Flannagan v. California Nat. Bank

• Decision Date: 19 June 1893
• Docket Number: 534.
• Citation: 56 F. 959
• Parties: FLANNAGAN et al. v. CALIFORNIA NAT. BANK et al.
• Court: U.S. District Court — Southern District of California

56 F. 959

FLANNAGAN et al. v. CALIFORNIA NAT. BANK et al.

No. 534.

United States Circuit Court, S.D. California.

June 19, 1893

Burnett & Gibbon, for plaintiffs.

M. T Allen, for defendants.

ROSS District Judge.

The plaintiffs, who are citizens of Oregon, and bankers doing business at the city of Marshfield, in that state, bring this suit to recover the amount of a certain draft drawn by one Baines on the defendant Graham. By their complaint the plaintiffs seek to charge the defendant the California National Bank of San Diego, now in the hands of the defendant receiver, with the payment of the draft; and a demurrer filed by the receiver, on behalf of the bank, raises the question of the latter's liability.

The complaint alleges that on the 15th of September, 1891 Graham, through his agent, Baines, applied to the plaintiffs at their bank in Marshfield, for a loan of $6,000, 'to be paid by draft upon said California National Bank of San Diego.' This allegation in respect to the proposed drawee was probably a mistake of the pleader, for that allegation is immediately followed by this:

'At the same time, plaintiffs received a telegram, sent by said California National Bank to plaintiffs, in which it stated that Baines' draft on Graham for $6,000 was [would be] good on the 16th of the next month.'

To which telegram plaintiffs replied by a telegram as follows:

'Marshfield, Coos Co., Or., Sept. 16, 1891.

'To California National Bank, San Diego, California: Will you pay Baines' draft on Graham for $6,000.00 on October 15, next?

'Flannagan & Bennett.'

In reply to this telegram, plaintiffs received, on September 18, 1891, the following, by telegraph, from the defendant bank:

'San Diego, Cal., Sept. 18, 1891.

'To Flannagan & Bennett, Marshfield, Or.: See our telegram of 15th. Should Graham money arrive earlier, we will pay when it comes, possibly tenth.

California National Bank.'

To which plaintiffs, on the 19th of September, replied by telegraph as follows:

'Marshfield, Coos Co., Or., Sept. 19, 1891.

'To California National Bank, San Diego, Cal.: Are we to understand that you will pay Baines' draft on Graham for $6,000.00 not later than 16th of next month?

Flannagan & Bennett.'

Receiving in reply the following:

'San Diego, Cal., Sept. 21, 1891.

'To Flannagan & Bennett: Yes.

G. N. O'Brien, Cashier.'

O'Brien was at the time the cashier of the California National Bank. Upon the receipt of the last-mentioned telegram the plaintiffs paid to Baines, for the use of Graham, $6,000, and received from Baines a draft, signed by him, in words and figures as follows:

'$6,000.00.

Marshfield, Sept. 23rd, 1891.

'On October 16th, 1891, pay to the order of Flannagan & Bennett six thousand dollars, value received, and charge the same to account of

'W. E. Baines.

'To R. A. Graham, California National Bank, San Diego.' On the 16th of October, 1891, the draft was duly presented to the defendant bank, and payment demanded, which was refused, and subsequently payment was demanded of defendant Graham, who likewise failed to pay the same.

It is apparent from the averments of the complaint that at no time did the defendant bank, or its cashier, promise to pay any draft drawn on the defendant bank. Had such promise been made, and plaintiffs had parted with their money on the strength of it, the case would be like that of Garrettson v. Bank, 47 F. 867, and a like ruling would be made here, for I have no doubt of the correctness of that decision. But the present case is altogether unlike that. The promise here counted on was the promise of the cashier of the defendant bank to pay Baines' draft on Graham, who, it would seem from the telegrams, was a customer of the defendant bank, and an anticipated depositor; and the question for decision is, whether such a promise of the cashier of a national bank is binding upon the bank. A national bank is empowered, by the seventh subdivision of section 5136 of the Revised Statutes, 'to exercise, by its board of directors or duly-authorized officers or agents subject to law, all such incidental powers as shall be necessary to carry on the business of banking; by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of...