Brannen v. State Exch. Bank of Parkersburg
| Decision Date | 11 January 1921 |
| Docket Number | No. 32646.,32646. |
| Citation | 180 N.W. 886,190 Iowa 630 |
| Parties | BRANNEN v. STATE EXCHANGE BANK OF PARKERSBURG. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Butler County; M. F. Edwards, Judge.
Action at law to recover $612 with interest evidenced by a certificate of deposit alleged to have been paid by the bank to a person not authorized to redeem the certificate. Verdict and judgment for plaintiff. Defendant appeals. Affirmed.W. T. Evans, of Parkersburg, for appellant.
Stipp, Perry, Bannister & Starzinger, of Des Moines, and C. G. Burling, of Clarksville, for appellee.
De GRAFF, J.
The facts of this case, briefly summarized, disclose the following: Plaintiff, Teresa Brannen, née Schultz, is a resident of Seattle, Wash., and had lived in said city for several years prior to the bringing of this suit. In 1907 she resided with her sisters at Cedar Rapids. At the time she changed her residence she left a certificate of deposit with one of her sisters, and subsequently this sister turned the certificate over to a half-brother, Herman Schultz, who under instructions of C. C. Wolf, cashier of the defendant bank, transferred the certificate from the issuing bank at Waterloo to the defendant bank, receiving therefor a duplicate deposit slip reading as follows:
“Deposited for account of Theresa Schultz in the State Exchange Bank of Parkersburg, Iowa, 3--18--1907:
Plaintiff was not advised that the certificate had been placed in the possession of her brother, or that the same had been transferred to the defendant bank, nor did she instruct or authorize her sister to turn over the certificate to Herman or have same transferred to the Parkersburg bank.
The deposit slip was later put in the form of a certificate of deposit which was renewed from time to time. The final certificate read as follows:
“State Exchange Bank of Parkersburg
$648.96. Parkersburg, Iowa, Mch. 21, 1910. No. 20469. Thresa Schultz has deposited in this bank six hundred and forty-eight and 96/100 dollars, payable to the order of herself on the return of this certificate and proper identification 12 months from date. Interest at 4 per annum for 12 months. Interest at _____ per annum for _____ months. C. C. Wolf, Cashier. Pd. 4--17--11. Indorsed: Thresa Schultz. Herman Schultz.”
At the end of the first year the interest was sent by Herman Schultz to his sister Teresa, and subsequent interest was added to the principal and new certificates issued. No instructions or authorization were given by Teresa to her brother, Herman, relative to the certificate in question, except in one instance she wrote to him to have the certificate renewed as it was past due.
On the 17th day of April, 1911, Herman Schultz indorsed her name on said certificate and cashed it without any express authority from his sister and applied the proceeds in payment of an indebtedness owing by him to the defendant bank.
A short time prior to the surrender of the certificate Herman Schultz had a conversation with Cashier Wolf, and the record testimony of Schultz is as follows:
After further talk of this character, Schultz finally indorsed the certificate, and, according to Schultz, the cashier told him “to sit tight and say nothing about it.” Cashier Wolf on the witness stand denied the conversation referred to above, but stated he had no reason to think that these funds belonged in fact to any one except Teresa Schultz; that he treated the funds as her property, and that all of the money that was paid on the certificate remained in the bank, and “all of it was applied upon a debt of Herman Schultz which he owed the bank.” After the certificate had been deposited to the credit of Schultz, the latter drew a check on his funds, which included this deposit, to apply on his debt to the bank evidenced by a $2,000 note. This was done with the knowledge of Wolf and the bank. In March, 1914, Herman Schultz sent to the plaintiff his note prepared by the cashier representing the money which the sister had in the defendant bank. The plaintiff denies accepting said note in payment of her claim or that she ever confirmed or ratified the transaction in this particular. The sister held other notes at this time of which Herman Schultz was the maker.
The plaintiff was not advised of the surrender of her certificate of deposit until some time in the year 1914 when she received the promissory note from her brother, Herman, with a very brief explanation of his transaction with the bank. Later this note was returned, but it was never paid nor was any attempt made to enforce collection thereon.
I. The errors assigned by the appellant and relied on for a reversal of the judgment are: (a) The admission of testimony on behalf of the plaintiff over the objection of the defendant; (b) the refusal to admit testimony offered on behalf of defendant; (c) the refusal of the court to give instructions requested by the defendant; (d) the giving of certain instructions; (e) the withdrawal from the jury at the close of the testimony of the defense that Herman Schultz was the agent of plaintiff with authority or apparent authority to indorse and surrender the plaintiff's certificate of deposit to the defendant bank; and (f) in the overruling of the motion for a new trial.
These assigned errors focus around the fundamental question in this case: Has an agent who has deposited his principal's money in a bank the authority to check it out and apply the proceeds to his own indebtedness to the bank?
The correctness of the ruling of the trial court on this proposition will in the main determine the controversy, and with this proposition we are primarily concerned.
Herman Schultz was a self-constituted agent in the first instance in depositing his sister's money in the defendant bank; for he acted on his own initiative and without any instructions from the plaintiff. True, she impliedly ratified this act by accepting the interest due at the end of the first year, and later by instructing Schultz to renew the certificate; but more than this she never did in relation to the deposit.
[1] Agency is a contractual relation, and the powers of the agent are created either by express authority conferred by his principal or are such as arise by implication.
If the act of Schultz constituted a conversion of the property of plaintiff, no difficulty is encountered in reaching a correct legal conclusion. The deposit at all times was in the name of the plaintiff, and the final act of the alleged agent in surrendering the certificate and applying the proceeds to his own indebtedness was without the knowledge or consent of the titleholder, but with the full knowledge and consent of the defendant bank.
No express authority having been given Schultz by this plaintiff, what facts, acts, or circumstances create his authority by implication? No inquiry was made by the cashier, Wolf, as to the authority of Schultz in the premises, and, according to the testimony of Schultz, he told the cashier that he (Schultz) had no such authority, and that he was not the agent of the plaintiff.
The surrender of the certificate by Schultz was in effect the borrowing of plaintiff's money from the bank to pay Schultz's indebtedness to the bank. The bank could put no other construction on this transaction. The very nature of this act was sufficient to put the bank on inquiry as to the authority that Schultz in fact had. The act itself was a warning,...
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Weaver Const. Co. v. Farmers Nat. Bank of Webster City
...that prevailed for many years thereafter until Reynolds turned embezzler. The present case is somewhat like Brannen v. State Exchange Bank, 190 Iowa 630, 635, 637, 180 N.W. 886, 888, although the bank there was more culpable than defendant here. These two sentences from the cited opinion ma......
- Brannen v. State Exchange Bank of Parkersburg