Drudge v. Citizens' Bank of Akron
| Decision Date | 08 June 1916 |
| Docket Number | No. 9147.,9147. |
| Citation | 113 N.E. 440,64 Ind.App. 217 |
| Parties | DRUDGE v. CITIZENS' BANK OF AKRON. |
| Court | Indiana Appellate Court |
OPINION TEXT STARTS HERE
Appeal from Circuit Court, Marshall County; Harry Bernetha, Judge.
Action by Francis M. Drudge against the Citizens' Bank of Akron. Judgment for defendant, and plaintiff appeals. Affirmed.
Julius Rowley and Isaiah Conner, both of Rochester, and Harley A. Logan, of Plymouth, for appellant. Holman, Bernetha & Bryant, of Rochester, Reuben R. Carr, of Akron, and M. A. Baker, of Rochester, for appellee.
This is a suit to recover damages for the conversion of the proceeds of five promissory notes. The complaint is in five paragraphs, and each is for the recovery of the amount of the proceeds of a separate note. The paragraphs are alike except in the description of the notes and the amount demanded. The first paragraph alleges, in substance, that appellee is an incorporated bank under the laws of this state, and at the times herein mentioned was engaged in the banking business in the town of Akron, Ind.; that on July 28, 1910, appellant owned and held a promissory note executed by one Milo Harold for $1,500, which he delivered to appellee for safe-keeping; that some time afterwards appellee received from said Harold the full amount of said note, with interest, amounting to $1,606.50, and wrongfully and unlawfully paid out the whole of said amount in discharge of its obligation to its depositors, other than appellant, and in that manner wrongfully and unlawfully converted the money to its own use, to the damage of appellant in the sum of $2,000. Each paragraph was answered by general denial and by two paragraphs of special answer. A reply in general denial was filed to each of the special answers. The second paragraph of answer sets out each of the notes in controversy, together with the respective mortgages securing them, the record thereon, and all indorsements and writings of every kind and character, or in any wise pertaining thereto and appearing upon said instruments and the record thereof, and alleges that there is no other record, indorsement or writing of any character whatever relating to the ownership of said notes and mortgages. The third paragraph of answer alleges that on the several dates set forth in the answer, up to the time the bank was closed, appellee was doing a banking business at Akron, Ind., under the private banking laws of this state; that the notes mentioned in the complaint were each given and made payable to appellee, together with the mortgages securing the same, and that such instruments and the proceeds thereof were and are the property of appellee and a part of the assets thereof; that the remaining assets of said bank are insufficient to pay in full the bona fide claims of all the depositors; that no instrument of any kind showing that appellee ever held the notes mentioned in the complaint, in trust for appellant, or any other person, was ever executed by appellee, nor was any such instrument ever recorded in the recorder's office of Fulton county, Ind., nor was any copy thereof filed with the auditor of state; that appellee is in voluntary liquidation, and has been since November 3, 1911, and that the depositors are not yet fully paid and satisfied, and that the assets of the appellee bank, including the proceeds of the notes set out in the complaint, are insufficient to pay and satisfy all the claims of the depositors.
Upon request the court made a special finding of facts, and stated its conclusions of law thereon. The court found the facts as alleged in the special answers and many other facts and details of the transactions, the substance of which, as far as material here, is as follows: That appellee was organized as a copartnership in June, 1905, and as such engaged in the business of private banking at Akron, Ind., continuously from that time to November 3, 1911, when the bank was closed by the auditor of state; that this suit was begun on July 15, 1912; that Howard B. Harter was cashier of the bank from the date of its organization until it was closed; that the bank in the usual course of business made the following loans of its funds: Milo Harold, $1,500; Walter L. Rogers, $500; Reuben Kamp, $1,200 and $3,000; Edwin Landis, $800, and took from each a note for the amount so loaned to him, payable to the bank; that each of said notes was secured by a mortgage upon land owned by the borrower, which mortgages were recorded in the recorder's office of the proper county. Copies of the notes and their indorsements and the mortgages are set out in full in the finding of facts. That appellant and said Harter, without the knowledge or consent of the directors or stockholders of the bank, entered into a pretended sale to appellant of said notes and mortgages, which notes were indorsed on the back with a rubber stamp, “Citizens Bank, Akron, Indiana, -, Cashier,” except the Harold note, which was not indorsed; that said mortgages were not assigned to appellant; that the cashier, Harter, received from appellant the principal and the unpaid interest accrued on said notes to the date of sale and delivered them to appellant, who immediately returned them to the cashier and took receipts therefor from said cashier, which are as follows:
“July 23, 1910.
Received from F. M. Drudge two notes-Milo Harold $1,500.00 and Walter Rogers $500.00 secured by real estate mortgage-same left for collection and safe-keeping.
Citizens' Bank, Akron, Indiana,
$2,000.00. -, Cashier.”
“September 2, 1910.
This is to certify that F. M. Drudge has on deposit at this bank one note bearing date of April 13, 1910-calling for $1,200.00 due in five years-indorsed by Reuben Kamp-secured by first real estate mortgage-note to be delivered only upon the surrender of this receipt to him or his heirs only.
[Signed] Citizens' Bank, Akron, Ind.,
By H. Harter, Cashier.”
“Dec. 16, 1910.
Received of F. M. Drudge eight hundred dollars Edwin Landis mortgage note dated May 19, 1909, secured by real estate mortgage for safe-keeping.
Citizens' Bank, Akron, Indiana,
H. Harter.”
“Received from F. M. Drudge one note of $3,000.00 secured by junior mortgage on Reuben Kamp farm dated May 29, 1911, due in six months this note is left for safe-keeping and to be delivered upon the return of this receipt.
[Signed] Citizens' Bank, Akron, Indiana.”
That none of said mortgages were ever delivered to appellant, and the bank never received the money so paid by him, although credited on the books of the bank; that the negotiations for the purchase of said notes by appellant and the payment of the money therefor by him all took place in the banking rooms of appellee in Akron, Ind., during banking hours. After said notes were left with the bank said Harter collected the interest on them at about the time it became due up to November, 1911, and paid the interest so collected thereon to appellant; that the cashier squandered the money obtained from appellant for the notes on the Chicago Board of Trade, in speculations on his own account, which resulted in a loss to him of $33,500, which facts were unknown to the other officials and stockholders of the bank until the bank was closed; that appellant did not, after said sale, or at any...
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