Commercial Nat. Bank v. Pirie, 791.
| Decision Date | 13 September 1897 |
| Docket Number | 791. |
| Citation | 82 F. 799 |
| Parties | COMMERCIAL NAT. BANK et al. V. PIRIE et al. |
| Court | U.S. Court of Appeals — Eighth Circuit |
N. T Guernsey and W. C. Perry (John H. Crain was with them on the brief), for plaintiffs in error.
Charles Blood Smith (W. H. Rossington and Clifford Histed were with him on the brief), for defendants in error.
Before CALDWELL, SANBORN, and THAYER, Circuit Judges.
This is a suit to recover the value of certain goods, which was brought by the defendants in error, composing the firm of Carson, Pirie, Scott & Co., against the Commercial National Bank of Independence, Kan., and George T Guernsey, the plaintiffs in error. The petition on which the case was tried in the circuit court simply alleged that the plaintiffs below, who are the defendants in error here, were the owners of the goods in controversy on June 10, 1892; that the defendants on said day wrongfully converted the same to their own use; and prayed judgment for their value in the sum of $6,920.26. The answer on the part of both of the defendants was a general denial of all the allegations of the petition. The case, as developed by the evidence produced at the trial, was substantially as follows: In February, 1892 and for some time previous thereto, R. T. Webb was president of the Cherryvale National Bank, located and doing business at Cherryvale, Kan. He was also doing a mercantile business at the same place, having first become engaged in the latter business in September, 1891. On the 17th or 18th day of February, 1892, Webb applied to the firm of Carson, Pirie, Scott & Co., at their place of business in Chicago, Ill., to purchase a bill of goods, and on being asked by a member of the firm to make a property statement as a basis for obtaining credit he produced and exhibited the following document, which had been executed by T. C. Molloy, cashier of the Cherryvale National Bank, at the instance and request of Webb, prior to the latter's departure for Chicago for the purpose of buying goods:
'Cherryvale, Kansas, February 15th, 1892.
On the production of the aforesaid guaranty, Webb was allowed to purchase a bill of merchandise amounting to $6,395.25. The goods so purchased were shipped in several lots during the latter days of February, 1892, and the bills therefor, according to the terms of sale, matured on May 15th and June 15th following. Before the maturity of the bills, Webb made cash payments on account, amounting to $439.60, and returned goods of the value of $39.35. At the time of this transaction no representations were made by Webb touching his financial condition or solvency, or concerning the solvency or condition of the Cherryvale National Bank; the firm of Carson, Pirie, Scott & Co. being willing, apparently, to extend credit on the aforesaid guaranty of the Cherryvale National Bank, which the firm accepted and retained. In point of fact, Webb was at the time insolvent in the sense that he could not pay his debts as they matured, and the Cherryvale National Bank was also insolvent, and in a failing condition, though still transacting business in the usual manner. On June 10, 1892, a national bank examiner took charge of all the property and effects of the Cherryvale National Bank, and closed its doors for the transaction of business, by direction of the comptroller of the treasury. On the same day Webb executed two chattel mortgages covering his entire stock in trade,-- one in favor of the Commercial National Bank of Independence, Kan., to secure a liability to that bank in the sum of $8,229.68; and the other in favor of George T. Guernsey to secure an indebtedness to said Guernsey in the sum of $5,000. A part of the indebtedness to Guernsey which was thus secured consisted of money, some six or seven hundred dollars, on that day loaned to Webb by said Guernsey. The residue of said indebtedness was a pre-existing debt in the sum of forty-two or forty-three hundred dollars, which Webb then owed to said Guernsey, that was due and unpaid. Under the aforesaid mortgages, Guernsey, who was cashier of the Commercial National Bank of Independence, Kas., immediately took possession of all the mortgaged property, and advertised it for sale on June 27, 1892. Prior to the sale, and on the 27th day of June, 1892, the defendants in error, acting in the firm name of Carson, Pirie, Scott & Co., served a notice on the Commercial National Bank of Independence, Kan., that said firm had been induced to sell the goods in controversy to Webb by reason of certain representations made by Webb and by the Cherryvale National Bank as to Webb's financial responsibility, which representations were false in fact, and were made with a fraudulent intent, and that they had elected to rescind the sale, and reclaim the goods, on account of such fraud. The defendants below, when this notice was served on them, refused to restore the goods in controversy, which were then in their possession, and the same were thereafter sold under the mortgages, whereupon this suit was brought in the form heretofore stated. At the conclusion of the testimony, which established substantially the aforesaid facts, the trial court gave a peremptory instruction, directing the jury to return a verdict in favor of the plaintiff's below. Such a verdict was accordingly returned, and a judgment was rendered thereon against the defendants below in the sum of $6,415.09. An exception, which was duly taken by the defendants to the giving of this instruction, presents all the questions which are to be considered.
We think that the trial court erred in withdrawing the case from the consideration of the jury, and that its action in that respect cannot be upheld. It is not claimed that any oral representations were made to induce the firm of Carson Pirie, Scott & Co. to sell the goods in question on credit, or to ship them to the purchaser. The representative of the firm who negotiated the sale confessedly acted on the assumption that the written guaranty executed by T. C. Molloy, as cashier of the Cherryvale National Bank, bound the bank, and that the bank was able to meet all its engagements. For this reason he made no inquiries...
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