Donnell v. Lewis Cnty. Sav. Bank

• Citation: 80 Mo. 165
• Parties: DONNELL et al., Appellants, v. THE LEWIS COUNTY SAVINGS BANK.
• Decision Date: 31 October 1883
• Court: Missouri Supreme Court

80 Mo. 165

DONNELL et al., Appellants,

v.THE LEWIS COUNTY SAVINGS BANK.

Supreme Court of Missouri.

October Term, 1883.

Appeal from Lewis Circuit Court.--HON. JOHN C. ANDERSON, Judge.

REVERSED.

Hagerman, McCrary & Hagerman for appellants.

David Wagner for respondent.

RAY, J.

This is a proceeding originally commenced before the assignee of the Lewis County Savings Bank for the adjustment and allowance of a claim in favor of plaintiffs--Donnell, Lawson & Co.--predicated upon a negotiable promissory note, of which the following is a copy:

“$4,000.

CANTON, Mo. February 15th, 1877.

Ninety days after date I promise to pay to the order of Lewis County Savings Bank $4,000 at the banking house of Donnell, Lawson & Co., New York City; value received.

H. DAVIS.

Indorsed: Pay Donnell, Lawson & Co., or order.

LEWIS COUNTY SAVINGS BANK,

Per S. H. STUART, President.”

The assignee disallowed the claim, from which decision Donnell, Lawson & Co. appealed to the circuit court, where upon a trial anew before the court, a jury having been waived, a finding and judgment was again had and rendered against the plaintiffs, from which they have appealed to this court

The record shows that the Lewis County Savings Bank was a banking corporation organized and doing business as such at Canton, Missouri, under and by virtue of the General Statutes of Missouri, (1 Wag Stat., 329); that it commenced business in 1867, and continued until March 31st, 1877, when it suspended, and on April 7th, 1877, made a voluntary assignment in trust for its creditors; and that thereafter the assignee had charge of its effects under said assignment and the statute governing the same. 1 Wag. Stat., 150, 154. The record also shows that the plaintiffs at the same time were bankers in the City of New York, and the correspondents of the Lewis County Savings Bank in that city, upon whom said savings bank drew its drafts for eastern exchange, and to whom remittances were made to meet the same.

The record further shows that while said savings bank was thus engaged in the banking business, to-wit, on November 7th, 1876, by its cashier, H. Davis, it addressed to plaintiffs, at New York, a letter to the following effect:

“We are furnishing our pork-packer here money on paper with margin put up to the amount of sixty cents on the dollar, and then when invested and cut we hold the entire product covered by insurance. With such paper as collateral could you discount our paper, from $5,000 to $20,000, at ninety days, and what at? Answer at once.”

To which the plaintiffs, on November 13th, 1876, replied as follows:

We will let you have $5,000 for ninety days, and beg to inclose herein a bank note, which you will please fill and forward to us for discount. This is the very best we can do at present, as the demand has been very general on us from our friends both west and south. Please have the note made by some private party and indorsed by the bank.”

In response to this letter on the 18th day of November, 1876, the savings bank, by its cashier, H. Davis, forwarded to plaintiffs at New York a negotiable promissory note for $5,000, at ninety days, made by its cashier, H. Davis, to said Lewis County Savings Bank, and indorsed to plaintiffs by said bank, by its president, S. H. Stuart. This note the plaintiffs discounted, and placed the proceeds to the credit of the Lewis County Savings Bank on its books; and subsequently such proceeds were checked out by said savings bank, and monthly statements of account were furnished said savings bank by plaintiffs. Afterward the said savings bank paid on said note $1,000, and on February 15th, 1877, the note in controversy was given in renewal of the balance thereof and indorsed to plaintiffs by said savings bank, by its president, S. H. Stuart, as aforesaid. This renewal note was also discounted by plaintiffs, and the proceeds thereof placed to the credit of the savings bank on the books of the plaintiffs, and afterward checked out by defendant before its suspension. On the maturity of this renewal note, to-wit, on the 19th day of May, 1877, the same was duly presented for payment, duly protested and notice thereof duly sent to the said Lewis County Savings Bank at Canton, Missouri. There is no evidence whatever showing or tending to show that plaintiffs, at or before the date of said protest and notice, had any notice of the prior assignment of said savings bank in trust for its creditors, as aforesaid. It further appears that said Stuart and Davis were the president and cashier of said savings bank, and that when, in the usual course of business, it became necessary to make indorsements, said president and cashier always indorsed the notes or drafts; that sometimes Stuart indorsed as president, and sometimes Davis as cashier; that prior to the indorsement of the note in question each of said officers had indorsed drafts to plaintiffs as such officers, and that plaintiffs and defendant, prior thereto, had a great many dealings with each other as such banks. It also appears that Davis, the cashier of said savings bank, on November 18th, 1876, was, on account of said $5,000 note first made as aforesaid, credited on his account on the books of said savings bank with $5,000, which he drew out from time to time before the suspension and assignment of the said savings bank, except $1,000; but it does not appear that the plaintiffs had any knowledge whatever of this arrangement of the officers of said savings bank, by which such credit, use or misapplication of the funds of said savings bank were made.

The 1st section of the 6th article of chapter 37, regulating “Savings Banks and Fund Companies,” (Wag. Stat., 329,) which may be regarded as the charter of the Lewis County Savings Bank, is as follows: “Any five or more persons, in any county in this State, may organize themselves into a savings association, and shall be permitted to carry on the business of receiving money on deposit and to allow interest thereon, giving to the person depositing credit therefor, and of buying and selling exchange, gold, silver, coin, bullion, uncurrent money, bonds of the United States, of the State of Missouri and of the city and county in which any association shall be organized, of loaning money on real estate and personal security, at a rate of interest not to exceed ten per cent per annum, and of discounting negotiable notes and notes not negotiable, and on all loans made may keep and receive the interest in advance.”

At the close of the testimony the court refused the following declaration of law asked by the plaintiffs, to-wit:

1. If the court, sitting as a jury, believes that Donnell, Lawson & Co. discounted and paid for the note of H. Davis for $5,000, dated November 18th, 1876, to the Lewis County Savings Bank on the indorsement of said bank by the authorized officers, and the Lewis County Savings Bank received the money and used it for its banking purposes, and at the maturity of said note paid $1,000 thereon, and Davis gave to said bank the renewal note in evidence for balance of said original note, which was indorsed to plaintiffs by said bank by its authorized officers and agents, and that said note was protested at the maturity thereof, plaintiffs should recover.”

The following declarations were given by the court at the instance of defendant, to-wit:

1. That the bank, by its officers, had no right or power to borrow money, and no action can be maintained on such contract of borrowing.

2. That the bank cannot be held liable as indorser on the note sued on; that the president of a bank is not, by reason of his official position, presumed to have the power to bind it as an accommodation indorser of the note of an individual, and a payee who fails to prove that the president or officer had authority to make the indorsement, cannot recover against the bank.

3. If the court, sitting as a jury, find...