G. B. Colvin, nor J. M. Adams had any knowledge that Forsythe had drawn on his company for the money by a false voucher.

Of course, the Merchants' & Planters' Bank had no authority to receive in payment of this draft of Anders anything but money, and if they took this alleged false voucher they did it upon their own responsibility, and that fact was known at the time to Mr. Forsythe. After this money had been received by the Bradley County Bank, by an understanding with the Lagle Stave & Lumber Company and Mr. Anders it was credited upon the note of the Lagle Stave & Lumber Company; and, it being paid by such credit and an additional credit on account of the $650 draft drawn on John F. Forsythe, its note was satisfied and was surrendered to the maker.

The books of the Warren branch were audited in June or July, 1910, and again in December, 1910, and January, 1911, but the fact that this voucher was false was not discovered. About June or July, 1911, Mr. Forsythe ceased to act as manager at Warren, and was succeeded by Mr. J. L. Jamison; but Mr. Forsythe continued for some time as manager at Lumberton. Later he surrendered that position, and shortly thereafter died. The books were not again audited until in November, 1911. In the meantime, in October, 1911, the Bradley Lumber Company discovered the voucher was false; but not until March 7, 1912, was this suit brought to recover the amount of money as having been paid under a mistake of fact.

The Lagle Stave & Lumber Company, M. J. Anders, and J. M. Adams demurred to the complaint, and G. B. Colvin moved to strike his name from the complaint, which motion seems to have been treated as a demurrer, and these demurrers were all sustained. The case was then tried to a jury as against the Bradley County Bank, and at the conclusion of the evidence, both parties having asked a directed verdict, the jury, upon the direction of the court, returned a verdict for the Bradley County Bank, and the Bradley Lumber Company sued out a writ of error, assigning:

'First. The court erred in sustaining the demurrers of the defendants M. J. Anders, G. B. Colvin, and J. M. Adams to the complaint, and dismissing the complaint as to them and each of them.

'Second. The court erred in not directing a verdict for the plaintiff, Bradley Lumber Company, as requested by it.

'Third. The court erred in directing a verdict for the defendant Bradley County Bank.

'Fourth. That the court erred as a matter of law and fact in finding that 'there are equities on the part of the bank of such a substantial character that they are not overcome by the mere contention that it still has the right to go out and sue the makers, including the Lagle Company. It appears that, if it should sue and recover a judgment, it would be, in large part, at least, worthless. I feel that these facts are sufficient to defeat the equitable right, if it is so called, on behalf of the plaintiff to recover.'

'Fifth. The court erred in finding as a matter of fact that the plaintiff, Bradley Lumber Company, was guilty of laches in the premises.

'Sixth. The court erred in finding against the plaintiff upon the pleadings and evidence in said cause, and that said finding is contrary to law and the facts as stated in the pleadings and evidence in said cause.'

There is no specification of errors in plaintiff's brief as required by rule 24 of this court. We will, however, without intimating that it will be done in other cases, consider briefly...