German Nat. Bank v. Louisville Butchers Hide & Tallow Co.

• Decision Date: 05 March 1895
• Citation: 29 S.W. 882,97 Ky. 34
• Parties: GERMAN NAT. BANK v. LOUISVILLE BUTCHERS HIDE & TALLOW CO.
• Court: Kentucky Court of Appeals

29 S.W. 882

97 Ky. 34

GERMAN NAT. BANK v. LOUISVILLE BUTCHERS HIDE & TALLOW CO.

Court of Appeals of Kentucky.

March 5, 1895

Appeal from circuit court, Jefferson county.

"To be officially reported."

Action by the German National Bank against the Louisville Butchers Hide & Tallow Company on four promissory notes. There was a judgment on two of the notes for plaintiff, and as to the other two the petition was dismissed. From this judgment plaintiff appeals, and defendant prosecutes a cross appeal. Reversed on the original appeal, and affirmed on the cross appeal.

O'Neal & Pryor and W. O. Harris, for plaintiff.

T. L Burnett, Lane & Burnett, and Frank Hagan & Son, for defendant.

HAZELRIGG J.

The appellee is a corporation, the stockholders of which are the butchers of Louisville. In aid of its trade it also organized a corporation known as the Kentucky Oak Tanning Company, the stockholders of which, with a trifling exception, were the first corporation and its stockholders. Pursuant to the purposes of its organization, the latter corporation, some 10 years before the institution of this action, took from the appellee a large quantity of hides, coming from animals slaughtered by the butchers of the city, and executed its four notes, aggregating some $40,000, negotiable and payable to the appellee at the bank of the appellant. These notes were at once discounted at their place of payment, and their proceeds placed to the credit of the appellee. Upon the maturity of each of the notes, from time to time, for many years, the appellant bank, at the instance and request of the two corporations (the payee and the payor), renewed the paper in the usual course of business, using for that purpose the following form: "$___. Louisville, Ky. _____, 18-. _____ after date, _____ promise to pay to the order of _____, _____ dollars. Value received. Negotiable and payable at the office of the German National Bank, at Louisville, Kentucky, with interest after maturity at the rate of six per cent. per annum until paid." This was signed thus: "Ky. Oak Tanning Co., by its President, Gottlieb Layer." Indorsed: "Louisville Butchers Hide & Tallow Co., by Adam C. Layer, Prest." The name of the appellee would be filled in as the payee, and when the proper dates and amounts were inserted, and the signatures of the parties attached the notes would be delivered to the bank. When two of the notes matured, on April 8, 1890, the usual form was not at hand, and the bank official furnished to the payor a form of this kind: "$___. Louisville, Ky. _____, 189-. _____ days after date, we jointly and severally promise to pay to the order of the German National Bank, of Louisville, Ky _____ dollars. Value received. Negotiable and payable at the office of said bank, at Louisville, Ky. with interest after maturity at the rate of six per cent. per annum until paid." Upon getting this form the bookkeeper and general manager of the tanning company, with an old form before him, sought to make the new conform to the old form, and therefore ran his pen through the words "German National Bank," as well as through some other words not found in the old form. The note then read as follows (it being one of those sued on in this action, the other one differing only as to its amount): "$9,464/21. Louisville, Ky. April 8, 1890. Four months after date, we promise to pay to the order of the Lou. Butcher's Hide & Tallow Co. nine thousand four hundred sixty-four/21 dollars. Value received. Negotiable and payable at the office of said bank, at Louisville, Kentucky, with interest after maturity at the rate of 6 per cent. per annum until paid." Signed: "Ky. Oak Tanning Co., by Gottlieb Layer, President." Indorsed: "Louisville Butchers Hide & Tallow Co., by its President, Adam C. Layer." The other two notes were renewed on the old forms.

When they were due, the last time, each of the four was duly protested for nonpayment, and thereafter this action on them was brought in the Jefferson court of common pleas, but was finally heard by the chancellor in the Louisville chancery court. The petition was amended, and reformation asked as to the two notes, where the erasures occurred; and it was alleged that the words "German National" were left out by mistake, and that the words "said bank" meant in fact, in the contemplation of all the parties, the German National Bank. This was denied by the appellee, and it was contended that the notes were not negotiable and payable at any bank, and that the only liability imposed on the appellee was that of assignor, and this had been discharged by the negligence of the bank in failing to prosecute the maker of the notes to insolvency. It was also contended that the act of the appellee's president in discounting and renewing the four notes was ultra vires; that, as to two of the notes, there was no mistake, or, if there was, it could not be corrected. After an elaborate preparation of the case the chancellor held that the contention on the part of the defendant, that its president had no right, under its articles of incorporation and by-laws, to discount paper, could not be sustained; that it had received the proceeds of the discounts, and had continued to hold them, and in many other ways had approved the action of its president in making the discounts in question. As to two of the notes, therefore, judgment was rendered for the plaintiff. It...