Exchange Bank of Ong v. Clay Center State Bank

• Decision Date: 28 September 1912
• Docket Number: 16,754
• Citation: 137 N.W. 845,91 Neb. 835
• Parties: EXCHANGE BANK OF ONG, APPELLEE, v. CLAY CENTER STATE BANK, APPELLANT
• Court: Nebraska Supreme Court

137 N.W. 845

91 Neb. 835

EXCHANGE BANK OF ONG, APPELLEE, v. CLAY CENTER STATE BANK, APPELLANT

No. 16,754

Supreme Court of Nebraska

September 28, 1912

APPEAL from the district court for Clay county: LESLIE G. HURD JUDGE. Reversed.

REVERSED.

Ambrose C. Epperson and W. G. Hastings, for appellant.

S. W Christy, L. E. Cottle and Samuel Rinaker, contra.

OPINION

FAWCETT, J.

This action was instituted in the district court for Clay county to recover a balance claimed by plaintiff to be due to it upon an open deposit account subject to check, which it had with defendant, amounting, as alleged, to $ 6,112.91. The defendant admitted liability and offered to confess judgment for $ 819.86, which offer was refused. After both sides had rested, the court directed a verdict in favor of plaintiff for $ 6,121.08, and entered judgment thereon. Defendant appeals.

Plaintiff and defendant are banking institutions organized under the laws of this state, and during the times in controversy were closely allied in business transactions; the cashier and managing officer of plaintiff, J. O. Walker, being a member of the board of directors and at least nominal president of defendant. In February, 1907, Walker addressed to the cashier and managing officer of defendant the following letter: "I have a few excess loans and I may want to send you some of them, until after we are examined I don't want any excess loans, when examiner is here, and he may come most any day and may not for a month or so, now I wish to know if you can handle them I will charge your account, and you give us credit for the amount, this way it will throw the balance in our favor, and you would treat our account then the same as a deposit account, subject to check so in that way it would not show due to other banks, but would be included in your subject to check account, but this would cut your cash reserve down the amount that we owe you but you have a good reserve, so it would not make much difference, or we might exchange some notes if you did not wish it this way you can let me know and I will send them over to you, if agreeable and after the examination you can return again to us, I want to carry the loans, but can't now as we will be examined soon and they will be excess loans, so you will see the point I am trying to make. I will also compute the interest. I remember what we talked of at Schwab's sale but had forgot it, so will go over this as soon as possible and count up the extra 1% to Feb'y 1st or Jan'y 1st, and from then on 3% as agreed to. Hope you are O. K., I am feeling good except a bad cold I can't get over, let me hear from you at once and oblige, I am yours truly, J. O. Walker, Cashier." The evidence shows that, in accordance with that letter, Walker sent to defendant a promissory note dated September 20, 1906, for $ 5,000, due six months after date, payable to plaintiff bank, and signed by C. W. McMaster and E. McCann. When that note was mailed to defendant it was indorsed "without recourse." When received by defendant it was placed to the credit of plaintiff upon defendant's books. On May 23, 1907, Walker addressed another letter to the cashier of defendant, in which he uses this language: "I will send you a written guarantee as to notes so you can file same away as this was to be done, as per our talk when the notes were forwarded or turned to you." The testimony of the cashier and assistant cashier of defendant bank shows that the words quoted from that letter referred to an agreement they had with Walker as cashier of plaintiff at the time they took the McMaster note, with others, that "they would guarantee the payment of the note; " that it was to be put in writing; and that "they would send" a written guarantee as to the notes. No written guarantee was ever sent. As the note in controversy was about to mature on March 20, 1907, it was sent by defendant to plaintiff for collection and credit. Instead of collecting it, Walker took a six months' renewal of the note, payable to plaintiff bank, indorsed it as before, sent it to defendant, and notified defendant that plaintiff bank had credited defendant bank with the interest. When the note matured again in September, 1907, the same course was pursued. Like action was taken when it again matured in March, 1908. When it was about to mature again in September, 1908, defendant sent the note to plaintiff as before, with this letter: "J. O. Walker, Cashier, Ong, Nebr. Dear Sir: Inclosed herewith we hand you for collection No. 1679 $ 5,000.00 which will be due September 20th, 1908. Please credit our account with the amount together with the interest when collected, and advise us of the amount. We are having lots of call for money for short time and hope these people will settle promptly. Yours very truly, F. T. Swanson, Cashier." The note was not paid, nor any renewal taken. Some time during that fall Mr. Walker died. On December 23, 1908, defendant's cashier wrote the following letter to plaintiff's new cashier: "Grace L. Walker, Cashier,...