Campbell v. Farmers & Merchants Bank of Elk Creek

• Decision Date: 16 September 1896
• Docket Number: 6791
• Citation: 68 N.W. 344,49 Neb. 143
• Parties: WILLIAM CAMPBELL v. FARMERS & MERCHANTS BANK OF ELK CREEK, NEBRASKA
• Court: Nebraska Supreme Court

68 N.W. 344

49 Neb. 143

WILLIAM CAMPBELL v. FARMERS & MERCHANTS BANK OF ELK CREEK, NEBRASKA

No. 6791

Supreme Court of Nebraska

September 16, 1896

ERROR from the district court of Johnson county. Tried below before BUSH, J.

AFFIRMED.

J. H Broady and W. H. Kelligar, for plaintiff in error:

The transfer is void because it assumed to be a preference of creditors of the old bank, which was made solvent by the transaction, as subsequent events demonstrated. (State v Commercial State Bank, 28 Neb. 677; Lyons v. Perry Stove Mfg. Co. 24 S.W. 16; Sawyer v. Hoag, 84 U.S. 610, 17 Wall. 610, 21 L.Ed. 731; Hibernian Ins. Co v. St. Louis & New Orleans Transportation Co. 13 F. 516; Ingwersen v. Edgcombe, 42 Neb. 740; Tillson v. Downing, 45 Neb. 549.)

For the purposes of plaintiff's case the new bank is the old bank and the identity is complete, and a right to recover at law obtains. (City Nat. Bank of Poughkeepsie v. Phelps, 97 N.Y. 44; Eans v. Exchange Bank, 79 Mo. 182; Hughes v. School District, 72 Mo. 643; Metropolitan Nat. Bank v. Claggett, 141 U.S. 520; Michigan Insurance Bank v. Eldred, 143 U.S. 293; Reed v. First Nat. Bank of Weeping Water, 46 Neb. 168.)

If the identity was not preserved, the taking of the assets of the old bank by the new bank rendered the latter liable to the creditors of the old bank, and, therefore, liable to plaintiff. (Continental Nat. Bank v. National Bank of Commonwealth, 50 N.Y. 575; Blair v. Wait, 69 N.Y. 113; 1 Beach, Equity Jurisprudence, secs. 284, 286; Jansen v. Williams, 37 Neb. 869.)

J. Hall Hitchcock and E. W. Thomas, contra:

A cashier cannot pay his private debts out of the funds of the bank. The law will not permit an agent's private interest to come between his principal and himself. (West St. Louis Savings Bank v. Shawnee County Bank, 5 Otto [U.S.] 557; Lee v. Smith, 84 Mo. 304.)

Bank officers cannot bind the bank by an unlawful act, nor outside the line of business of the bank. Like other agents, a bank cashier must act within the scope of his authority, to bind his principal, unless his acts are ratified, and it cannot be claimed that the unlawful acts of the cashier were ever ratified in this case, as all the testimony shows that no other person connected with the bank knew anything about the transaction until long after the bank was closed. (Kennedy v. Otoe County Nat. Bank, 7 Neb. 59; Merchants Bank v. Rudolf, 5 Neb. 527; Rich v. State Nat. Bank, 7 Neb. 201; Miller v. McIntyre, 6 Pet. [U.S.] 61; United States v. Dunn, 6 Pet. [U.S.] 51; Bank of Metropolis v. Jones, 8 Pet. [U.S.] 12; First Nat. Bank v. Ocean Nat. Bank, 60 N.Y. 291; Franklin Bank v. Steward, 37 Me. 519; Washington Bank v. Lewis, 22 Pick. [Mass.] 24; Harper v. Calhoun, 7 How. [Miss.] 203; Wyman v. Hallowell, 14 Mass. 58*; Lloyd v. West Branch Bank, 15 Pa. 172; Merchants Bank v. State Bank, 10 Wall. [U.S.] 675; Bank Commissioners v. Bank of Buffalo, 6 Paige Ch. [N.Y.] 497.)

OPINION

The opinion contains a statement of the case.

RAGAN, C. J.

In the district court of Johnson county William Campbell sued the Farmers & Merchants Bank of Elk Creek, Nebraska. Campbell in his petition alleged for a first cause of action that the defendant was a banking corporation, organized under the laws of the state, doing business at Elk Creek, Nebraska; that it was the successor of the Bank of Elk Creek, at that place that on the 20th of December, 1890, he deposited $ 3,000 with the Bank of Elk Creek, for which that institution issued to him a certificate of deposit; that on the 28th of April, 1892, the Farmers & Merchants Bank was organized as the successor of the Bank of Elk Creek; that said last named bank then ceased to do business and the Farmers & Merchants Bank began business as its successor; that on the said 28th of April, 1892, the Farmers & Merchants Bank took and converted to its own use in its banking business the resources of the Bank of Elk Creek; that on the 20th of December, 1892, the Farmers & Merchants Bank took up the certificate of deposit which had been issued by the Bank of Elk Creek and issued to plaintiff two others in its place; that at the time of the conversion of the assets of the Bank of Elk Creek the Farmers & Merchants Bank assumed the liabilities of said Bank of Elk Creek, and that the Farmers & Merchants Bank was indebted to it for the amount called for by said two certificates. For a second cause of action the petition of Campbell, in addition to the averments already stated, claimed a judgment against the bank for the sum of $ 1,000 and interest on a certificate of deposit issued on the 3d of April, 1892, by the Bank of Elk Creek to Campbell's wife, and by her assigned to him. A jury was waived and the issues tried to the court, which found in favor of Campbell and against the bank on the first cause of action, and against Campbell and in favor of the bank on the second cause of action. To reverse the judgment dismissing his second cause of action Campbell has prosecuted to this court a petition in error and the Farmers & Merchants Bank is here only as defendant in error.

1. The transcript of the proceedings in the court below was filed in this court within six months after the date of the rendition of the judgments, but the bank has never filed in this court a petition in error. This court, then, is without jurisdiction to review on error the judgment pronounced against the bank. (Code of Civil Procedure, sec. 592; Wistedt v. Beckman, 37 Neb. 499, 55 N.W. 1061.) But counsel for the bank seem to be of opinion that this is an equity proceeding and insist, as the transcript of the proceedings had below was filed here within six months after the date of the rendition of the judgment complained of, that the supreme court can review the judgment on appeal. But we think the proceeding is one purely legal in its nature, and which calls for the exercise of none of the equity powers of the court. Campbell by his action seeks an ordinary money judgment against the new bank, because, as he alleges, that bank was the successor of the Bank of Elk Creek, the original debtor--that is, that the Bank of Elk Creek had merely changed its name without destroying its identity; and on the further ground that the new bank had assumed the obligations of the old one. We cannot, therefore, disturb the judgment rendered by the district court in favor of Campbell and against the Farmers & Merchants Bank on the first cause of action set out in Campbell's petition.

2. The argument made by Campbell for a reversal of the judgment of the district court pronounced against him is that the finding of the court on which such judgment was based is not supported by sufficient evidence. There is little, if any, material conflict in the evidence. It shows that from April, 1885, until April, 1892, one Russell and one Holmes were copartners; that they were engaged in conducting a banking business at Elk Creek, Nebraska; that such copartnership business was carried on under and by the name of the Bank of Elk Creek, hereinafter called the old bank; that while said copartnership business continued the old bank issued the certificate of deposit made the subject of this action; that some time in April, 1892, some fourteen gentlemen, a number of them being depositors of the old bank and one of them being Holmes, of the old copartnership, organized the defendant in error, hereinafter called the new bank, a corporation for the purpose of conducting a banking business at Elk Creek, Nebraska; that on the 28th of April, 1892, the stockholders of the new bank met in the office of the old bank and certain negotiations then took place between the stockholders of the new bank and Holmes, representing the old bank, which resulted as follows:

The old bank sold to the new bank its furni-

ture and fixtures at the price of

$ 1,292 22

Cash in its vaults

570 90

Money on deposit in a bank at Lincoln

300 00

Money on deposit in a bank at Omaha

7 97

Overdrafts due it from its customers

1,993 40

And notes belonging to it of the value of

11,302 71

In consideration of this the new bank agreed to pay the following liabilities of the old bank:

Deposits subject to check

$ 3,102 02

Unremitted collections made

3,000 00

A claim in favor of a man named Bagley

2,224 00

Overdrafts made by the old bank against its

correspondents

1,637 80

Outstanding certificates of deposit

5,536 38

At the time this transfer or sale took place the old bank had notes on hand belonging to it of the face value of $ 31,703.11. In other words, the new bank by the deal did not acquire all the property of the old bank, but it had notes remaining belonging to it of the face value of $ 20,403.40, after delivering to the new bank the assets transferred to it. The agreement of the new bank was to pay the deposits, the unremitted collections, the Bagley claim, and overdrafts unconditionally according to what the books showed they were and to pay the certificates of deposit to the extent of $ 5,503.38 as they were presented. The evidence further shows that the new bank made all...