Citizens Bank & Trust Co. v. Hinkle

• Decision Date: 13 November 1916
• Docket Number: 252
• Citation: 189 S.W. 679,126 Ark. 266
• Parties: CITIZENS BANK & TRUST CO. v. HINKLE, ADMINISTRATOR
• Court: Arkansas Supreme Court

189 S.W. 679

126 Ark. 266

CITIZENS BANK & TRUST CO. v. HINKLE, ADMINISTRATOR

No. 252

Supreme Court of Arkansas

November 13, 1916

Appeal from Independence Circuit Court; T. D. Crawford, Special Judge; affirmed.

Judgments affirmed.

Brundidge & Neelly and J. W. & J. W. House, Jr., for appellant.

1. The bank books were balanced from time to time and delivered to appellees with all checks and vouchers, and it was the duty of appellees to examine them, thus discovering any shortage and notify the bank, so it could protect itself; but the failure to so examine and notify the bank relieved it from liability, as upon an account stated.

2. Paxton was appellee's agent and was authorized to sign checks and acted within the scope of his authority and under the circumstances the bank was not liable. These are the bank's defenses and the instructions were based upon these theories. It was error to give instruction No. 5 for plaintiffs. The vice is the use of the words, "With knowledge of the improper charges." 117 U.S. 96; 56 S.E 152; 71 S.W. 612; 74 Am. St. 672-4; 97 N.W. 380; 87 N.E 740-4; 63 Id. 969, 973; 27 Am. St. 82; 101 N.E. 872; 109 Va. 530; 57 Ark. 142; 58 A. 305; 92 Cal. 14; 14 L. R. A. 320; 69 A. 609; 87 N.E. 740; 77 S.W. 1002. All these and others show that it is the duty of the depositor to make reasonable examination of pass books and statements and notify the bank, and if he neglects and the bank suffers it is not liable.

3. Other instructions also are objectionable and conflicting. The knowledge of Thomas cannot be imputed to the bank. 154 S.W. 512; 65 Ark. 543; 100 F. 705; 122 Mo. 339; 134 S.W. 165; 180 F. 686; 59 Am. St. 650.

4. Where a principal by entrusting his money to the agent enables him to do the wrong the principal, rather than the bank, should suffer. Michie on Banks & Banking, 964; 2 N.Y.S. (2 Hall) 589; 57 Ga. 283; 191 F. 566; 86 Pa. 84; 97 N.W. 380. Thomas was appellee's agent.

Hal. L. Norwood, Ernest Neill and Moore, Smith, Moore & Trieber, for appellees.

1. The bank became debtor to appellees by virtue of the relation to bank as depositors, and the bank being accountable for the money deposited therein must show that the charges made against the accounts were made with their authority. The burden was on it. 3 Ruling Case Law, § 149; 56 Ark. 508; 187 S.W. 674. The charges against appellee's accounts were unauthorized and unknown.

2. The bank benefited by these charges and is liable. 127 N.W. 522; 95 F. 87; 82 Conn. 8; 104 U.S. 54; 72 N.Y. 286; 147 Mass. 268; 68 Ark. 299; 69 Id. 48; 68 Id. 71; Morse on Banks, etc. (3 Ed.), § 317; Michie on Banks & Banking, 966; 14 L. R. A. 234; 104 Tex. 379; 127 N.W. 522; 2 L. R. A. (N. S.) 993.

3. The unlawful charges by Thomas were the acts of an officer of the bank and not of the customer. The bank is charged with notice of the acts of its cashier and cannot escape liability except by showing authority from the depositor. 95 F. 87; 72 A. 150.

4. Knowledge of the unauthorized acts is imputed to the bank. 2 L. R. A. (N. S.) 993; 60 F. 79; 177 S.W. 72; 118 Ill. 625; 127 N.W. 522; 72 A. 150; 72 N.Y. 286; 80 N.Y. 162; 74 F. 1000; 46 L. R. A. 734; 15 S.E. 888; 17 N.E. 496; 26 Mo.App. 129; 72 N.Y. 286; 107 Ark. 232; 170 U.S. 133.

5. Instruction No. 5 for appellee was correct and properly given. Ratification of unauthorized acts of an agent must be with full knowledge. 11 Ark. 189; 76 Id. 563; 64 Id. 217; 97 Id. 43; 90 Id. 104; 82 Id. 367; 15 Id. 55; 117 U.S. 96.

6. There was no ratification and no account stated. There is no error in the other instructions. 141 F. 538; 57 Hun. (N. Y.) 72; 38 N.Y.S. 580; 58 Ark. 129; 120 Id. 178.

OPINION

SMITH, J.

This appeal is prosecuted from a judgment of the court rendered in a cause wherein two cases were consolidated and tried together. Both suits were against, the appellant, Citizens Bank & Trust Company, hereinafter referred to as the bank. Mrs. Ida L. Erwin was the plaintiff in one of these suits and the administrator of her husband's estate was the plaintiff in the other. It was alleged by Mrs. Erwin that on January 10, 1913, she deposited with the bank to her credit the sum of $ 30,779.18, and thereafter, up to and including November 11, 1914, made sundry deposits aggregating $ 45,821.93, so that her total deposits between those dates amounted to $ 76,601.11, which deposits were made subject to the rules controlling general deposits, and that the sum of $ 61,061.55 had been paid her, leaving a balance of $ 15,539.56, for which she had made demand but the bank had refused to pay.

In the complaint filed by the administrator of W. J. Erwin's estate it was alleged that plaintiff's intestate carried an account with the bank as a general depositor and subject to the rules controlling general deposits. That at the close of business on January 9, 1913, there was on deposit to the credit of his account the sum of $ 33,879.18, and the bank was indebted to Erwin in that sum, and on the next day Erwin drew a check for $ 30,779.18 in favor of his wife, and at the time there was another outstanding check, which was subsequently cashed by the bank, in the sum of $ 600, and no other checks had been drawn against said account and there was, therefore, to the credit of this account the sum of $ 2,500, for which a demand had been made and payment refused.

In defense of Mrs. Erwin's suit the bank denied that only the sum of $ 61,061.55 had been withdrawn, alleging the fact to be that the entire deposit had been withdrawn by her and by her duly authorized agents and attorneys. Further answering, the bank alleged that at stated intervals between the dates mentioned in her complaint, statements of the account had been rendered with balances and pass books, at which times the cancelled checks and vouchers were returned and the pass books showed at such times the true and correct balances to her credit, and no objection was made thereto for nearly a year after the rendition of the last of such statements. Whereby the bank says Mrs. Erwin is now estopped to dispute such statements.

In answer to the complaint filed by the administrator, the bank alleged that Major Erwin's account was closed on January 10, 1913, at which time he and his duly authorized agent withdrew all of said funds from the bank, and said account was closed, and thereafter statements were rendered to him showing that it had been closed, and no objections to such statements were made from that date until the date of his death on October 22, 1914. It was further alleged that on January 10, 1913, Major Erwin was president of the bank, and continued as such until the date of his death. That as president he was charged with the duty to investigate his account and to determine the correctness thereof, and to report any irregularity to the board of directors. Wherefore, it is said that, because of the failure to perform his duty as president, and because of his failure to complain of the erroneous statement of his account as a depositor, his administrator is now estopped from the prosecution of a suit to recover an alleged balance.

Major Erwin was a man of large wealth and had extensive interests, but he had grown old and feeble, and on January 6, 1913, being then in his 81st year, he had a stroke of paralysis, from which he never recovered. This event marked the close of his business career, and such attention as he thereafter gave to his business was in the collecting together of the odds and ends of his holdings. He had numerous loans but thereafter made no new ones, and as the old loans matured and were collected the proceeds were deposited to the credit of his wife's account with the bank.

In a conference with Paxton Thomas, who was the cashier of the bank, Major Erwin determined to transfer to his wife the balance to his credit in the bank, and, to accomplish this end signed a check drawn in blank as to the amount, payable to the order of his wife. This check was delivered to Thomas with directions to fill in the amount of the balance on hand, less certain checks known to be outstanding, but Thomas filled in this check for $ 2,500.00 less than this balance, and credited this difference to his individual account. This transaction closed the account of Major Erwin at the bank, and thereafter no checks were drawn in his name, and no subsequent deposits were made to his credit.

Notwithstanding the allegation of the answer to that effect, there is no proof that Major Erwin's pass book was ever balanced after he drew the check to his wife, nor is there any showing that this check was ever returned to him; but, upon the contrary, other checks drawn by Major Erwin were found in the compartment of the bank's vault where cancelled checks were kept until the pass books of the drawers of the checks were balanced, and the checks so found were ones which would have been included in a final balancing of this account.

There was no showing that Major Erwin had any duties to perform as president except such as are ordinarily performed by a bank president. On the contrary, it affirmatively appears there was an auditing committee whose business it was to exercise a general supervision of the bank's books, and to make regular examination of them every two or three months, and to examine generally into the accounts and condition of the bank; but this committee was not required to go into a personal investigation of any individual accounts.

It is also undisputed that after his stroke Major Erwin did not undertake to discharge any of the duties of president, and on only a very few occasions did he ever visit the bank, and the duties of president were discharged by other persons. Thomas the bank's cashier, was a trusted friend and agent of the Erwins, and their confidence in him...