Chapman v. Cochran

• Decision Date: 01 April 1925
• Docket Number: (No. 1196.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 271 S.W. 169
• Parties: CHAPMAN, Banking Commissioner, et al. v. COCHRAN.
• Court: Texas Court of Appeals

271 S.W. 169

CHAPMAN, Banking Commissioner, et al. v. COCHRAN.

(No. 1196.)^*

Court of Civil Appeals of Texas. Beaumont.

April 1, 1925.

Rehearing Denied April 8, 1925.

Appeal from District Court, Polk County; J. L. Manry, Judge.

Action by Jeff Cochran against J. L. Chapman, Banking Commissioner, and another. Judgment for plaintiff, and defendants appeal. Affirmed.

W. A. Keeling, Atty. Gen., and Riley Strickland, Asst. Atty. Gen., for appellants.

Campbell, Myer, Simmons & Hawkins, of Houston, for appellee.

O'QUINN, J.

This suit was originally brought by Jeff Cochran, as plaintiff below, against J. L. Chapman, banking commissioner of the state of Texas, and the Shepherd State Bank and San Jacinto county, by petition filed in the district court of San Jacinto county, Texas, on December 5, 1923. Cochran claimed to be the owner of a deposit in the Shepherd State Bank in the sum of $16,000, which he alleged was a noninterest-bearing and unsecured deposit on the 19th day of August, 1921, the date said bank ceased to do business and was closed by the banking commissioner, and sought to have said deposit classed as a noninterest-bearing and unsecured deposit payable out of the guaranty fund. By agreement of the parties, the suit was transferred to the district court of Polk county, Texas. March 25, 1924, plaintiff amended his petition, dropping his suit against San Jacinto county, and asserted his cause of action, identical with that alleged in the original petition, against the other defendants, to wit: Chapman, the banking commissioner, and the Shepherd State Bank, and prayed for judgment establishing his claim as a noninterest-bearing and unsecured deposit payable out of the guaranty fund. Plaintiff, in said amended original petition, alleged:

"Plaintiff alleges in this respect that he is the owner and holder in due course of two (2) noninterest-bearing and unsecured certificates of deposit each for the sum of eight thousand ($8,000) dollars, evidencing said noninterest-bearing and unsecured deposit issued by defendant bank on the 16th day of December, 1919, and payable to Harold G. Wise & Co."

The defendants filed an amended original answer, in which they pleaded a general demurrer, special exceptions, general denial, and several special pleas, among which was (1) that $1,900 was paid in advance to Harold G. Wise & Co., the original holders of the deposit certificates as interest on said deposit; and (2) "that the certificates of deposit sued upon were transferred to San Jacinto county by Harold G. Wise & Co. as a part of the consideration for the purchase of $200,000 worth of road bonds which Wise & Co. bought at par and accrued interest; that in consideration of the purchase of the certificates of deposit of the Shepherd State Bank, amounting to $24,000, the said Wise & Co. received $1,900 interest in advance, which, at the usual rate of interest, would continue until after the maturity of said certificates, and, therefore, the holder of said certificates was not protected by the depositors' guaranty fund." This answer was duly verified by defendant Chapman.

The case was tried before the court without a jury and judgment rendered for plaintiff establishing his claim as a noninterest-bearing unsecured deposit payable out of the depositors' guaranty fund. From that judgment the case is here by appeal.

It was agreed between the parties: (a) That the Shepherd State Bank was a state banking corporation, incorporated under the laws of the state of Texas, and did a banking business at Shepherd, San Jacinto county, Texas, from 1919 to August 19, 1921, and that it operated under the depositors' guaranty fund system, and as such institution was in good standing until said date of August 19, 1921, when it was closed by the commissioner of insurance and banking. (b) That within ninety (90) days after the publication of the notice to creditors and depositors, plaintiff, Cochran, filed his claim as a noninterest-bearing and unsecured deposit in said bank in the sum of $16,000, and that on June 29, 1923, the commissioner of insurance and banking refused to allow said claim as payable out of the depositors' guaranty fund, and this suit was filed within six months after such refusal to enforce its allowance and classification as a claim entitled to the protection of the guaranty fund.

Appellants present 17 propositions under 15 assignments of error, but the controlling questions are: (a) Did the proof show appellant to be the owner of the deposit evidenced by the certificates of deposit? (b) Was the deposit such a deposit as is protected by the depositors' guaranty fund? If these questions are to be answered in the affirmative, then the judgment should be affirmed; otherwise it should be reversed and remanded.

As to the ownership of the deposit: The Shepherd State Bank, on December 16, 1919, issued three certificates of deposit for $8,000 each, to Harold G. Wise & Co., numbered 7, 8, and 9, payable to the order of Harold G. Wise & Co. 18, 19, and 20 months after date, respectively. It is not disputed but that said bank received the $24,000 from Harold G. Wise & Co. for which the certificates were issued. Harold G. Wise & Co. indorsed the certificates without recourse to San Jacinto county, and J. E. Phillips, as county treasurer of said county indorsed said certificates in blank, and for their full face value paid to him in cash by appellee, and delivered them to appellee.

We think the evidence amply shows that appellee was the owner and holder of the certificates evidencing the deposit in question. It is undisputed that Harold G. Wise & Co. deposited $24,000 in the Shepherd State Bank receiving three certificates of deposit, each for $8,000, numbered 7, 8, and 9, and payable 18, 19, and 20 months after date, respectively; that Harold G. Wise & Co. indorsed said certificates over to San Jacinto county; that J. E. Phillips, county treasurer of San Jacinto county, indorsed as county treasurer of San Jacinto county the certificates to plaintiff, Cochran, and that be was the holder of numbers 8 and 9 at the time the bank was closed by the commissioner of insurance and banking. Neither of the indorsements on the certificates, each of which was made for the purpose of transferring title to and possession of said certificates, is questioned. Cochran paid full value in cash for the certificates representing the deposits. San Jacinto county received the money for them, applied the money to its own use and benefit, and is not claiming the deposit.

Appellants insist that they having attacked the regularity of the transfer from San Jacinto county, to appellee by a verified plea, the burden was on appellee to show that Phillips, the county treasurer of San Jacinto county, was authorized by the commissioners' court of said county to transfer by indorsement the certificates to appellee, and that as appellee made no such proof, therefore he has not shown ownership of the certificates. We think that when appellee pleaded that he had on deposit in the Shepherd State Bank, at the time it was closed, the sum of $16,000, which was noninterest-bearing and unsecured, and that he was the owner and holder in due course of the two certificates of deposit evidencing the said deposit of $16,000, and made proof of the...