Commercial Nat. Bank v. First Nat. Bank

• Decision Date: 12 May 1904
• Parties: COMMERCIAL NAT. BANK OF BEEVILLE v. FIRST NAT. BANK OF CUERO.
• Court: Texas Supreme Court

80 S.W. 601

COMMERCIAL NAT. BANK OF BEEVILLE v. FIRST NAT. BANK OF CUERO.

Supreme Court of Texas.

May 12, 1904.

Error to Court of Civil Appeals of First Supreme Judicial District.

Action by the First National Bank of Cuero, Tex., against W. H. Smith and another, and the Commercial National Bank of Beeville, Tex. There was a judgment of the Court of Civil Appeals affirming a judgment for plaintiff against defendant bank (for opinion, see 77 S. W. 239), and it brings error. Reversed.

John C. Beasley, for plaintiff in error. Davidson & Bailey and Lackey & Lewright, for defendant in error.

BROWN, J.

We copy the statement of the case and conclusions of fact of the Court of Civil Appeals, as follows:

"This action was brought in the district court of De Witt county by the appellee, against W. H. Smith and J. F. Ray, to recover upon a promissory note for the sum of $2,066.66, dated November 27, 1901, payable at Cuero, Tex., and alleged to have been executed by them to the appellee. The appellee also made the appellant a party to the suit and sought to recover against it, alleging that the appellant had undertaken, as the agent of appellee, to have the note sued on signed by Smith and Ray, and had sent the same to appellee with the representation that it had been so signed, and that appellee had acted on such representation and had advanced the sum of $2,000 on the note to Smith, against whom no recovery could be had on account of his insolvency; that Ray was solvent, but claimed that the note as to him was a forgery; and that in the event the note was a forgery appellant was liable to appellee for the amount so advanced by it to Smith on account of its deceitful representations. Defendant Smith filed no answer. Defendant Ray answered under oath, denying the execution of the note by him. The appellant pleaded in abatement to the venue of the suit, asserting its privilege to be sued in Bee county, where it had its domicile. It also pleaded the general demurrer, a special demurrer to the venue, a special demurrer raising the question of misjoinder, and in bar the general denial.

"The pleas to the venue and the general demurrers were overruled by the court, and afterwards the cause was submitted for trial to the court without a jury, and resulted in a judgment in favor of the appellee for the amount of the note and costs against Smith and the appellant, and in favor of the defendant Ray. The questions presented to this court on appeal are: (1) The sufficiency of the petition to show a cause of action for deceit against the appellant; (2) the misjoinder of parties defendant; (3) venue of the suit as to the appellant; (4) the sufficiency of the facts to show that the appellant is liable. The facts upon which the suit is founded transpired in the making of a loan of $2,000 by the First National Bank of Cuero, Tex., to W. H. Smith. Smith, who resided at Mineral City, in Bee county, wrote to the bank at Cuero, requesting the loan, and offered as surety James F. Ray, who was a wealthy stockman of Bee county, and resided at Pettus, in that county. Ray was vice president and director of the appellant bank, and an uncle by marriage of Smith. The Cuero bank wrote to the First National Bank of Beeville, in Bee county, its correspondent, stating that Smith had applied for the loan and had offered Ray as surety; that it was unacquainted with them, and asked about their responsibility. The First National Bank of Beeville replied in due course of mail, saying that the parties were good for the amount of money, that Smith was a merchant in good standing, that Ray was a man of property and an official of the Commercial National Bank, that Smith was a former patron of that bank, and that it was acquainted with their signatures. The Cuero bank then prepared for signature the note sued on in Cuero, and mailed it, with a letter to the Commercial National Bank, saying: `A few days since we had a letter from Wm. H. Smith, of Mineral City, Texas, making application for a loan of $2,000.00, and offering as security James F. Ray, vice president of your bank. Will you do us the kindness to hand the enclosed note to Mr. Ray for signature by himself and Mr. Smith? Thanking you in advance,' etc. Upon receipt of this letter and the note, the appellant, by its president, John W. Flournoy, mailed the note in a letter to Wm. H. Smith at Mineral City, requesting him to get Mr. Ray's signature and return to the writer. A letter was received returning the note, as follows: `Pettus, Texas, 11-30-01. The Commercial National Bank of Beeville, Beeville, Texas. Dear Sirs: Enclosed find note as per request. You will please forward to the Cuero bank and tell them to place to my credit. Respectfully, Wm. H. Smith.' The letter was opened by Flournoy in presence of the bookkeeper of the appellant bank, and the signatures to the note were examined and pronounced genuine by both of them. Flournoy at once wrote a letter from Beeville to the appellee at Cuero, in which he inclosed the note and mailed it. The letter was as follows: `Commercial National Bank of Beeville, Beeville, Texas, 12-2-01. First National Bank of Cuero, Cuero, Texas. Dear Sirs: Enclosed you will find note of Wm. H. Smith, properly signed up. He wants the proceeds of said note placed to his credit. Yours truly, John W. Flournoy, President.' The note was received, and the money was advanced by the appellee to Smith. The signature of Ray to the note was found to be a forgery, but was pronounced to be a most clever one. Both Flournoy and the bookkeeper, Miller, testified that, `if the signature of Ray to this note is a forgery then it is a most expert and adroit one, and calculated to deceive the most careful, and greatly did deceive this witness.'

"Smith belonged to a family of people who stood high in Bee county, well known for probity and honesty, and who had occupied positions of public honor and trust. Wm. H. Smith himself had been a young man of excellent habits, and at the time of this transaction, and for a number of years prior thereto, he was engaged in a...