Fort Dearborn National Bank of Chicago v. Seymour

• Citation: 73 N.W. 724,71 Minn. 81
• Decision Date: 25 January 1898
• Docket Number: 10,810 - (211)
• Parties: FORT DEARBORN NATIONAL BANK OF CHICAGO v. FRANK A. SEYMOUR and Another
• Court: Supreme Court of Minnesota (US)

73 N.W. 724

71 Minn. 81

FORT DEARBORN NATIONAL BANK OF CHICAGO v. FRANK A. SEYMOUR and Another

Nos. 10,810 - (211)

Supreme Court of Minnesota

January 25, 1898

Original Opinion Filed January 6, 1898 [Copyrighted Material Omitted]

On Motion for Reargument.

SYLLABUS

Note of Land Company Discounted by Chicago Bank -- Cashier of St. Paul Bank Agreeing that Chicago Bank Might Charge St. Paul Bank with Note -- Authority of Cashier to Pledge Bank's Credit -- Fraud.

A bank in Chicago was the correspondent of a bank in St. Paul, in which the latter kept funds on deposit. The cashier of the St. Paul bank was secretary of, and a large stockholder in, a land company. The president and two of the directors of the St. Paul bank were also interested in, and stockholders of the land company. The land company was indebted to certain parties in the sum of $25,000, which had to be met and paid. The cashier of the St. Paul bank, in his individual name, wrote to the cashier of the Chicago bank that he had been unexpectedly called on to take up $25,000 for a company in which he was interested, and did not want to borrow the money from his own bank, and asked if the Chicago bank would place an inclosed note of the land company for $25,000 to the account of the St. Paul bank; adding that the latter bank would not draw against it. To this the cashier of the Chicago bank replied that he had placed the proceeds of the land-company note to the credit of the St. Paul bank, with the understanding that none of it was to be paid out, and that they reserved the privilege of charging the land-company note to the St. Paul bank at their option. The cashier of the St. Paul bank replied, consenting to and accepting these conditions. The Chicago bank then discounted the land-company note and placed the proceeds to the credit of the St. Paul bank, and the latter then paid the amount ($25,000) to the land company. The St. Paul bank was not a party to the note of the land company, and had no interest in it. None of the officers of the St. Paul bank, except those who were stockholders in the land company, and interested in the transaction in their own behalf, adversely to the interests of the bank, ever authorized, knew of or ratified the agreement between their cashier and the Chicago bank, and they had no notice that the credit of $25,000 by that bank to the St. Paul bank was not an actual and unconditional credit for cash deposited. Held, that the agreement of the cashier of the St. Paul bank that the Chicago bank might charge up the note of the land company to the St. Paul bank was wholly without the scope of his authority; that it amounted to an attempt to...