City Electric St. Ry. Co. v. First Nat. Bank

• Decision Date: 09 July 1898
• Parties: CITY ELECTRIC ST. RY. CO. v. FIRST NAT. BANK.<SMALL><SUP>1</SUP></SMALL>
• Court: Arkansas Supreme Court

47 S.W. 855

CITY ELECTRIC ST. RY. CO. v. FIRST NAT. BANK.¹

Supreme Court of Arkansas.

July 9, 1898.

Appeal from Pulaski chancery court; P. C. Dooley, Special Chancellor.

Suit by the First National Bank against the City Electric Street-Railway Company. From the decree, both parties appeal. Modified.

John McClure and Cockrill & Cockrill, for plaintiff. Rose, Hemingway & Rose, for defendant.

McCAIN, Special Judge.

This is an appeal from the Pulaski chancery court. Two suits were consolidated in the court below. One of these was a suit brought by Nick Kupferle, as trustee, on an account which H. G. Allis had, or claimed to have, against the Electric Street-Railway Company, and which he had assigned to Kupferle as collateral security for his indebtedness to the First National Bank of Little Rock. The amount claimed in this suit was $157,500. The other suit was an action brought by the receiver of said bank against the same defendant for an amount claimed to be due on several overdrafts and promissory notes, aggregating a little over $110,000. The street-car company, by answer filed in each case, disputed the correctness of the claims sued on, denied any liability on either claim, averred that the receiver was not the holder or owner of certain of the notes embraced in his suit, and by way of counterclaim asked for judgment over against the receiver for the proceeds of certain notes alleged to have been negotiated by the bank for the street-car company. The chancellor appointed a master to state an account between the parties, and on the coming in of the master's report the receiver was awarded a decree against the street-car company for $106,850.26. Both parties appealed.

1. We conclude that the street-car company has no right to complain of the chancellor for refusing to give judgment over against the receiver on the counterclaim. The contention of counsel on this point is plausible, but underlying it there is the fallacy that in negotiating the notes in question the action of Allis was the action of the bank. Allis was president of the bank, it is true; but he was also payee of the notes, and he was personally interested in their negotiation. This of itself made him a stranger to the bank, so far as the handling of these notes was concerned. An agent cannot prostitute the name of his principal to the service of his own personal ends, and this rule applies with full force to the official of a corporation in making use of the corporate name. Surety Co. v. Pauly, 170 U. S. 133, 18 Sup. Ct. 552; 1 Mor. Corp. § 517. Not only so, but it was held by this court in Grow v. Cockrill, 63 Ark. 418, 39 S. W. 60, that a national bank cannot engage in the brokerage business. It follows that officers of the bank had no authority to negotiate notes which did not belong to the bank. But it is said that the bank got the proceeds of the notes when they were discounted, and that for this reason the bank ought to account for the amount received. It is true that Allis deposited the proceeds of the notes in the bank, or — which is the same thing — he had the amount passed to the credit of the bank by its metropolitan correspondents, to whom he remitted the proceeds. To deposit money in bank is the same, in legal effect, as to place an amount, with its approval, to its credit in another bank. But the bank did not in this case get the proceeds of these notes, because Allis deposited the same to his own credit. It is no answer to this to say that he ought not to have done this, or that the bank ought not to have allowed him to do this. When you go to deposit money in bank, it must be a very extraordinary case in which the bank can challenge your right to say whether the deposit offered shall go to your credit, or to that of some one else. As Allis in this case had unlawfully used the name of the bank in procuring the money on the notes, the bank official making the entry might well have refused to credit Allis with the deposit, and might have placed it to the credit of the bills payable, or rediscounts; but we are not satisfied that there was anything in the circumstances of the case to require the bank to credit the amount to the street-car company, over the objection of Allis, or without his direction. It is said that the bank knew that this paper in Allis' hands was accommodation paper. We are not certain that the bank did know this; but, if it did, that was the most satisfactory evidence that the street-car company intended him to have the money. If you intrust a friend with your negotiable note, either for his accommodation or your own, you would hardly be allowed to complain that some one had discounted the paper...