First Nat. Bank v. Hessell

• Decision Date: 03 April 1925
• Docket Number: 18950.
• Parties: FIRST NAT. BANK OF SEATTLE v. HESSELL et al.
• Court: Washington Supreme Court

234 P. 662

133 Wash. 643

FIRST NAT. BANK OF SEATTLE v. HESSELL et al.

No. 18950.

Supreme Court of Washington

April 3, 1925

Department 2.

Appeal from Superior Court, Franklin County; Truax, Judge.

Action by the First National Bank of Seattle against E. R. Hessell and others. Judgment for defendants, and plaintiff appeals. Affirmed.

Chadwick McMicken, Ramsey & Rupp and J. E. Peterson, all of Seattle for appellant.

Chas W. Johnson, of Seattle, for respondents.

MACKINTOSH J.

Suit on a promissory note. The facts can be summarized from the trial court's findings as follows: That the appellant is a bank, doing business in Seattle; that the Farmers State Bank, in 1920 and 1921, up to November 8 of the latter year, was doing business in Connell, Wash., on which date it failed; that on December 29, 1920, the respondents made a promissory note in the sum of $2,600 payable to the Farmers' Bank 90 days after date; that this note was indorsed by the Farmers' Bank and delivered to the appellant as rediscount paper; that the respondents delivered to the Farmers' Bank several notes of other parties as collateral to their note; that on January 26, 1921, one of these notes in the sum of $152 was paid to the Farmers' Bank, and the amount thereof was credited by appellant on the back of respondents' note; that on February 11, 1921, the respondents paid to the Farmers' Bank the sum of $160.84 to be applied on their note, and on February 14 the appellant indorsed this credit on the back of respondents' note; that on March 28, 1921, the respondents owed a balance on the $2,600 note of $2,287.16, and on that day the respondents went to the Farmers' Bank and executed and delivered a renewal note for the sum of $2,287.16, payable six months after date, which is the note sued on in this action; that on March 30, 1921, the renewal note was duly indorsed by the Farmers' Bank and delivered to the appellant; that at the time the respondents executed the renewal note the Farmers' Bank delivered to respondents a duplicate copy of the original $2,600 note, bearing this indorsement, 'Renewed March 28, 1921,' and promised respondents that the original $2,600 note would be returned to them in a few days; that on April 1, 1921, the note was duly returned to the respondents by the cashier of the Farmers' Bank; that before the note in suit was due the respondent H. F. Hessell, on August 24, 1921, who was an accommodation maker, went to the Farmers' Bank and paid the note in the sum of $2,287.16, at which time he was given a duplicate copy of the note, which was stamped, 'Paid,' and was told by the cashier of the bank that the original note would be delivered to him in a few days, as had been done in the former transaction; that at the time of paying the note in suit the respondents knew that the Farmers' Bank did not have the note and did not demand the surrender thereof before or simultaneously with the making of the payment; that the note became due according to its terms on September 29, 1921, at the Farmers' Bank; that at that time the money for the satisfaction of the note had been paid by respondents and the money remained on deposit in the Farmers' Bank up to the time of its failure on November 8 following; that at no time between March 28, 1921, and November 29, 1921, did the appellant bank notify the respondents that the appellant was the owner and holder of the note, and if the note had been presented at the place designated thereon for payment on its due date as provided in the note, the appellant would have found that the money had been already paid to the Farmers' Bank and received the money, or respondents would have been given the chance to protect themselves as against the Farmers' Bank to which it made the payment; that no part of the sum received on August 24, 1921, by the Farmers' Bank was ever received by the appellant; that the appellant took the notes from the Farmers' Bank as rediscount paper under a system which had for some time been in vogue between the two banks, by which the Farmers' Bank would assign and indorse to the appellant notes of its local customers, the appellant receiving and accepting the notes and allowing the Farmers' Bank credit on the appellant's books for the full amount thereof; that in some cases, if the note were not paid when due, the appellant, upon instructions from the Farmers' Bank would charge the notes back to the Farmers' Bank, and in other cases the appellant would request the Farmers' Bank to collect the notes from the makers.

The court concluded from these findings that the Farmers' Bank was the agent of the appellant with full authority to collect the note and that even though the agency might not have been directly conferred upon the Farmers' Bank, the conduct of appellant, at the time of the renewal of the original note, in accepting and receiving the renewal amounted to a ratification and approval of the acts of the Farmers' Bank, and that the appellant is now estopped to say that the Farmers' Bank was not the appellant's agent for handling and collecting this note.

From judgment against the appellant it has appealed.

It is of course, the law that the fact that a note is made payable at a certain designated...